Title 15 – Chapter 301 – Kikala-Keokea Housing Revolving Fund Program

DEPARTMENT OF BUSINESS, 	ECONOMIC DEVELOPMENT
AND 	TOURISM
Adoption of 	Chapter 15-301
Hawaii 	Administrative Rules
July 	31, 	2007
Chapter 301 	of 	Title 	15, 	Hawaii 	Administrative
Rules, 	entitled 	"Kikala-Keokea Revolving 	Loan 	Program"
is 	adopted.

HAWAII ADMINISTRATIVE 	RULES
TITLE 	15
DEPARTMENT OF BUSINESS, 	ECONOMIC DEVELOPMENT
AND TOURISM
SUBTITLE 	5
HAWAII 	HOUSING FINANCE AND DEVELOPMENT CORPORATION
CHAPTER 	301
KIKALA-KEOKEA HOUSING REVOLVING 	FUND 	PROGRAM
Subchapter 	1 	General 	Provisions
§15-301-1
§15-301-2
Purpose
Definitions
Subchapter 2 	Kikala-Keokea Housing Revolving
Fund 	Program
§15-301-10
§15-301-11
§15-301-12
§15-301-13
§15-301-14
§15-301-15
§15-301-16
§15-301-17
§15-301-18
§15-301-19
§15-301-20
§15-301-21
§15-301-22
Corporation's 	right 	to 	contract 	for
services
Use 	of 	loan
Amount 	of 	loan
Term of 	loan
Interest 	rate 	on 	loan
Fees
Mortgage valid 	first 	lien; 	protection
of 	security
Acceleration of 	maturity of 	loan
Default 	of 	loan
Corporation's 	right 	upon 	default 	of
loan
Loan not 	available 	for 	refinancing
Occupancy
False 	information 	in application
301-1

§15-301-1-
Subchapter 	3 	Application Procedures
§15-301-30
§15-301-31
Loan application process
Review of 	Loan Application; 	loan
approval/disapproval
Subchapter 4 	Mi.scellaneous 	Provisions
§15-301-40 	Waiver
SUBCHAPTER 1
GENERAL PROVISIONS
§15-301-1 	Purpose. 	These 	rules 	are 	adopted
pursuant 	to 	chapter 	91, 	and 	section 	201H-81, 	Hawaii
Revised Statutes 	to 	enable 	the 	corporation 	to provide
low interest 	loans 	for 	home 	construction 	for 	Kikala-
Keokea 	leaseholders 	who 	have 	been denied 	loans 	from
traditional 	financial 	institutions.
[Eff 	SEP 	172007 	] 	(Auth: 	HRS 	§201H-81) 	(Imp: 	HRS
§201H-81)
§15-301-2 	Definitions. 	As 	used 	in 	this 	chapter:
"Annualized gross 	income" 	means 	the 	gross 	monthly
income multiplied by 12. 	Gross monthly 	income 	is 	the
sum of: 	monthly gross 	pay; 	any additional 	income 	from
overtime, 	part-time 	employment, 	bonuses, 	dividends,
interest, 	royalties, 	pensions, 	Department 	of Veterans'
Affairs 	(VA) 	compensation, 	net 	rental 	income, 	etc.; 	and
other income 	(such as 	alimony, 	child support, 	public
assistance, 	sick pay, 	social 	security penefits,
unemployment 	compensation, 	income 	received 	from 	trusts,
and income 	received from business 	activities 	or
investments).
301-2

§15-301-2
The 	income 	to be 	taken 	into account 	in determining the
gross monthly 	income 	is 	the 	income 	of 	the 	eligible
leaseholder 	(or eligible 	leaseholders)· and 	all
non-dependent 	persons who 	are 	expected 	to 	live 	in the
residence being 	financed 	under 	this 	chapter.
"Area median 	income" 	means 	the median 	income 	for
the 	county 	of 	Hawaii 	as 	established by 	the 	United
States 	Department 	of 	Housing and Urban Development
from 	time 	to 	time, 	and 	adjusted by 	family 	size_.
"Board" 	means 	the 	board of 	directors 	of 	the
corporation.
"Corporation" 	means 	the 	Hawaii 	housing 	finance
and development 	corporation.
"Eligible 	leaseholder" 	means 	a 	person or 	family
who, 	at 	the 	time 	of 	application:
(1) 	Is 	a 	leaseholder;
(2) 	Has 	no 	present 	ownership 	interest 	in a
principal 	residence 	at 	the 	time 	of 	loan
closing;
(3) 	Is 	at 	least 	eighteen years 	of 	age;
(4) 	Does 	not 	have 	annualized gross 	income 	that
exceeds 	one 	hundred 	twenty per 	cent 	of 	the
area 	median 	income 	at 	the 	time 	of
application;
(5) 	Has 	applied 	for, 	and been denied, 	a 	loan
from 	one 	financial 	institution;
(6) 	Possesses 	the 	financial 	resources 	and 	credit
worthiness 	to 	repay 	t~e 	loan.
"Executive 	director" 	means·the 	executive 	director
of 	the 	corporation, 	or 	the 	executive 	director's
designated 	representative.
"Financial 	institution" 	means 	an 	institution as
defined 	in 	chapter 	412, 	HRS, 	12 	U.S.C. 	§21 	(national
bank) 	and 12 	U.S.C. 	§1461 	(F~deral 	savings 	and 	loan
association or 	federal 	savings 	bank).
"Government" 	includes 	the 	State 	and 	the· United
States 	and 	any 	political 	subdivision, 	agency, 	or
instrumentality, 	corporate 	or otherwise, 	of 	either of
them.
301-3

