Bill Text: HI HB2687 | 2020 | Regular Session | Amended


Bill Title: Relating To The Downpayment Loan Loss Reserve Program.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Engrossed) 2020-05-21 - Report adopted; Passed Second Reading, as amended (SD 1) and referred to WAM. [HB2687 Detail]

Download: Hawaii-2020-HB2687-Amended.html

HOUSE OF REPRESENTATIVES

H.B. NO.

2687

THIRTIETH LEGISLATURE, 2020

H.D. 1

STATE OF HAWAII

S.D. 1

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO THE DOWNPAYMENT LOAN LOSS RESERVE PROGRAM.

 

 

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

 


     SECTION 1.  The legislature finds that homeownership creates strong communities through economic growth.  Homeownership helps families build equity and enjoy stability.  Homeowners have a greater sense of security, continuity, belonging, and pride in their communities.  However, saving for a downpayment is often cited as the biggest hurdle for first-time homebuyers, particularly for young people grappling with student loan debt.  The Hawaii Housing Planning Study, 2019, prepared for the Hawaii housing finance and development corporation, found that twenty-seven per cent of those interested in buying a single-family home could not afford the downpayment.

     The legislature further finds that a loan loss reserve fund is a form of credit enhancement that helps lenders control for the risk that loans will not be repaid.  If a borrower defaults on a loan, the lender may access funds in the lender's loan loss reserve account to mitigate losses.  Because they have access to the loan loss reserve fund, lenders can offer better rates and more attractive terms to borrowers or make financing available to borrowers having a wide range of credit scores.  State funds could be leveraged at a ratio of 10:1 with private loan capital to assist from more than eight hundred to twelve hundred first-time homebuyers with downpayment loans.

     Accordingly, the purpose of this Act is to facilitate the provision of downpayment loan assistance to first-time homebuyers by establishing a downpayment loan loss reserve program to address downpayment loan defaults.

     SECTION 2.  Chapter 201H, Hawaii Revised Statutes, is amended by adding a new section to part III, subpart F, to be appropriately designated and to read as follows:

     "§201H‑     Downpayment loan loss reserve program; administrator.  (a)  The corporation may set aside and provide funds to serve as a downpayment loan loss reserve for financial institutions that make downpayment loans to eligible borrowers.  If a downpayment loan issued pursuant to this subpart is in default, the downpayment loan loss reserve shall cover a percentage of the second mortgage loan pool or a percentage of each individual second mortgage in default, as determined by the corporation.  The corporation may secure the services of nonprofit organizations, as defined in section 454F-1, to operate the downpayment loan loss reserve program.

     (b)  There is established within the corporation a downpayment loan loss reserve administrator position.  The downpayment loan loss reserve administrator shall be appointed by the executive director and shall, at the direction of the executive director, administer the downpayment loan loss reserve program."

     SECTION 3.  There is appropriated out of the general revenues of the State of Hawaii the sum of $           or so much thereof as may be necessary for fiscal year 2020-2021, to be deposited into the housing finance revolving fund established by section 201H-80, Hawaii Revised Statutes.

     SECTION 4.  There is appropriated out of the housing finance revolving fund established by section 201H-80, Hawaii Revised Statutes, the amount of $           or so much thereof as may be necessary for fiscal year 2020-2021, to serve as loan loss capital for downpayment loans for first-time homebuyers pursuant to section 201H‑   , Hawaii Revised Statutes.

     The sum appropriated shall be expended by the Hawaii housing finance and development corporation for the purposes of this Act.

     SECTION 5.  There is appropriated out of the housing finance revolving fund established by section 201H-80, Hawaii Revised Statutes, the amount of $           or so much thereof as may be necessary for fiscal year 2020-2021 to establish and fill one full-time equivalent (1.00 FTE) downpayment loan loss reserve administrator position established pursuant to section 2 of this Act.

     The sum appropriated shall be expended by the Hawaii housing finance and development corporation for the purposes of this Act.

     SECTION 6.  New statutory material is underscored.

     SECTION 7.  This Act shall take effect on July 1, 2050.


 


 

Report Title:

HHFDC; Downpayment Loan Loss Reserve Program; Administrator Position; Appropriation

 

Description:

Establishes a downpayment loan loss reserve program to address downpayment loan defaults under the Hawaii Housing Finance and Development Corporation's downpayment loan assistance program. Establishes one downpayment loan loss reserve administrator position.  Appropriates funds for the program and administrator position.  Takes effect 7/1/2050.  (SD1) 

 

 

 

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

 

 

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