Hawaii Proposes State-Run Reverse Mortgage Program to Assist Senior Homeowners

Hawaii is introducing a state-run reverse mortgage program to help seniors access home equity amid rising living costs, modeled after the federal HECM program.

Hawaii’s lawmakers are pushing for a new bill to create a state-operated Home Equity Conversion Mortgage (HECM) program, managed by the Hawaii Housing Finance and Development Corp. (HFDC).

Legislative Support

Unveiled on January 23, this initiative has garnered support from a diverse group of nine legislators, including Democrats Kim Coco Iwamoto, Elle Cochran, and Tina Nakada Grandinetti, along with Republicans Christopher L. Muraoka and Kanani Souza.

Their aim is to help older residents, known as “kupuna,” tackle the rising costs of homeownership.

The bill underscores a pressing challenge faced by many kupuna in Hawaii: while they may have home equity, their retirement incomes are often insufficient.

With costs like maintenance fees, community assessments, and insurance premiums on the rise, these homeowners need financial relief.

Program Features

The proposed HECM program is designed to offer stability to seniors, following the model of the existing federal program managed by HUD.

By enabling access to their home equity, the initiative seeks to prevent homelessness and provide options for affordable housing.

Key elements of the program include a minimum age requirement of 62, state-approved lenders, and age and counseling criteria for borrowers.

A unique feature ensures that repayment is capped at the home’s market value, protecting homeowners from excessive debt.

The program would offer various disbursement choices, like standby lines of credit and monthly payment plans, along with assistance for those needing to transition to more affordable rental options.

National Response

The National Reverse Mortgage Lenders Association (NRMLA) is currently reviewing the bill with legal advisors and plans to issue comments soon.

While state-sponsored reverse mortgage programs are rare—Montana’s “Reverse Annuity Mortgage” program is one example—Hawaii’s proposal aims to provide a more comprehensive support system for its residents.

Source: Housingwire