§15-301-2
"Guide" 	means 	the 	set 	of 	instructions 	and
guidelines, 	terms 	and 	conditions 	for 	the 	origination
and 	servicing of 	loans made 	under 	this 	chapter. 	The
guide 	shall 	be 	available 	for 	public 	inspection at 	the
principal 	office 	of 	t~e 	corporation during 	the
corporation's 	normal 	business 	hours.
"Household" 	means 	the 	l~aseholders 	who 	dwelled,
and 	continues 	to 	dwell, 	as 	a 	family and have 	been
displaced or dispossessed 	from 	their home 	as 	a 	result
of 	the 	continued volcanic 	eruptions 	on 	the 	Island of
Hawaii.
"Leaseholder" 	means 	a 	person who 	was 	awarded a
lease 	by 	the 	department 	of 	land and natural 	resources
for 	the 	Kikala-Keokea 	residential 	subdivision.
"Program" 	means 	the 	Kikala-Keokea 	housing
revolving 	fund 	program.
"Residence" 	means 	the 	dwelling unit 	which 	is
financed pursuant 	to 	this 	chapter.
~S;t;af~• l'l~~ans 	the 	State 	of 	Hawaii.
[Eff ~tr 	1 LUU[ 	] 	(Auth: 	HRS 	§201H-81) 	(Imp: 	HRS
§201H-81)
SUBCHAPTER 2
KIKALA-KEOKEA REVOLVING LOAN PROGRAM
§15-301-10 	Corporation's 	right 	to 	contract 	for
services. 	The 	corporation 	is 	authorized 	to 	enter 	into
agreements 	with or purchase 	services 	from 	any
financial 	institution, 	non-profit 	organization, 	or any
other 	appropriate 	government 	agency, 	for 	services
required 	for 	the 	purpose 	of 	this 	chapter.
[Eff 	StP 172007 	] (Auth: 	HRS 	§201H-81) 	(Imp: 	HRS
§201H-8:i)
301-4

§15-301-15
§15-301-11 	Use 	of 	loan. 	Loans made 	under 	this
chapter 	shall 	be:
(1) 	For 	the 	purpose 	of 	home 	construction; 	and
( 2) 	Limited 	to,., 9.~~ loan per 	leaseholder.
[Eff SEP 1 ·, LUU! 	] 	(Auth: 	HRS 	§201H-81)
(Imp: 	HRS 	§201H-81)
§15-301-12 	Amount 	of 	loan. 	The maximum amount
of 	the 	loan under 	this 	chapter 	shall 	be 	$100,000 	per
eligible 	leaseholder. 	[-Eff 	SEP 172007 	] 	(Auth:
HRS 	§201H-81) 	(Imp: 	HRS 	§201H-81)
§15-301-13
loan 	shall 	not 	be
[Eff 	SEP 1 7 20D7
§201H-81) 	.
Term of 	the 	loan. 	The 	term of 	the
more 	than 	forty 	years.
] 	(Auth: 	HRS 	§201H-81) 	(Imp: 	HRS
§15-301-14 	Interest 	rate 	on 	loan. 	The 	interest
rate 	on-the 	loan offered under 	this 	ch~ter 	shall 	not
exceed 	three 	per cent 	per year. 	[Ef f 	~tP 1 7 2007 	]
{Auth: 	HRS 	§201H-81) 	(Imp: 	HRS 	§201H-81)
§15-301-15 	Fees. 	The 	eligible 	leaseholder 	shall
be 	responsible 	for 	the 	payment 	of 	all 	fees 	charged by
the 	corporation 	in connection with 	the 	application 	for
a 	loan under 	this 	chapter, 	including, 	but 	not 	limited
to, 	a 	non-refundable 	application 	fee 	of 	$100. 	Failure
to 	submit 	the 	fee 	by 	the 	required 	date 	and 	time may
result 	in 	the 	eligible 	leaseholder's 	forfeiture 	of 	a
program 	loan. 	[Eff 	SEP 172007 	] 	(Auth: 	HRS 	§201H-
81) 	( Imp : · 	HRS 	§ 2 0 lH- 81 )
301-5

