Aloha HHFDC Participating Lenders,

We are writing to notify you of an important update to the Hale Kamaʻāina Mortgage Program that impacts the Down Payment Assistance (DPA) loan. Effective February 13, 2026, HHFDC received clarification from the State Attorney General’s Office that HHFDC does not have the authority to forgive interest on the DPA loan.

As a result:

·      The DPA loan is subject to 1% simple interest.

·      Forgiveness of DPA loan interest is not permitted.

Program Reminder – DPA Loan Structure

·      Is provided in the form of a 1% simple interest, 30-year deferred payment second mortgage.

·      Is calculated as 4% of the total first mortgage loan amount, as entered into the eHPortal.

·      Is automatically reserved upon first mortgage loan reservation in the eHPortal.

·      Is funded by the Lender at closing and reimbursed by the Master Servicer upon loan purchase.

·      May be used toward down payment costs.

The second mortgage will become due upon one of the following:

1.    First mortgage maturity;

2.    The first mortgage is refinanced or otherwise repaid;

3.    The borrower rents or no longer occupies the home as their principal residence;

4.    The borrower sells, transfers, or otherwise disposes of the property, including foreclosure; or

5.    There is a default under the first mortgage loan or the second mortgage loan.

Please review the attached updated documents: Second Mortgage/Note, and Subordinate Disclosure. The revised guidelines may be found by clicking on this link.

We apologize for any inconvenience this clarification may cause and appreciate your prompt attention with ensuring your teams are familiar with these updates when counseling borrowers and structuring loans.

Mahalo for your continued partnership and support of the Hale Kamaʻāina Mortgage Program.

If you have any questions, please contact HHFDC at

dbedt.hhfdc.mortgage@hawaii.gov or (808) 587-0578.

Best Regards,

eHousingPlus

Program Administrator on behalf of HHFDC