Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 1022 entitled:

begs leave to report as follows:

The purpose of this measure is to modify the qualifications for a Housing and Community Development Corporation of Hawaii (HCDCH) downpayment loan to:

Your Committee received testimony supporting this measure from the Housing and Community Development Corporation of Hawaii. Your Committee received testimony opposing this measure from the Mortgage Bankers Association of Hawaii.

Your Committee finds that the HCDCH downpayment loan program has helped many people purchase a home by providing eligible borrowers with downpayment loans of up to thirty per cent of the purchase price or $15,000, whichever is less. To qualify for the downpayment loan program, the borrower is required to contribute three per cent of the sales price from their own liquid assets. This measure allows owner-builders to take advantage of this loan program by crediting their work and labor, or "sweat equity", toward the contribution requirement.

Your Committee is aware that the inclusion of sweat equity as part of the State's downpayment loan program may result in a limitation in the financing options available to borrowers as owner-builders. Testimony indicated that the options may be limited to FHA programs offered by lenders at a higher cost.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1022 and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.