In an effort to tackle the escalating costs of homeownership for older Hawaiians, also known as “kupuna,” H.B. 1306 proposed the establishment of a state-specific Home Equity Conversion Mortgage (HECM) program. The Hawaii Housing Finance and Development Corp. (HFDC) would take charge of managing this program.
Introduced by Iwamoto in January, this bill was referred to three separate committees – consumer protection and commerce, finance, and housing – for further examination. However, according to an insider familiar with the legislative processes in the state, the bill’s referral to multiple committees significantly hindered its progress due to the strict time constraints of the legislative session in Honolulu.
The legislative session, which spans approximately 60 days excluding weekends, holidays, and recess days, commences in late January and typically concludes in April or May. Unfortunately, Iwamoto’s office confirmed that H.B. 1306 would not advance further this session due to missed deadlines.
Among the key provisions in the bill were several similarities to the traditional HECM program, such as a minimum age requirement of 62, insurance authority additions to HFDC, and mandatory lender approval by state authorities. It also stipulated that borrowers must meet age qualifications and receive separate counseling.
However, one notable deviation was the bill’s inclusion of a provision allowing assistance to a borrower when their home equity was depleted. In such cases, HFDC would collaborate with the homeowner to transition to an affordable rental housing unit under the corporation while initiating the sale of the dwelling unit, as stated in the bill.
While receiving news that the bill would not progress was a relief for one Hawaii originator, the National Reverse Mortgage Lenders Association (NRMLA) President, Steve Irwin, expressed concerns over certain complex aspects of the legislation. Given the lack of clarity on these provisions, NRMLA intended to liaise with the bill’s sponsors but ultimately had to shelve these plans until at least 2026.
This setback marked the second instance this month where state-level reverse mortgage bills faced delays. In Oregon, proposed legislation targeting the home equity contract industry encountered similar obstacles over concerns that the bill might inadvertently focus too heavily on reverse mortgages, prompting discussions for potential amendments to ensure precise targeting.
As we navigate these developments, it becomes evident that streamlining and refining these proposals to meet the specific needs and challenges of each state’s aging population are crucial. By taking a thoughtful and thorough approach to address issues related to home equity and retirement financing, lawmakers can pave the way for more tailored and effective solutions moving forward.
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