Ronnie's Blog

Deed for Lease - Can It Work

Mon, 09 Nov 2009 09:06:20 -0600

As lenders scurry to fend off the continuing foreclosure crisis, Fannie Mae, one of the three government entities who purchases mortgages in the secondary market, announced a new approach last week. RENT YOUR HOME! Not to someone else, but to yourself.

The Deed for Lease program lets homeowners transfer the deed back to their lender and then sign a lease to remain in the home. The effort is aimed at borrowers with mortgages owned or guaranteed by Fannie Mae who do not qualify for or cannot sustain a loan modification. Borrowers must live in the home as their primary residence and must be released from any subordinate liens.

One question arises is how, if you have a second mortgage, you are going to be released from any subordinate liens, in other words, a 2nd or 3rd mortgage. I can see that perhaps so people can regroup within a year and get back on track, but given the sheer number of defaults, I am not sure this program is going to make much of a difference.

Homeowners must show they can afford market rent, but that payment cannot be more than 31% of the borrower's pre-tax income. Leases may be up to 12 months, with the possibility of renewal or month-to-month extensions. If the property is sold, the new owner picks up the lease. 31% is the government's number for maximum loan payment in a modification that is acceptable to the parties as well. So if my gross income is $4000, I cannot have a payment greater than $1240 dollars.

Certainly for many with adjustable mortgages, this formula will create a number that is seemingly more affordable. Time will tell.

County of Kauai extends Additional Dwelling Unit Deadlines

Wed, 28 Oct 2009 13:11:58 -0500

Homeowners who have ADU permits to build additional structures, but have not had the ways or means to act upon it, got a reprieve from the County of Kauai last Friday. Draft Bill 2322, which was passed by a 4-0 vote by the council’s Planning Committee Wednesday, would push the deadline for obtaining building permits for ADUs — formerly referred to as “‘Ohana Units” — from Dec. 15 of this year until the same date in 2014, but the extension would only apply to those who already have a facilities clearance form in hand or submitted, and would not open the process up to any new applicants, council members said.

Mayor Carvalho is expected to sign the bill into law shortly. This five year extension will more than likely according to local sources, be the final extension of this bill.

Read the full story in this week's Garden Island newspaper.

A separate bill that would allow previously existing TVRs (Transient Vacation Rentals) to continue on ag land until the government concludes its Important Ag Lands study was deferred, at the request of the Office of the County Attorney, until Nov. 10.

Bank of America Short Sales and Their Endless Runarounds and Contradictions

Fri, 23 Oct 2009 15:44:36 -0500

Sometimes doing a short sale comes with additional challenges. The borrower needs to get relief from the deficiency in many cases in order to get the full advantage of the short sale. When the bank plays hard ball, the borrower loses and so does the bank.

Via Chris Ann Cleland, GRI (Long & Foster, Gainesville, VA):

Bank of America short sales and their endless runarounds and contradictions have left a bad taste in my mouth for this banking and lending institution. Two years ago, my largest short sale problem was Countrywide. Countrywide would take many months to review files and just when you were getting ready to dig your own grave, the approval would come through. That wasn't the end. Just because Countrywide approved your short sale, didn't mean squat. I had an approved file closed for not sending in a form that Countrywide never asked us for. That was dealing with Countrywide.

Well, when a seemingly good bank (Bank of America), swallows a large problem whole (Countrywide), you know the outcome. The problem remains, but under a different name. Bank of America.

I had been working on a short sale with Countrywide/Bank of America for well over a year. It was a divorce. The first contract we sent at the beginning of the listing, was denied in one month. Why? Not enough money. It was the the highest offer we would ever see on the property in question.

The second offer came about six months later. Was with Countrywide/Bank of America for three to four months. Lower offer, but the writing was on the wall. The local market was in decline. The neighborhood where the property was located was in a steeper decline. Those months it took to accept the offer came back to haunt Countrywide/Bank of America when the buyer's appraisal came in. It was nearly $20K off the accepted sales price. Countrywide/Bank of America refused to accept the appraised value and my sellers were forced to kick that buyer to the curb.

Put the property back on the market, not expecting what we really needed. A cash buyer willing to overpay for the home and forgo their own appraisal. My short sale prayers were answered when that third offer came in. My sellers sent it in. It was the amount that Countrywide/Bank of America has refused to move down from in our second scenario AND, there was no seller subsidy as there had been in that second scenario.

Despite what should have been flagged as a slam dunk, Bank of America (no longer calling the monkey on its back Countrywide) took four months to get back to us on this deal. The deal was accepted BUT, the approval letter wa not the same approval letter as Countrywide had sent before. This one left my sellers wide open to collections in the future for the shortfall of the mortgage payoff.

