SB 3089: HHFDC; Downpayment Loan Assistance Program

A BILL FOR AN ACT

RELATING TO THE DOWNPAYMENT LOAN ASSISTANCE PROGRAM.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Section 201H-161, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (a) to read:

     "(a)  The corporation may make downpayment loans, either directly or through a nonprofit organization as defined in section 454F-1, to eligible borrowers who qualify for loans under section 201H-162.  The downpayment loan to any one borrower shall not exceed fifteen per cent of the purchase price or appraised value of the residential property or $60,000, whichever is less.  In no event shall the loan amount and purchase money mortgage amount exceed [one hundred per cent of combined] the maximum loan-to-value[.] ratio permitted by federal guidelines.  The interest rate on the loans may range from one per cent to eight per cent, depending on the buyer's income."

     2.  By amending subsections (c) and (d) to read:

     "(c)  The principal of the downpayment loan, together with accrued interest, shall be due and payable upon the sale, transfer, or refinancing of the property, or shall be repaid by the borrower in installments as determined by the corporation; provided that the corporation may provide a period in which payments may be waived.  The corporation may also forgive all or a portion of the accrued interest, subject to terms and conditions established by the corporation.  The period over which the principal and interest shall be paid need not coincide with the period over which the loan from the mortgage lender for the balance of the purchase price must be repaid.  The borrower may repay the whole or any part of the unpaid balance of the downpayment loan, plus accrued interest, at any time without penalty.

     (d)  The corporation may secure the services of nonprofit organizations, as defined in section 454F-1, as well as financial institutions, mortgage lenders, or other qualified loan originators, to originate the downpayment loans on behalf of the State for an origination fee not in excess of the prevailing loan origination fee amount, as determined by the corporation."

     SECTION 2.  Section 201H-162, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  No person shall be qualified for a downpayment loan unless the person:

     (1)  Is a citizen of the United States or a resident alien;

     (2)  Is at least eighteen years of age;

     (3)  Is a bona fide resident of the State;

     (4)  Will physically reside in the residential property to be purchased for the term of the loan;

     (5)  Is accepted by a mortgage lender as a person to whom it is willing to lend money for the purchase of the residential property provided the required downpayment is made;

     (6)  Provides a portion of the downpayment [which] that shall be equal to [at least five] three per cent of the sales price[; and], which may include any downpayment loan assistance made available by the corporation under this chapter; and

     (7)  Has successfully completed a homeownership counseling program provided by a housing counseling agency approved by the United States Department of Housing and Urban Development."

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect upon its approval.

Report Title:

HHFDC; Downpayment Loan Assistance Program

Description:

Amends the Downpayment Loan Assistance Program, administered by the Hawaii Housing Finance and Development Corporation, to align with federal requirements and enhance assistance for low- and moderate-income first-time homebuyers.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

RELATING TO THE DOWNPAYMENT LOAN ASSISTANCE PROGRAM.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Section 201H-161, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  The corporation may make downpayment loans, either directly or through a nonprofit organization as defined in section 454F-1, to eligible borrowers who qualify for loans under section 201H-162.  The downpayment loan to any one borrower shall not exceed fifteen per cent of the purchase price or appraised value of the residential property or $60,000, whichever is less.  [In no event shall the loan amount and purchase money mortgage amount exceed one hundred per cent of combined loan-to-value.]  The interest rate on the loans may range from one per cent to eight per cent, depending on the buyer's income."

     SECTION 2.  Section 201H-161, Hawaii Revised Statutes, is amended by amending subsections (c) and (d) to read as follows:

     "(c)  The principal of the downpayment loan, together with accrued interest, shall be due and payable upon the sale, transfer, or refinancing of the property, or shall be repaid by the borrower in installments as determined by the corporation; provided that the corporation may provide a period in which payments may be waived.  The corporation may also forgive all or a portion of the accrued interest, subject to terms and conditions it may establish.  The period over which the principal and interest shall be paid need not coincide with the period over which the loan from the mortgage lender for the balance of the purchase price must be repaid.  The borrower may repay the whole or any part of the unpaid balance of the downpayment loan, plus accrued interest, at any time without penalty.

     (d)  The corporation may secure the services of nonprofit organizations, as defined in section 454F-1, as well as financial institutions, mortgage lenders, or other qualified loan originators, to originate the downpayment loans on behalf of the State for an origination fee not in excess of the prevailing loan origination fee amount, as determined by the corporation."

     SECTION 3.  Section 201H-162, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  No person shall be qualified for a downpayment loan unless the person:

     (1)  Is a citizen of the United States or a resident alien;

     (2)  Is at least eighteen years of age;

     (3)  Is a bona fide resident of the State;

     (4)  Will physically reside in the residential property to be purchased for the term of the loan;

     (5)  Is accepted by a mortgage lender as a person to whom it is willing to lend money for the purchase of the residential property provided the required downpayment is made;

     (6)  Provides a portion of the downpayment which shall be equal to [at least five] three per cent of the sales price[; and], which may include any downpayment loan assistance made available by the corporation under this chapter; and

     (7)  Has successfully completed a homeownership counseling program provided by a housing counseling agency approved by the United States Department of Housing and Urban Development."

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect upon its approval.

Report Title:

HHFDC; Downpayment Loan Assistance Program

Description:

Amends the Downpayment Loan Program, administered by the Hawaii Housing Finance and Development Corporation, to align with federal requirements and enhance assistance for low- and moderate-income first-time homebuyers.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO. 2404

Honolulu, Hawaii

RE:     S.B. No. 3089

        S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Sir:

     Your Committee on Housing, to which was referred S.B. No. 3089 entitled:

"A BILL FOR AN ACT RELATING TO THE DOWNPAYMENT LOAN ASSISTANCE PROGRAM,"

begs leave to report as follows:

     The purpose and intent of this measure is to amend the Downpayment Loan Assistance Program, administered by the Hawaii Housing Finance and Development Corporation, to align with federal requirements and enhance assistance for low- and moderate-income first-time homebuyers.

     Your Committee received testimony in support of this measure from the Department of Business, Economic Development, and Tourism; Hawaii Housing Finance and Development Corporation; Office of Planning and Sustainable Development; AARP Hawaii; Hawaiʻi Association of REALTORS; and Aloha United Way.

     Your Committee received comments on this measure from one individual.

     Your Committee finds that the State's Downpayment Loan Assistance Program is designed to provide below-market rate financing for eligible households.  To be eligible for the program, purchasers must put down five percent from their own funds to be eligible for downpayment assistance.  This requirement is difficult and even insurmountable for some households, given the rapidly rising cost of housing in the State.

     In addition to the five percent requirement for downpayment assistance, the program also imposes restrictive loan-to-value ratio caps, further undermining homebuyers.  By removing these stringent requirements, this measure supports homebuyers in the State and helps make housing available to eligible residents.

     Your Committee has amended this measure by:

     (1)  Clarifying that the loan-to-value ratio shall be the maximum allowable under federal guidelines; and

     (2)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3089, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 3089, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Housing,