§15-301-16
§15-~01-16 	Mortgage valid first 	lien; 	protection
of 	security. 	The mortgage 	securing 	each 	lo~n 	shall
constitute 	a 	first 	lien on 	such real 	estate 	secured.
The 	corporation, 	or 	its 	agent, 	shall 	promptly record
or 	file, 	or 	both, 	the 	lien with 	the 	bureau of
conveyances 	or 	the 	land court, 	as 	the 	case 	may be, 	to
ensure. the ·creation of 	a 	valid lien on 	the 	mortgaged
property. 	[Eff ~l:'P } 7 2007 ] 	(Auth: 	HRS 	§201H-81)
(Imp: 	HRS 	§201It'-'t3'1)
§15-301-17 	Acceleration of 	maturity of 	loan.
The 	occurrence 	of 	either of 	the 	following 	events 	shall
be 	sufficient 	grounds 	for 	the 	corporation, 	at 	its
option, 	to 	accelerate 	the maturity of 	the 	loan:
(1) 	The 	eligible 	leaseho'lder 	ceases 	to 	occupy
the 	residence 	as 	the 	eligible 	leaseholder's
primary residence; 	or
(2) 	Failure 	to 	respond within 	thirty days 	to 	the
corporation's 	request 	to verify 	the
continued occupancy of 	the 	eligible
leaseholder. 	[Eff 	SEP 1 7 ?007 	] 	(Auth:
HRS 	§201H-81) 	(Imp: 	HRS 	§2~1H-81)
§15-301-18 	Default 	of 	loan. 	The 	occurrence 	of
any 	of 	the 	following 	events 	shall 	be 	sufficient
grounds 	for 	the 	corporation, 	at 	its 	option, 	to 	treat
the 	loan 	to 	be 	in default:
(1) 	The 	property described 	in 	the 	mortgage 	or
security agreement 	is 	conveyed or
transferred; 	provided, 	however, 	that 	a
transfer 	of 	title 	will 	be 	permitted if 	it
appears 	to 	the 	satisfaction of 	the
corporation that 	the 	transfer 	was 	effected
for 	estate 	planning purposes 	and 	the
corporation's 	security 	interest 	is
unaffected by the 	transfer;
(2) 	The 	eligible 	leaseholder 	fails 	to 	comply
with any agreement 	executed 	for 	the 	purpose
of 	securing the 	loan; 	or
301-6

§15-301-21
(3) 	The 	corporation determines 	that 	any
statement made 	by the 	eligible 	leaseholder
in 	the 	loan application or 	loan document 	is
false 	or 	fraudulent. 	[Eff SEP 1 7 2007 	]
(Auth: 	HRS 	§201H-81) 	(Imp: 	HRS 	§201H-81)
§15-301-19 	Corporation's 	rights 	upon 	default 	of
loan. 	With 	respect 	to 	any 	loan made 	under 	this
chapter, 	which 	is 	in default 	under 	the 	terms 	thereof,
the 	corporation may:
(1) 	Renegotiate, 	refinance, 	or 	foreclose 	the
loan;
(2) 	Waive 	any 	default 	or 	consent 	to 	the
modification of 	the 	terms 	of 	the 	loan or 	the
security agreement;
(3) 	Commence 	any action 	to 	protect 	or 	enforce
any 	right 	conferred upon 	the 	corporation by
any 	law, 	mortgage, 	insurance 	policy,
contract, 	or other agreement;
(4) 	Bid 	for 	and purchase 	the 	property 	secured by
the 	loan at 	any 	foreclosure 	or 	other 	sale,
or 	acquire 	or take 	possession of 	the
property 	secured by the 	loan; 	or
(5) 	Operate, 	manage, 	lease, 	dispose 	of, 	or
otherwise 	deal 	with 	the 	property 	secured by
the 	loan. 	[Eff Sl="P 1 7 ?nnt 	] 	(Auth: 	HRS
§201H-81) 	(Imp: 	'rtRS-- ~~H-81)
§15-301-20 	Loan not 	available 	for 	refinancing.
No 	funds 	under 	this 	chapter 	shall 	be 	available 	for
refinancing 	of 	existing 	loans. 	[Eff 	SEP 	1 7 2001
(Auth: 	HRS 	§201H-81) 	(Imp: 	HRS 	§201H-~lr
§15-301-21 	Occupancy. 	The 	eligible 	leaseholder
shall 	utilize 	the 	residence 	as 	his 	or 	her principal
residence 	for 	the 	life 	of 	the 	loan.
[Eff 	SEP 172007 	] 	(Auth: 	HRS 	§201H-81) 	(Imp: 	HRS
§201H-81)
301-7

