A Critical Evaluation of the Hawaii Housing Authority Housing Loan and Mortgage Program

Abstract

The 1979 Hawaii State Legislature authorized the issuance of $125 million in revenue bonds for the Hawaii Housing Authority’s and Mortgage Program more commonly known as Hula Mae. The proceeds of the bonds were used to provide loans to low- and moderate-income families at lower than conventional mortgage interest rates. On June 17, 1980, Governor George Ariyoshi signed into law, legislation for a second $100 million Hula Mae offering. Since high interest rates cause higher monthly mortgage payments, the Hula Mae program was geared towards “the gap group” - a group with income too high to qualify for federal rent subsidies, and too low to qualify for home ownership. The Hula Mae program was intended to provide an opportunity for home ownership to people who could not have qualified in any other way. The purpose of the Hula Mae program was to alleviate the shortage of long term financing at affordable interest rates, which the Legislature felt was a major cause of the continuing housing problem in Hawaii. This paper is designed to analyze the characteristics of the participants in the first Hula Mae offering and determine whether these borrowers could have qualified under various mortgage financing alternatives. The null hypothesis is: The Hula Mae program participants could not have qualified for alternative mortgage financing during the period of the Hula Mae loan program. The alternative hypothesis is: The Hula Mae program participants could have qualified for alternative mortgage financing during the period of the Hula Mae loan program.