Refinancing a Reserved Housing Unit

Refinancing a Reserved Housing Unit

Owners of an HCDA Reserved Housing Unit may refinance under certain conditions.  Complete the highlighted sections of the letter linked below and return to HCDA, along with the documents mentioned at the bottom of the letter below.  This letter will serve as your formal request for subordination of HCDA’s shared equity interest.

Under HCDA’s rules, the HCDA will only approve requests to refinance the owner’s primary mortgage up to the original loan amount, provided it does not exceed 80 percent of the original purchase price.  In addition, the HCDA must maintain its second lien position at all times.

The HCDA will deny all requests that would subordinate its shared equity interest to a second mortgage (i.e., Home Equity Line of Credit) or would further demote the HCDA’s second lien position on the property.

If your request meets the above parameters, you will be asked to draft a Subordination of Equity Sharing Payment Agreement.  The template document is linked at the bottom of this page.  Please allow 4-6 weeks for legal review after submitting the draft document to HCDA.

HCDA’s consent to subordinate is required prior to refinancing an existing loan, regardless of whether the regulated term has expired or not.  HCDA’s consent is not needed if the lender is willing to subordinate to the HCDA, thereby elevating the HCDA to the first lien position.

Return all documents to:

HCDA
547 Queen Street
Honolulu, HI, 96813

Or by email to:

DBEDT.hcda.reservedhousing@hawaii.gov

If you have any questions, call HCDA at (808) 594-0300

Request for Subordination Template Letter

Subordination Document Template