Redlining Hawaiʻi’s Indigenous Families: A Teacher’s Journey


Once upon a time, a talented wife, mom and teacher was awarded a leasehold lot under the Hawaiian Homes Commission Act (HHCA) on Oʻahu, to build a home, grow her family’s security, accumulate home equity, and build assets to pass to her keiki. The same things that other families strive for.

But the state had issued her a 7,500 square foot “farming lot” instead of a “residential lot” with a commercial-grade farming condition in her lease, which disqualified her from FHA mortgage financing since her primary income must come from farming to qualify. It didn’t matter that 7,500 square feet is too small for a commercial farm or that she is a teacher, not a farmer.

And the reasons for this? Redlining. Ignorance. The government focusing on justifying bad policy, instead of using common sense and searching for fair solutions.

Her story began more than 40 years ago.

After sitting on the DHHL waitlist for 20 years, she was finally contacted and offered a lot that was part of an agricultural park. She was told not to worry, that the Hawaiian Homes Commission had a deal with a specific local bank to create a special mortgage program so she could build a home on the lot. She accepted.

Two decades passed. Interest rates were declining. She wanted to refinance to reduce her monthly mortgage payments. However, the bank she worked with 20 years earlier no longer offered the special mortgage program. Her applications for both a standard FHA mortgage and for a federal HUD (Housing and Urban Development) 184 mortgage product were also denied because she had a “farming” lot.

The root of the issue was the state’s decision to offer DHHL beneficiaries a commercial agricultural lease on what was obviously a residential-sized parcel without providing a farming exemption.

Unfortunately, mortgage loan denials like these have gone unchecked for decades. That’s redlining and it affects thousands of Hawaiʻi citizens all of whom have one thing in common – they are native Hawaiians living on trust lands.

Fortunately, this story ends with a just solution. Two years ago, our teacher applied for technical assistance from the Homestead Ombudsman program set up by SCHHA and its nonprofit loan fund.

SCHHA walked with her over the two-year period. In March 2021 under the Biden administration, it was clarified that the HUD 184 program includes agricultural leases, and in October 2021 she was able to refinance her mortgage at 2.75% interest – plus additional cash-out funding against her home value and equity to make home improvements.

Sadly, stories like this are common. Denial of on par treatment for homestead families by our state government. Whether due to racist intent – redlining has a history of this – or the indifference of government officials, it’s time to end redlining of native Hawaiians.

It should be noted that while our teacher was able to access mortgage capital, redlining still worked to deny the fair market valuation of her home because homes on trust lands are only allowed a valuation approach called “replacement cost” instead of “fair market value.”

This devalues the assets owned by native Hawaiians on trust lands, limiting their ability to fully participate in the economic framework of the state and country. If limiting home valuations to the “replacement cost” is such a good thing, then make it the law of the land for all Hawaiʻi residents.