Sunday, February 5, 2023
Hawai'i Free Press

Current Articles | Archives

Wednesday, April 17, 2013
Audit Slams DHHL 'Lax Loan Management'
By News Release @ 10:47 PM :: 4582 Views :: DHHL

Audit of the Department of Hawaiian Home Lands’ Homestead Services Division: Lack of commission guidance and lax loan management favor lessees over other beneficiaries

State Auditor's Report 13-02 April, 2013

The Department of Hawaiian Home Lands administers about 200,000 acres of public lands set aside for agricultural and pastoral use to be leased to native Hawaiians, upon which they may live, farm, ranch, and engage in commercial or other activities.

The department, led by a nine-member commission, must provide financial and technical assistance to native Hawaiians (those with at least 50 percent Hawaiian blood), which enables them to enhance their economic self-sufficiency and promote community-based development. According to the Hawaiian Homes Commission Act of 1920, by doing this, the traditions, culture, and quality of life of native Hawaiians will be self-sustaining.

As of June 30, 2011, there were 9,922 homestead leases statewide and 26,170 applicants waiting for homestead leases. In FY2011, the department issued 177 new homestead leases. That year, the department collected $61.1 million in revenues and accrued $70 million in expenses.

Commission fails to meet its fiduciary obligations

We found that the roles and responsibilities of the commission are not clearly defined and the commission lacks tools to aid it in prudent trust administration. For instance, according to the commission chair, the commission is more concerned with keeping lessees on the land than with collecting on delinquent loans, ignoring its broader responsibilities. In addition, the department does not provide sufficient monthly delinquent loan totals or other data to the commission and has not done any meaningful analysis of direct loan program profitability or other current and upcoming obligations.

With little information on the department’s more than $588 million in direct loans, loan guarantees, and insurance obligations, the commission is unaware of the potential impact of its loan award decision making and is unable to meet its fiduciary duty.

Department’s lax management of loans undermines accountability to beneficiaries as a whole

We also found that the department has vague policies and few standards governing its direct loans (those it underwrites directly as well as insured and guaranteed loans that have been reassigned to the department for delinquent collection). For example, the department and commission have not reassessed loan interest rates since 1995. In addition, an estimate used to calculate household expenses for determining loan eligibility has not been updated in a decade, meaning the department may be underestimating the cost of living and miscalculating lessees’ ability to pay off loans.

As a result, the department may be making loans to borrowers who cannot afford to make their payments.

Agency response

The department agreed that much can be done to enhance its performance, and that its higher risk portfolio requires active loan monitoring and collection policy enforcement to control delinquent loans. It recognized our concern that lax management of lessee loans undermines its ability to serve all beneficiaries and says it will aggressively look at loan delinquency issues and that actions will be taken against the most chronic delinquent borrowers.

It will also review best practices to improve internal controls and provide adequate staffing for its loan program.

The department disagreed that an external benchmark such as Hawai‘i’s subprime mortgage delinquency rates would help commissioners identify whether DHHL’s delinquency trends diverge from the rest of the market, asserting it is unfair to judge DHHL’s performance solely on standards established by commercial lenders. The department misunderstands our point that such a benchmark would provide perspective on performance trends of other loans provided to less creditworthy borrowers and whether DHHL’s performance runs counter to the markets.

---30---

Read: Audit of the Department of Hawaiian Home Lands’ Homestead Services Division 

Related: 120 DHHL Loans Delinquent over 5 Years --owed $82M

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

ACA Signups Hawaii

Alliance Defending Freedom

Aloha Pregnancy Care Center

American Council of Trustees and Alumni

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Astronomy Hawaii

Back da Blue Hawaii

Ballotpedia Hawaii

Better Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

ChinaTownWatch.com

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Save Dillingham Airfield

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT