Writing down mortgages could create jobs in Hawaii

Pacific Business News
August 18th, 2011

By Janis L. Magin

A new report says that Hawaii’s economy could gain nearly 3,300 jobs and get an annual stimulus of $223 million if banks wrote down every underwater mortgage in Hawaii.

A mortgage is underwater if its amount is higher than what a home is currently worth. You could also call it upside down.

Either way, it means that someone is paying more for his or her house than they could sell it for.

Here in Hawaii, there are 22,403 mortgages in that situation, according to the report released by a national campaign called The New Bottom Line, a coalition of community, faith-based and labor groups, including Hawaii’s Faith Action for Community Equity, or FACE Hawaii.

While the number of upside down mortgages in Hawaii is a lot lower than it is in other states — California and Florida each have more than 2 million — it’s still nearly 10 percent of the homes here.

The report says that means $2.2 billion in negative equity for Hawaii.

Getting rid of that negative equity could mean putting $828 back in each homeowner’s pocket each month — money they could presumably spend on other things, stimulating the state economy.

The report argues that by getting the banks to write down all the underwater mortgages in the nation to their current market value, banks can pump $71 billion into the national economy every year and create more than 1 million jobs.

Hawaii would gain 3,292 of those jobs, the report said.

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