Hawaii Mortgage Broker Regulations May Be Tightened

Hawaii’s banking commissioner is pushing once again for legislation that would allow the state to tighten the rules for mortgage brokers, who now number more than 5,000.

Nick Griffin, commissioner of the state Division of Financial Institutions, will give testimony today to the House Committee on Consumer Protection and Commerce on legislation that would enhance Hawaii mortgage regulations as the apply to mortgage brokers and solicitors.

A similar effort failed last year after the 400-member Hawaii Association of Mortgage Brokers asked state lawmakers to delay action on the bill for at least a year.

Among other things, the legislation would require a mortgage broker to be tested and would hold them responsible for the conduct of their solicitors and loan originators.

Regulators see the change as helping to better protect borrowers in the Hawaii housing market from potentially abusive practices in the industry, which is one of the state’s fastest growing.

“We’re running at the same things again - prelicensing and background checks to make sure people in the industry qualify and past muster,” Griffin said.

New home loan guidelines are being pushed by the federal government and by many individual states. In addition, many such as Hawaii are trying to tighten the reins on brokers and lenders.

A surge in bad credit home loan lending - in which borrowers with suspect credit are issued loans at low introductory rates, for perhaps more than they can afford - has raised red flags over the past 12 months.