A new loan program from Hawai‘i Community Lending — providing zero-down mortgages to Native Hawaiians on Hawaiian Home Lands — recently received its first infusion of funds.
Northern Trust, a Chicago-based financial services company that's also the banking partner for Parker Ranch, has invested $10 million in HCL's new Kūpa‘a Hale Loan program.
It's just the start of a larger capital campaign to raise $35 million, HCL Executive Director Jeff Gilbreath told Aloha State Daily.
For the community, Gilbreath says it means "families will get access to zero-down mortgages that will be potentially below market interest rate, to be able to afford to purchase homes on Hawaiian Home Lands."
"This means that at a time we're seeing interest rates as high as they are, costs increasing, there could be an avenue for families to be able to purchase these homes on Hawaiian Home Lands, without having to come up with large down payment amounts, which we just don't have."
The Northern Trust investment in particular is geared toward homestead communities at Waimea and Laʻiʻōpua on Hawai‘i Island.
"For those families, it really provides an opportunity, another option for them, as opposed to having to go to market-rate loans with higher down payment amounts," he told ASD.
Gilbreath says several hundred homes are planned for development in Laʻiʻōpua, so families will be looking for construction and mortgage loans.
The impetus for the Kūpa‘a Hale Loan program stems from federal funding cuts to the U.S. Department of Agriculture 502 Direct program.
Gilbreath says that program was established to help low and very low income families buy homes in rural communities with zero-down mortgages. That funding, though, has been consistently cut and is now at its lowest level ever.
Seeing the 502 Direct program whittled down — with the possibility of being lost all together — Gilbreath said, "we knew there needed to be another option for families."
The HCL team then set out see if they could create a program that mirrored the federal one or provides zero-down, below market interest rates mortgages for families at all income levels buying homes in both rural and non-rural areas.
"Could we raise private money, put the program in place to basically fill the gap of this federal program that is going away?" he said. "Now, here we are. The first $10 million of this $35 million raise shows that we can start to do this work, that it is a viable model. It does require partnership with private investors like banks and financial institutions like Northern Trust, but also philanthropic institutions. Here we are, trying to fill that gap where the federal government is leaving us."
Gilbreath says that close to 30 families can be served with the initial $10 million investment, but HCL anticipates that 100 families can receive mortgages through the full $35 million raise, the first of several offerings it plans to do.
He said, too, that it was exciting to receive the initial $10 million investment.
"It's coming from a financial institution that's not local," he said. "I'd love for it to inspire and incentivize local investors to step in and invest in our local families and homeownership for our local families. I'd really love to see that."
But the biggest takeaway?
Gilbreath says homeownership is possible, "despite how much costs are increasing, how much we feel like we're getting squeezed financially as families."
"There are options out there, and I don't want families to disqualify themselves," he said. "Come in. Talk [with] our team. We can figure out a plan to get the families on Hawaiian Home Lands, and get them help to purchase that home. I don't want them thinking, 'Oh, this is not possible and there's no hope for this.' There is hope, and homeownership is possible. We've just got to get the right products and the right tools in the hands of the families. I think what's exciting about all of this is that we can demonstrate that despite what we're seeing in terms of federal funding being disinvested from our local communities, there are opportunities for us to work together to fill those gaps. I think Hawai‘i demonstrates very well the concept of aloha in taking care of one another, and this is an example of that in action."
Interested individuals can currently join an interest list, which can be found here.
According to Gilbreath, Hawaii Community Lending is a U.S. Treasury-certified Native Community Development Financial Institution that has a $25 million revolving fund. HCL, a nonprofit mortgage lender, makes loans to homebuilders, homebuyers and homeowners, along with technical assistance and grants to prevent foreclosure.
Stephanie Salmons can be reached at stephanie@alohastatedaily.com.