§15-301-22
§15-301-22 	False 	information 	in application. 	By
signing 	the 	application, 	the 	eligible 	leaseholder
certifies 	that 	the 	information provided 	in 	the
application, is 	true 	and 	correct. 	The 	eligible
leaseholder 	shall 	be 	subject 	to 	criminal 	charges 	or
civil 	action, 	or both, 	under 	the 	lawsstf 	i1V=zfit11a-te 	if
false 	information 	is 	provided. 	[Eff 	]
(Auth: 	HRS 	§201H-81) 	(Imp: 	HRS 	§201H-81)
SUBCHAPTER 3
APPLICATION 	PROCEDURES
§15-301-30 	Loan application process. 	(a) 	The
corporation shall 	obtain a 	listing of 	the 	leaseholders
from 	the 	department 	of 	land and natural 	resources.
(b) 	A loan application packet 	will 	be mailed 	to
all 	interested 	leaseholders.
(c) 	Loan applications 	received by 	the
corporation will 	be 	time 	and date 	stamped, 	and will 	be
reviewed on a 	first-come, 	first-served basis, 	subject
to 	fund 	availability. 	[Eff SEP 172001 	] 	(Auth:
HRS 	§201H-81) 	(Imp: 	HRS 	§201H-81)
§15-301-31 	Review of 	loan application; 	loan
approval/disapproval. 	(a) 	Loan applications 	will 	be
preliminarily 	reviewed 	to 	ensure 	all 	required
information has 	been submitted to 	the 	corporation.
301-8

§15-301-31
(1) 	Information required 	includes, 	but 	is 	not
limited 	to, 	a 	completed, 	signed 	loan
application and all 	supporting documents 	to
verify 	current 	income 	and assets 	(i.e.,
employment 	paystubs, 	bank 	statements),
copies 	of 	signed 	federal 	and/or 	state 	income
tax 	returns 	for 	the 	most 	recent 	past 	two 	(2)
years, 	letters 	of 	denial 	from 	one 	(1)
financial 	institution, 	owner-occupancy
statement, 	copy of 	recorded 	Kikala-Keokea
residential 	subdivision 	lease 	document, 	and
any 	other 	document 	required 	by 	the
corporation.
(2) 	Loan applications 	deemed 	to 	be 	substantially
incomplete 	shall 	be 	returned 	to 	the
leaseholders. 	No 	further 	action will 	be
taken on 	the 	part 	of 	the 	corporation.
Leaseholders 	resubmitting 	their 	loan
application 	for 	review will 	be 	subject 	to
section 15-301-30(c).
(b) 	Final 	review 	of 	the 	loan applications 	will
be 	based on 	the 	leaseholder's 	ability 	to 	qualify 	for 	a
program 	loan and 	includes 	the 	review of 	the
leaseholder's 	income, 	repayment 	ability 	and
creditworthiness.
(c) 	Upon 	completion of 	the 	final 	review, 	a
recommendation will 	be 	made 	to 	the 	executive 	director
for 	approval 	or disapproval 	of 	the 	leaseholder's 	loan
application.
(d) 	Leaseholders 	will 	be 	notified 	in writing as
to 	their 	~alification 	for 	a 	program 	loan.
[Eff 	SEP 172007 	] 	(Auth: 	HRS 	§201H-81) 	(Imp: 	HRS
§201H-81)
301-9

8i1s
§15-301-40
SUBCHAPTER 4
MISCELLANEOUS 	PROVISIONS
§15-301-40 	Waiver. 	The 	board may 	by 	resolution
waive 	or vary provisions 	of 	these 	rules 	or 	any process
or procedure 	established by 	these 	rules 	in order 	to
conform 	to 	applicable 	federal 	and 	state 	l~s
regulations, 	and 	requirements. 	[EffSEP 1 ,2007 	]
(Auth: 	HRS 	§201H-81) 	(Imp: 	HRS 	§201H-81)
301-10

DEPARTMENT OF BUSINESS, 	ECONOMIC DEVELOPMENT
AND TOURISM
The 	adoption of 	chapter 15-301, 	Hawaii
Administrative 	Rules, 	on 	the 	Summary 	Page 	dated 	July
31, 	2007 	was 	adopted on July 31, 	2007 	following 	a
public 	hearing 	that 	was 	held on July 19, 	2007 	after
public 	notice 	was 	given 	in 	the 	Honolulu 	Star-Bulletin,
and 	the 	Hawaii 	Tribune-Herald newspapers 	on June 	19,
2007.
The 	adoption 	shall 	take 	effect 	ten days 	after
filing 	with 	the 	Office 	of 	the 	Lieutenant 	Governor.
Chairperson
Hawaii 	Housing 	Finance 	and
Development 	Corporation
APPROVED:
LIND~
Governor
State 	of 	Hawaii
Dated: 	SEP 10 2087
Filed .......
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