STAND. COM. REP. NO. 2414

Honolulu, Hawaii

RE:    S.B. No. 2538

       S.D. 1

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2014

State of Hawaii

Madam:

     Your Committees on Human Services and Economic Development, Government Operations and Housing, to which was referred S.B. No. 2538 entitled:

"A BILL FOR AN ACT RELATING TO HOME LOANS,"

beg leave to report as follows:

     The purpose and intent of this measure is to establish the Hawaii home loan guarantee program to assist residents who have a steady, low or modest income, and yet are unable to obtain conventional financing to obtain a home loan.

     Your Committees received testimony in support of this measure from the City Council of the City and County of Honolulu, and Community Alliance for Mental Health.  Your Committees received comments on this measure from the Department of Budget and Finance, Hawaii Housing Finance and Development Corporation, and Blueprint for Change.

     Your Committees find that helping individuals and families move out of rental housing and into homeownership is valuable for individuals and families, and also for society as it frees up spaces in rental and public housing.  Your Committees heard testimony expressing concern that this measure does not go far enough to help low-income families who have adequate, dependable income and an acceptable credit history obtain home loans.

     Your Committees have amended this measure by:

     (1)  Creating a direct home loan program rather than a home loan guarantee program by specifically:

          (A)  Establishing home loans that come directly from the Hawaii Housing Finance and Development Corporation;

          (B)  Requiring qualified applicants to have low or very low income and defining those terms;

          (C)  Extending the term of the loan to at least thirty-three years, and allowing for a thirty-eight year term for borrowers with incomes below sixty percent of the area median income who cannot afford a thirty-three year term;

          (D)  Establishing that interest rates are to be determined by the Corporation and must be based on the individual or family's income;

          (E)  Requiring qualified applicants to refinance their loans in the private market when household income increases substantially or home equity becomes significant; and

          (F)  Amending terms and restrictions for the home loans;

     (2)  Changing the home loan guarantee revolving fund to the direct home loan special fund;

     (3)  Inserting an effective date of July 1, 2050, to encourage further discussion; and

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

     As affirmed by the records of votes of the members of your Committees on Human Services and Economic Development, Government Operations and Housing that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2538, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2538, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Human Services and Economic Development, Government Operations and Housing,

____________________________ DONOVAN M. DELA CRUZ, Chair

____________________________ SUZANNE CHUN OAKLAND, Chair