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Foreclosure Prevention Program Report from Hawaiian Community Assets!

Apr 10, 2012

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Click here to download the full report.

Report Cites Reduced Household Income, High Housing Costs, and Subprime Loan Products as Barriers to Sustaining Homeownership in Hawaii  

HAWAII – In a Foreclosure Program Report released in April, HUD approved housing counseling agency, Hawaiian Community Assets (HCA), has cited reduced household income, high housing costs, and subprime loan products as barriers to sustaining homeownership in Hawaii. The Report, which includes client data on 90 Hawaii homeowners HCA served with National Foreclosure Mitigation Counseling Program funding between May 1, 2010 and December 31, 2011, found that said homeowners had an average monthly household income of $5,486 with an average monthly mortgage payment of $2,679, representing, on average, 49% of borrowers’ monthly income. The Report goes on to highlight that 56% of HCA clients who received foreclosure prevention counseling services held subprime loan products, such as option ARMs (Adjustable Rate Mortgages), interest-only, and interest-only option ARM hybrid mortgages.  The data reflects a sustained 4-year trend reported by the US Department of Housing and Urban Development in 2008, in which, subprime loans represented 55% of all foreclosure starts in the nation while, at the same time, representing only 22% of the total market share of mortgage loans.  Showing the true impacts of such risky loan products on our Hawaii homeowners, one HCA client saw her option ARM loan reset causing her mortgage payment to increase from a spike in her interest rate from 5.25% APR (Annual Percentage Rate) to 15.95% APR in one month. “Our Hawaii homeowners already find themselves in a highly competitive housing market,” says HCA Executive Director, Jeff Gilbreath pointing out the large gap between Hawaii’s median home price ($521,500, US Census Bureau) and annual average pay rate of the State’s residents, which ranks last in the nation ($24,203, Corporation for Enterprise Development).  “While the Report identifies key trends our families face when struggling to sustain homeownership, it also provides us with the data necessary to establish effective, community-specific solutions to prevent foreclosure and keep the dream of homeownership alive.” Reinforcing the connection between the State’s high housing costs, low pay rates, and barriers to sustaining homeownership, the Report confirms that 68% of Hawaii homeowners who received HCA foreclosure assistance cited loss of a job or reduction of income as the primary reason for mortgage delinquency.  Another 12% of clients identified increases in expenses, including mortgage payments, as second most common reason for delinquency followed by decline in health and marital issues (10%). With a goal of addressing barriers to sustaining homeownership, a series of recommendations are contained in the Report, including, principal reduction for families with reduced income, subprime mortgage loans, or increases in the amount of their mortgage payments; greater refinance options for both current and delinquent homeowners; a concerted public education campaign on consumer protection to combat predatory loan scams; and targeted HUD approved housing counseling with a primary focus on streamlining work out solutions between homeowners and servicers and enrolling individuals in free asset building and micro-lending programs.

For more information contact HCA at 1.866.400.1116 or email info@hawaiiancommunity.net.

  Hawaiian Community Assets (HCA) is a nonprofit HUD approved housing counseling agency and Community Development Financial Institution that builds the capacity of low- and moderate-income communities to achieve and sustain economic self-sufficiency with a particular focus on Native Hawaiians.  HCA’s philosophy supports permanent housing, culturally-relevant financial education, and asset building programs to achieve its mission.

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