We asked Bank of America to remove that wording. After all, they had received MEGA money from the U.S. Government to help them cover such shortfalls. Seemed qutie greedy of them to take from the government and then threaten to take that same shortfall amount from my sellers. The loan would be repaid and then some.

When Bank of America refused to changed their short sale approval letter and remove the collections language, my sellers declared bankruptcy and told Bank of America to shove it. My sellers refused to move forward with the short sale, and who can blame them? Now Bank of America has paid the attorney's fees to foreclose (estimated at a low end of $40K in my state) and will continue to face the same or worse market conditions. Not a good business move, but that's Bank of America for you. Wasting America's money!

Chris Ann Cleland, Realtor- Licensed in Virginia, GRI & Short Sale Specialist. Affiliated with Long & Foster, 7526 Limestone Drive, Gainesville, VA 20155. To contact Chris Ann, call 703-402-0037 or email chrisann@LNF.com.

On Bloomberg TV discussing foreclosures

Mon, 12 Oct 2009 19:19:29 -0500

Interesting interview with head of Zillow about the state of foreclosures and where we may be in this real estate market cycle. Thanks for the tip. Knowledge is power.... Thanks Spencer

Via Spencer Rascoff (Zillow):

Here's the analysis of foreclosures moving upscal e.

The startling headline is this -- in 2006, the top 1/3 most expensive homes in each local area made up 16% of foreclosures. Today, the top 1/3 of homes make up 30% of foreclosures.

And here's the video from Bloomberg TV today discussing this and other issues. Sorry to come off as so pessimistic, but I call 'em like I see 'em. No spin here.

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The West Side of Kauai - Have you been there?

Sun, 11 Oct 2009 13:21:11 -0500

Many people who travel to Kauai seek a retreat on the North Shore in remotes places like Hanalei and Wainiha. Some tourists have heard that Poipu is the dry sunny side of the island and Poipu is where many vacation rentals and hotels are, so that's where they stay. BUT, what about the West Side? Today's Garden Island paper has an editorial piece that will give you a little insight into Kauai's west side and what we mean when we talk about the west side of Kauai.

Where does west Kaua‘i begin, and what does that geographical reference include?

If you’re talking to Rhoda Libre-Hayton, who chairs the Kaua’i Westside Watershed Council, it encompasses the area referred to as the Kona District of this island.

The trek is definitely “down-home, country-style, and rural-to-the-max” as one can eventually get all the way to Polihale if one stays at sea-level or if one opts to head up for higher ground to the Koke‘e mountains, the crown jewel of Na Pali Coast. In turn, west Kaua‘i is a mixture of honored traditions and innovative transitions as well as being a series of random delights that range from serene to spectacular.

POLIHALE BEACH at Kauai's west end - Awesome ocean and beach

Read the full Kauai west side introspective here

Mortgage Delinquencies - The Coming Storm

Thu, 01 Oct 2009 13:07:16 -0500

Jeff's comprehensive post provides a lot of food for thought. As i begin my CDPE pursuit, there are many short sellers who i can help get out of this mess more unscathed than if they just sat there and did nothing about the foreclosure process and having negative equity in a property.

Via Jeff Geoghan MBA - Lancaster PA Real Estate Expert (The Jeff Geoghan Realty Group, Coldwell Banker Lancaster PA):

This is one of those posts where I wish I didn't have to write it, but felt it was so important to my readers that I would be remiss not to at least talk about it.

Everyone out there probably knows somebody who is behind on their mortgage payments, looking for alternatives and likely also just finding out that their home's value has dipped below what their loan amount is. I know some within my own personal circles. It's a tough situation for me to advise them as a professional because it's such a personal challenge to their pride and self-worth, not to mention their plans and dreams for the family. The question we're asking is "when is this going to stop and where are we heading?"

I'm going to put up a few graphs that show the trends nationally with regards to mortgage delinquincies:

This chart is by quarter - Single-family mortgages set a new record delinquency rate in the second quarter of 2009, according to a quarterly survey by the Mortgage Bankers Association. Those of us in the real estate business see the foreclosure process (just visit the local Sheriff Sale docket to see the current numbers) but the looming delinqency-to-foreclosure issue is far, far larger.

The Wall Street Journal on 8/3/09 reported the following quote: “While subprime mortgages sparked the first round of housing problems two years ago, now "troubles are lurking further up the food chain," says Joshua Shapiro, chief U.S. economist at MFR Inc. White-collar job losses have accelerated while more adjustable-rate loans to prime borrowers are resetting to higher payments. ‘You put all that together, it leads me to believe that the next leg down on home prices is going to come from the top,’ he says.”

