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New program has $5M to help Hawaiʻi Island and Kauaʻi homeowners catch up on mortgage payments

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Roughly 200 qualified homeowners on Kauaʻi and Hawaiʻi Island will be able to get some relief on their mortgages with a new pilot program.

Five million dollars in federal aid is helping to jumpstart the Homeowner Assistance Fund — a grant program helping those impacted by the pandemic. The fund is a partnership among the state, Hawaiʻi and Kauaʻi counties, and the nonprofit Hawaiʻi Community Lending.

"The Homeowner Assistance Fund was actually funded through the American Rescue Plan that was signed by President Biden early on coming into office," said Jeff Gilbreath, executive director of Hawaiʻi Community Lending.

"It has set aside funding specifically to provide grants for homeowners to pay past-due mortgages or to make their payments more affordable monthly. So we can prevent foreclosures, defaults and delinquencies."

The fund is not like the rental assistance programs that helped qualified applicants with rent and utility payments during the pandemic. Instead, it provides two solutions to homeowners.

One is a home reinstatement.

"The homeowner can receive up to $30,000 to pay their past due arrears — whatever is past due on the mortgage," said Gilbreath. "This is perfect for a homeowner who's got that past due, and can still afford their monthly payment."

The second solution is paying off what is past due, and buying down some of the principal amount of the loan. Gilbreath says this will stretch the loan term back to its original number of months, but at a lower monthly payment.

Gilbreath says the grants will not be awarded over a period of time, but will be issued to the appropriate mortgage servicers when a household qualifies.

If those options don't address a homeowner's needs, Gilbreath says HCL and its sister agency Hawaiʻi Community Assets offer counseling services for further assistance.

"The number of homeowners we're anticipating to serve with grants is one thing. But there are a myriad of solutions that we can get homeowners connected to, that may not require grant assistance," he said.

"The federal government has really taken a proactive stance on ensuring homeowners have access to a number of loss-mitigation options, and that mortgage servicers have to make those available to them."

To qualify for the Homeowner Assistance Fund, applicants must be:

  • Owner-occupants prior to January 21, 2020
  • Experienced financial hardship caused by the pandemic
  • Earn below 150% the area median income in Hawaiʻi or Kauaʻi County for 2021

Gilbreath says this is the first time the state has been able to help homeowners impacted by a global economic crisis.

"There were similar programs that were created during The Great Recession, but it was limited to states. And so Hawaiʻi didn't even have a shot at this," he said.

"This is a huge opportunity, in particular in those communities on Hawaiʻi Island and Kauaʻi, where you typically have a higher percentage of homeowners — as it relates to the entire population."

The state could access another $50 million to expand the program statewide, depending on how much demand there is in Hawaiʻi and Kauaʻi counties. Gilbreath anticipates the state to tap into those funds in the future.

"This is the beginning of what will be a much larger program that can serve more homeowners," he said.

A request for proposals to run the Oʻahu program was issued last week, and will close by the end of the month.

Gilbreath says in order for HCL to assist homeowners, the nonprofit needs to enter agreements with mortgage servicers. HCL currently has agreements with a handful of banks and lenders, but needs local partners to join in their assistance efforts.

"We really encourage mortgage servicers, especially our local banks and local credit unions, to step up and execute those agreements with us — so their homeowners can have access to these funds, and essentially take care of the troubled assets on their balance sheets."

More information can be found at HawaiiCommunityLending.com

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