Initially launched on Jan. 23 and sponsored by 9 members — together with Democratic Reps. Kim Coco Iwamoto, Elle Cochran and Tina Nakada Grandinetti, and Republican Reps. Christopher L. Muraoka and Kanani Souza — the invoice stated such a program would be capable of assist older Hawaiians, known as “kupuna,” with the rising prices of homeownership.
RMD reached out to the workplaces of a number of sponsor lawmakers within the state however didn’t obtain a direct reply.
“The legislature finds that many kupuna in Hawaii with restricted retirement revenue who could have fairness of their dwelling are going through challenges in assembly elevated prices associated to homeownership; whether or not it’s rising upkeep charges, neighborhood assessments, or insurance coverage prices,” the invoice reads.
“Establishing a state-administered [HECM] program, much like the federal Division of Housing and City Improvement (HUD) program for eligible retirees, might present housing safety and reduction for some kupuna.”
This system would assist “present a pathway to inexpensive rental housing for kupuna who’ve exhausted their dwelling fairness, serving to to stop elder displacement and homelessness,” the invoice added, and would set up a kupuna HECM program underneath the purview of the state’s HFDC.
Much like the HECM program sponsored by the Federal Housing Administration (FHA), the proposed program would carry a minimal age requirement of 62 years and would add HECM insurance coverage authority to the HFDC. Lenders providing this system must be authorized by the state authority, whereas debtors would wish to satisfy the age requirement and separate counseling necessities.
The invoice additionally states that the borrower “shall not be responsible for any distinction between the web quantity of the remaining indebtedness of the kupuna home-owner underneath the mortgage and the quantity recovered by the mortgagee,” language that’s much like the FHA-backed HECM program’s nonrecourse characteristic.
The invoice additionally requires this system to hold a wide range of disbursement choices, together with a standby line of credit score and numerous month-to-month fee choices.
And the invoice has a provision that may permit for help for a borrower on the time that the fairness of their house is exhausted. At that time, HFDC would “coordinate with and help the kupuna home-owner to relocate into an inexpensive rental housing unit underneath the company and start the sale of the dwelling unit,” the invoice reads.
After that time, the borrower will “not have any debt after sale of the dwelling,” and rental charges in a brand new dwelling can be “much like lease charges underneath tenant-based housing alternative voucher program” administered by HUD.
In an e-mail alert to its membership, NRMLA stated it can evaluate the invoice proposal with its exterior normal counsel and can weigh in as soon as that evaluate is full.
State-based reverse mortgage applications are exceedingly uncommon. One exception is a program in Montana, which sponsors a “Reverse Annuity Mortgage” (RAM) program with decrease rates of interest and proceeds, together with a better minimal qualifying age that distinguishes it from the FHA-backed HECM program.
However FHA-backed HECMs are solely a small fraction of all U.S. mortgage originations, and the Montana program is so unknown that some space originators weren’t even conscious of it when requested about it by RMD. That is primarily as a result of purposes are dealt with by the state’s Board of Housing. However the state ramped up promotion of this system final summer season in an effort to exhaust its funds allocation from the Montana legislature.
“[The RAM program] had an obtainable stability, which is uncommon as a result of only a few of our applications have obtainable funding, and I actually don’t like to go away any assets on the desk once we have to be deploying them to serve our residents,” Cheryl Cohen, division administrator for the housing division on the Montana Division of Commerce and government director of the Montana Board of Housing, stated in an interview with RMD in August 2024.
However the Hawaii proposal can also be bigger in scope than the Montana program, which contains a extra restricted eligibility threshold together with a better minimal age and a most mortgage quantity of $150,000.
