Hawaiian Home Lands

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Chapter 1
Appraisal & Property Requirements
Page 1-14A

General Eligibility

A mortgage on a homestead lease granted by the Department of Hawaiian Home Lands covering a one - to four - family residence located on Hawaiian home lands is eligible for insurance pursuant to section 247 of the National Housing Act (12 U.S.C. 1715z-12) if the mortgagor is a native Hawaiian who will occupy it as a principal residence. Mortgage insurance on cooperative shares under Sec. 203.43c on homes in federally impacted areas under Sec. 203.43e is not authorized under this section." See 24CFR Sec. 203.43i for more information.

Appraisals on Department of Hawaiian Home Lands (DHHL) properties (existing and proposed construction) only require the use of the Cost Approach. This change was brought about because appraisers felt that performing the Sales Approach on DHHL violated the Uniform Standards of Professional Appraisal Practices (USPAP). Licensed appraisers are required to conform to USPAP which identifies market value as "…the most reasonable price which a property should bring in a competitive and open market:". The Market Approach or Sales Comparison Approach is no longer required as these properties are neither freely transferable nor subject to an open market.

In the Reconciliation Section of the URAR under Conditions of the Appraisal, the appraiser can conclude that the appraisal is being completed per HUD instructions for FHA mortgage insurance purposes only and the sales comparison approach is waived for DHHL properties.

A statement can be added in the Reconciliation Section of the URAR when estimating the final value that, "the value stated in the appraisal is not "market value" as defined in USPAP", however, the appraiser must include a date (which is the date of the inspection), a value and sign the appraisal.

References: 24CFR sec. 203.43i Eligibility of mortgages on Hawaiian Home Lands insured pursuant to section 247 of the National Housing Act.

The ADP code for a regular DHHL loan should be 759, if it is a DHHL buydown, then the ADP code should be 811.