Hawaii bill seeking state-run reverse mortgage program appears dead for now

A bill in the state of Hawaii that seeks to establish a state-run equivalent of the Federal Housing Administration (FHA)’s Home Equity Conversion Mortgage (HECM) program appears to be dead in its current form, having failed to reach key deadlines following its submission to three different legislative committees.

This is according to the office of the bill’s chief sponsor, Rep. Kim Coco Iwamoto (D), and a separate source who is familiar with the legislative process for housing within the state.

H.B. 1306 would seek to establish a state-specific HECM program to be managed by the Hawaii Housing Finance and Development Corp. (HFDC), specifically to assist older Hawaiians, referred to as “kupuna,” with the rising costs of homeownership.

Initially introduced in January by Iwamoto, the bill was referred to three different committees (consumer protection and commerce, finance, and housing) for further deliberation.

A person familiar with the legislative functions in the state told HousingWire’s Reverse Mortgage Daily (RMD) that a bill’s referral to that many committees severely slows down its legislative momentum and, practically speaking, would not offer enough time in the limited legislative session in Honolulu.

The session began in the third week of January and runs for 60 legislative days, which excludes weekends, holidays and recess days. The session typically ends in late April or early May. This year’s session adjourns on May 2.

RMD reached out to Iwamoto’s office for clarity on the bill’s status. A statement confirmed that the bill will not progress further this 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 office said. “However, the bill has a second shot to be heard in the next calendar year if the applicable committee chair so chooses.”

The bill shared several similarities with the HECM program, including a minimum age requirement of 62 years, the addition of insurance authority to the HFDC and a requirement for lender approval by the state authority. Borrowers would need to meet the age requirement and separate counseling requirements.

But the bill also contains a provision that would allow for assistance for a borrower at the time that the equity in their home is exhausted, something that raised the reverse mortgage industry’s eyebrows. At that point, 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 reads.

One Hawaii originator expressed relief at the news that the bill was not moving forward. Separately, National Reverse Mortgage Lenders Association (NRMLA) President Steve Irwin told RMD that the association’s state and local committee met on the matter last week.

“We are not, at this point in time, fully versed on the intent behind this,” Irwin said in an interview last week. “I think I can assume that the need and importance to monetize home equity is critical. We have an aging nation, and financing people’s retirement is a big concern and necessarily needs to be paid attention to. There are provisions within this bill, however, which are complicated and concerning.”

There was not enough information available about these provisions, and NRMLA expressed a desire to reach out to the bill’s sponsors. But now that the bill is on pause until at least 2026, it’s unclear if this will be a priority. Iwamoto’s office did not respond to a follow-up question asking if she and the other co-sponsors would be motivated to reintroduce the bill in the next legislative session.

This is the second state-level reverse mortgage bill to potentially be sidelined this month.

Last week, a committee meeting in the Oregon state Senate found that proposed legislation that would limit the amount of equity a reverse mortgage lender can receive after the sale or transfer of a property was too focused on reverse mortgages. The bill is evidently intended to target the home equity contract industry, according to a discussion between lawmakers and witnesses who included reverse mortgage professionals.

“It sounds like we need to do some amendment processing to make sure that we’re accurately targeting the products,” committee Chair Khanh Pham said near the end of the discussion.