The first objection someone may have would be to say "yes, but historically those who are delinqent usually get their act together and come current on the mortgage after a while". That WAS true, but not anymore! We call that the "Cure Rate", that is the rate of delinquencies that go back to current. The Wall Street Journal reported on 8/24/09 about a Fitch analysis that found that the Cure Rate from 2000-2006 was 45% (which means about half of people fix their delinquency). However, as of July 2009 the rate had dropped to just 6.6%! That means that over 90% of delinquent customers are going to foreclosure. Take a look again at the above chart...

The next thing someone will say is "well, that's the 'sand states' and not my area". Here's the chart for all 50 states showing the same breakdown of delinquencies and foreclosures. Guess what - most states have a significant problem, especially compared to historical figures.

Now the next thing someone may say is "aren't those loans going to get 'fixed' by a loan modification?" I know several people right now who are applying for a Lancaster County loan modification but are waiting and waiting. I hope it works out for them...

In reality, loan modifications are hardly making a dent. To me, that's a burning question. Why arent banks being more aggressive in giving customers the option to extend their loan and/or reset to a lower rate? Why are they being SO difficult? The people I know don't want to be foreclosed. They CAN make payments. They just need the terms redrawn to allow them to catch & keep up. Loan modifications are not helping us get this crisis under control.

What are the causes of all these delinquencies? Here's a chart that is enlightening:

We hear a lot about adjustable rate mortgages being the culprit, but the reality is that it's the loss of jobs and the tanking real estate market that's the perfect storm. See my previous post on unemployment in the nation, the state and Lancaster County.

Keep in mind, this post is not intended to give us "good news". You may be experiencing good things in your market and that's great. My intent is to get us thinking about the challenges that aren't going away and how we're going to address them as homeowners, agents and professionals. I'd love to hear your ideas!

St. Regis Hotel Opens Sept 26th., Grand Opening Oct. 1

Mon, 28 Sep 2009 13:35:52 -0500

This past Saturday, the Princeville hotel reopened as the St. Regis Hotel of Princeville. According to senior management, 96% of the previous staff has returned and has been receiving training over the last couple of weeks to understand the St. Regis brand, the top of the food chain for the Starwood Hotel Group. Over 1000 people viewed the hotel over the weekend during this soft opening and Kama Aina rates are in effect for local residents.

The hotel even boasted that they Had their first wedding this weekend. The hotel has been redone replacing the old marble floors with coconut wood floors, Koa, and african woods throughout. The formal grand opening of the hotel is scheduled for October 1st this Thursday. I hope to attend and will report back to you with what I learn.

This photo of the St. Regis lobby shows you the coconut wood floors, and solid Koa columns. What amazing woodwork. The background looks rendered to me, but I'll take some photos when i get up there this week.

Kauai Tax Assessments Slow to adjust to the market

Sat, 19 Sep 2009 19:24:33 -0500

Today's paper had a thoughtful article by Walter Lewis commenting on the appeals process regarding the valuation of Walter's property on Kauai. It is really quite a dichotomy to be a real estate professional whose success is somewhat tied to the work of appraisers who in this market are more conservative than ever. More often than in prior years contracts are cancelled due to a property not appraising for the contract price. At the same time, the county has raised the assessed value of most condos on the island. And despite the fact that the market has corrected 15-20% in most neighborhoods, island-wide the assessed value is only down 3%.

As Walter Lewis pointed out,
This year was a banner year for the number of appeals by Kaua‘i taxpayers with nearly 1,000 filing exceptions to the amounts of their assessments. Steve Hunt, who is handling over half of the appeals, informed me that in over 15 percent of the cases that he was given, adjustments were made to the assessments, certainly an improvement from the taxpayer’s standpoint from the 2 percent rate that has been applicable in Board of Review hearings.

Read Walter's entire commentary here:

I spent time with a condo owner earlier in the week who did not achieve as good of results as Walter. In her condo complex in Princeville, the value of the land went up significantly. The county boasted that their new system had succeeded in creating a better balance of values between buildings and land. I find it hard to believe that the assessors can raise the value in such a declining market.

Another comment Walter makes:

Property taxes provide over 60 percent of the revenue for our county and are essential for its financing. But fairness to taxpayers is also fundamental and the 2 percent success rate for taxpayers in the Board of Review process is disquieting.

When the county releases its new assessments for 2010, there is certain to be a problem if values actually rise again. The county not only needs to consider it's balance sheet, but also the fiscal wellness of it's citizens too.

How Does the Short Sale Process on Kauai Work Anyway...

Tue, 25 Aug 2009 18:11:25 -0500

This diagram below over simplifies the Short Sale Process. It's important to know that any one of these stages can take weeks to occur. The main point of this post is so that you understand the Short Sale Process and temper your expectations with the knowledge that the timeline is pretty much out of your (and everyone else's) control. A great exercise in surrender, that's what I'd say.

