Native Hawaiian Family Faces Displacement Due to Predatory Lending

Inside Subprime: September 30, 2019

By Lindsay Frankel

Hawaii is a coveted tourist destination, which has impacted the focus of development on the islands, led to a rising cost of living, and displaced many native Hawaiians from their homes. As hotels and vacation rentals continue to sprout up, the housing shortage for local residents is becoming an increasingly devastating problem.

The minimum hourly wage required to afford a modest apartment in Hawaii is $36.82, the highest in the nation, according to estimates from the National Low Income Housing Coalition. But the average hourly wage in Hawaii is just $25.43, and minimum wage is only $10.10. The state’s high rates of homelessness are in part due to this disparity. And Native Hawaiians account for 42 percent of the homeless population in Hawaii. 

In at least one family’s struggle to keep their land, predatory lending has played an important role. Joddy ʻIwalani Manuwai and her family are at risk of losing land that has been in the family for generations if they can’t come up with $1 million. 

The situation has been escalating for more than a decade. First, the Manuwais state they were bilked by a contractor when left with an unfinished remodel that wasn’t up to code. They ended up with insurmountable debt, and when they tried to refinance last year, they state they were scammed by a financial adviser who kept their money without modifying their mortgage. As a result, the home went into foreclosure. 

Manuwai’s daughter, Kaʻiulani, said they’ve been “victims of predatory lending from the beginning.” When the original lender for their mortgage shut down, the loan was repeatedly sold, and the interest rate rose with each sale. 

Predatory lending often leads to inescapable debt. Low-income Hawaii residents struggling to make ends meet amid rising housing costs are particularly vulnerable to predatory lending . The average APR on a payday loan in Hawaii is 461 percent, according to the most recent data from Pew Charitable Trusts. The high interest rates, combined with short terms, make these loans particularly risky to Hawaii residents. 

“I have no doubt that somebody’s going to come in and they’re going to take it and bed-and-breakfast it,” Joddy Manuwai said. “And that just kills me to know that they’re going to do that to the land that was promised to us.” 

The Manuwais now have until December 5th to raise enough money to keep their home after recently persuading a judge to grant them more time.

Learn more about payday loans, scams, and cash advances by checking out our city and state financial guides, including Chicago, Illinois, Florida, and Texas.