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After taking the time to digest elements of a proposal from lawmakers in Hawaii, the National Reverse Mortgage Lenders Association (NRMLA) has expressed support for a measure to establish a state-run Home Equity Conversion Mortgage (HECM) program there.
In a letter submitted by NRMLA to sponsor lawmakers at the end of February, the association explained that it “strongly supports” the adoption of such a program. It said that any state-sponsored additions beyond the Federal Housing Administration (FHA)-sponsored HECM program are “very welcome additions to the marketplace” that provide additional choice for the state’s older residents.
But NRMLA is hoping that certain “clarifying revisions” can be made to the language of the existing bill, H.B. 1306.
The existing language of the bill does not address core features of the FHA’s HECM program, which requires that the borrower must remain in the property as their primary residence. It also mandates the ongoing obligation to continue paying property taxes, homeowners insurance and other applicable fees as a condition of keeping the loan in good standing. NRMLA recommended placing language in a revision to address these issues.
Another feature of the bill as proposed would allow for borrower assistance once their home equity is exhausted. At that point, the Hawaii Housing Finance and Development Corp. (HFDC) would “coordinate with and assist the kupuna homeowner to relocate into an affordable rental housing unit under the corporation and commence the sale of the dwelling unit,” the bill states.
After that point, the borrower will “not have any debt after sale of the dwelling,” and rental rates in a new dwelling would be “similar to rent rates under tenant-based housing choice voucher program” administered by HUD.
NRMLA called this provision “admirable and forward thinking.” But it also requested additional language to avoid conflating “this program requirement and the events which trigger repayment of the loan obligation,” the letter explained.
In an interview with HousingWire’s Reverse Mortgage Daily (RMD) in February, NRMLA President Steve Irwin explained that the association needed further time to establish its position.
When reached on Wednesday, Irwin explained some of the thinking that NRMLA’s state and local issues committee weighed when determining its support.
“The NRMLA State and Local Committee deliberates all of the proposed state-level legislation, and, through the feedback gathered from those deliberations, official association comments are crafted,” Irwin said.
“The discussions around Hawaii’s H.B. 1306 were particularly robust as the committee members tried to discern the intent of certain provisions of the legislation, and then worked to propose clearer language that might support that legislative intent.”
The process was robust and “extremely deliberative and collaborative,” he added.
The bill will not progress any further in 2025, according to comments previously shared with RMD from its primary sponsor, Rep. Kim Coco Iwamoto (D). But she kept the door open for its return in the next legislative session.
“This bill did not get a hearing in time to meet certain deadlines, so the bill is dead for the year,” a spokesperson for the representative’s office said last month. “However, the bill has a second shot to be heard in the next calendar year if the applicable committee chair so chooses.”
A person familiar with the legislative functions in the state previously told RMD that a bill’s referral to multiple committees severely slows down its legislative momentum. Practically speaking, this does not give it enough time for consideration during the limited legislative session in Honolulu. H.B. 1306 was submitted to three separate committees, making this outcome more likely.
The session began in the third week of January and runs for 60 legislative days, excluding weekends, holidays and recess days. This year’s session is set to adjourn on May 2.
When asked if NRMLA is supportive of a revival in the future, Irwin said that further study of potential impacts will be helpful.
“As far as outcomes, we do hope that the Hawaii legislators take a step back and study further any potential unintended consequences of the proposed state-run reverse mortgage program,” Irwin said on Wednesday.
