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LOAN SERVICES BRANCH<br />
The Loan Services Branch administers the department’s<br />
loan origination, loan servicing and<br />
loan collection programs. DHHL is authorized<br />
by the Hawaiian Homes Commission Act of<br />
1920 to provide loan funds to native Hawaiian<br />
beneficiaries and issues guarantees through<br />
Memorandums of Understanding (MOU) for<br />
loans <strong>ma</strong>de by alternative lending sources for<br />
the replacement, construction and repair of<br />
homes and payment of real property taxes.<br />
The Direct Loan Program run by the Loan<br />
Services Branch is a revolving loan fund. The<br />
branch works to collect funds in a timely <strong>ma</strong>nner<br />
so those moneys can be used again for more<br />
loans, helping more native Hawaiians.<br />
Improving the department’s loan collection<br />
<strong>ma</strong><strong>ke</strong>s efficient use of funds and insures the<br />
<strong>ma</strong>ximum numbers of beneficiaries are being<br />
helped. Working with loan delinquencies, the<br />
branch also refinances loans and offers financial<br />
counseling to help <strong>ke</strong>ep lessees on their<br />
property.<br />
In fiscal year 2010, the Loan Services Branch<br />
issued 43 direct loans, totaling some $4.6 million.<br />
The Loan Services Branch continues to<br />
place an emphasis on the collections of delinquent<br />
DHHL direct loans to replenish the<br />
revolving loan funds. The revolving funds are<br />
<strong>ma</strong>de available for new loans to homestead lessees<br />
for home purchases, home construction,<br />
repairs, sewer connections and real property<br />
taxes. When loans are not repaid, it reduces<br />
the amount of funds available to other native<br />
Hawaiians.<br />
In addition, the 2005 Legislature passed and<br />
the Governor signed into law Act 53, which<br />
amended section 208 (5) of the Hawaiian<br />
Homes Commission Act of 1920, as amended,<br />
to authorize lessees to enter into loans insured<br />
by private mortgage insurance acceptable to the<br />
Commission. Since August of 2005, four (4)<br />
local lenders, American Savings Bank (ASB),<br />
Bank of Hawai‘i (BOH), Hawai‘i National<br />
Bank (HNB) and Central Pacific Bank (CPB)<br />
have launched programs to provide financing<br />
to lessees. In fiscal year 2010, these four<br />
lenders funded 30 loans totaling $6.2 million.<br />
The continued drop in loans from the previous<br />
year can be <strong>ma</strong>inly attributed to the tightening<br />
of underwriting policies by the lenders’ insurance<br />
partner, Mortgage Guaranty Insurance<br />
Corporation (MGIC).<br />
Lastly, in fiscal year 2008, the HUD 184A loan<br />
program was launched. The program enables<br />
the lessees and the lenders another option for<br />
financing. In the HUD 184A loan program,<br />
HUD guarantees the lenders’ loans on DHHL<br />
leased land. Also, the guaranty fee paid by the<br />
lessee is less than the insurance premium the<br />
lessee would pay for a similar FHA 247 mortgage<br />
loan. There were 130 loans for $34 million<br />
processed through the HUD 184A loan program<br />
during the 2010 fiscal year. T h e<br />
HUD 184A program has proven to be a very<br />
popular product for our lessees due to lower<br />
closing costs as compared to the other mortgage<br />
loan products.<br />
DHHL ANNUAL REPORT 2010 | 57
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