Surety Bond News

SB 2603/HB 2278 is a new bill that was enacted in Hawaii State relating to mortgage loan originators. The new will substitute the present mortgage loan originator surety bond requirements with a recovery fund. The previous legislation required originators to be covered by a surety bond in a quantity calculated by the dollar amount of the loans originated and authorized originators to be covered by their employer’s surety bond. The Commissioner of Financial Institutions was allowed to set regulations to employ the surety bond requirement, but no rules were promulgated. SB 2603/HB 2278 requires licensees to pay into a fund that would be intended for any individual affected by an action, transaction or procedures of a licensed mortgage loan originator ensuing from the licensee’s fraud, falsification or deception; these individuals could recover from the fund with a court order in a quantity that could not exceed $25,000 per transaction for losses suffered.

Hawaii State implemented a new bill regarding activity desks. The new bill is labeled HB 2417 and revoked the surety bond requirement for activity desks, which are companies that operate as an intermediary to sell, contract for, or arrange for activities which are furnished by an activity provider who offers specialized air, land, or sea tour excursions. The present law requires the activity desk to sustain client funds in a trust account or attain a surety bond or irrevocable letter of credit. The surety bond indemnifies any consumer who may encounter damages as a consequence of an activity desk’s failure to execute its responsibilities. The surety bond must be in a quantity equivalent to the average monthly net sales revenues of the activity desk for a year. The surety bond cannot be any smaller than $50,000 but cannot exceed $100,000. The Senate companion bill, SB 2607, was modified and passed in the Senate. The bill boosted the maximum surety bond quantity from $100,000 to $250,000 as oppose to repealing the bond requirement.

Insurers who employ managing general agents are affected by a new Hawaii State law. The new law is referred to as SB 2697/HB 2544 and has insurers require their managing general agents to acquire a surety bond in a quantity equivalent to $100,000 or 10% of the agent’s sum yearly premiums written nationally for the insurer in the prior calendar year, whichever is more. Additionally, a $1 million errors and omissions insurance policy also must be obligatory.

SB 2603/HB 2278 is a new law that was enacted relating to mortgage loan originators in the State of Hawaii. The new law substitutes the present mortgage loan originator surety bond requirement which was enacted in 2009 with a recovery fund. The previous law required originators to be covered by a surety bond in a quantity calculated by the dollar amount of the loans originated and authorized originators to be covered by their employer’s surety bond. The Commissioner of Financial Institutions was authorized to promulgate regulations in order to apply the surety bond requirement, but no regulations were promulgated. SB 2603/HB 2278 requires licensees to pay into a fund that would be for any individual aggrieved by an action, representation, transaction or behavior of a licensed mortgage loan originator ensuing from a licensee’s deception, misrepresentation or fraud. These individuals can recover from the fund with a court order in a maximum quantity of $25,000 per transaction for damages suffered.

A new law was introduced concerning mortgage loan originators in Hawaii State. The new law is titled HB 2278-SB 2603 and replaces the present mortgage loan originator surety bond requirements implemented in 2009 with a recovery fund. The present legislation requires originators to be covered by a surety bond in a quantity calculated by the dollar amount of the loans originated. Should the loan originator be an employee or an exclusive agent of a licensee, coverage under the employer’s surety bond satisfies the requirement. HB 2278-SB 2603 requires the surety bond to provide coverage for all originators. The Commissioner of Financial Institutions is allowed to promulgate policy to adopt the bond requirement, which has not yet taken place.