One thing to note. With many banks these days, the loan modification department and short sale department are one and the same. This means the these folks are swamped. As one Home Rescue consultant described it to me, "Imagine your local Costco totally empty. And all there is are desks and piles of paper. That is what some of the bank's short sale/loan mod departments look like. The grey box in the center of the diagram can take months. It can take months to even get a response from the bank and then if the price offered has to be renegotiated you can go back around in that circcle for quite some time.

Wanna know more about Kauai short sales. Wanna know about great buying opportunities here on Kauai. I can send you a list of all the ofreclosure and short sales. Just drop me a note or check my blogs frequently.

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Kauai REO listings and updates - Week of August 24th

Tue, 25 Aug 2009 10:19:47 -0500

New Listings:

1. 5796 Noni St., Wailua Homesteads. This is a 5 bedroom 2 bath home 2 story home. The home has nice curb appeal and is in an excellent location near Sleeping Giant (Nonou) mountain. The home is a good example of a home remodel gone bad. Check out a video walkthough by Hawaii Life's Susie Kunkel. Owned by American Home Mortgage Servicing Inc. MLS#226761

Price Changes:

Banyan Harbor G-80, Lihue. A 2 bedroom 2 bath fully furnished condo with partial ocean view. New price $224,0000. MLS#225936
4740 Hokuloa Place, Eleele. 3 bedroom 2 bath home for $289,900. Garage has been turned into a family room. MLS#225781.
5086 Napookala Circle, Princeville $727,800 MLS#224854. An amazing location on the Makai golf course in Princeville. Over 16,000 sq. ft. Some of my buyers think the home should be leveled! Ouch... Owned by Bank of America..

Buyers often request which bank owns the property. Dealing with each bank can be vastly different whether you are purchasing a Kauai REO or a Kauai Short Sale

You can search the entire state of Hawaii at the Hawaii Life website, and even set up your own account there.

Upcoming listings include some units at the Waipouli Beach Resort. This project, located across the street from the Kauai Village Shopping Center, was sold at the height of the market. It's an amazingly high quality construction, with the utmost in amenities. However, with super high maintenance fees, the market would not sustain the original developer prices. With the start of REOs in this complex, I anticipate the prices are going to adjust rapidly just as they did with other similar projects like the Aston Island on the Beach and the Hilton Kauai Beach Resort. If you want a deal at Waipouli Beach resort, keep your eye on the market. Here is a list of all the units for sale at the Waipouli Beach Resort today.

Night Shot from Waipouli Beach Resort in Kapaa.

Gwen's Kauai Picks under 600K

Mon, 13 Jul 2009 07:01:30 -0500

My wife Gwen is the consummate shopper. She knows how to find bargains.

This small chart below has Gwen's picks for best values on Kauai under $600,000. Many are short sales, being sold for under assessed value, etc. Some are in ready-to-move-in condition, have extra-income potential, and are REAL DEALS by my standards. A few are in Princeville. Just take a look at these homes!

Click on the MLS to see more details on each property. Once in the MLS listing, click on the icons at the top of the listing for pictures and additional info.

gwenmargolis@gmail.com
808 346 0357

MLS #	DOM	Taxkey	Tnr	Price	Location	Land area	Sq. Footage – Bedrms/Baths
218623	366	4-5-2-15-9	FS	$369,000	4155 Momi St	6,220 sqft	1,028 3/2
191463	846	4-4-2-11-37	FS	$399,000	139 Lihau St	9,350 sqft	1,190 3/2
221116	125	4-1-2-14-61	FS	$410,000	9436 Keahi St	8,016 sqft	1,240 4/2
218213	10	4-4-6-17-91	FS	$439,000	5181 Hau'oli Pl	5,004 sqft	1,701 3/2
221214	133	4-1-6-1-46-1	FS	$475,000	5121 Menehune Rd #1	15,856 sqft	1,438 2/2
211242	402	4-2-5-11-22	FS	$499,000	3600 Pua-kenikeni St	11,189 sqft	1,149 3/2
221225	124	4-2-3-11-55	FS	$499,000	4325 Maka Rd	6,477 sqft	2,002 4/2
217137	261	4-2-4-5-31-5	FS	$524,000	4838 Puuwai Rd #E	19,859 sqft	972 2/2
224336	48	4-5-4-23-38	FS	$545,000	3812 Iluna Pl	6,895 sqft	1,310 3/2
213160	373	4-4-1-4-25	FS	$549,000	4601 Kuamoo Rd	6,611 sqft	1,128 4/2
221567	126	4-4-2-15-14	FS	$575,000	308 Aina Lani Pl	22,303 sqft	2,272 4/3.5
216389	282	4-4-2-10-31	FS	$579,000	374 Kaima Pl	24,655 sqft	1,760 5/4
219545	188	4-5-4-22-26	FS	$598,000	4372 Emmalani Dr	11,390 sqft	1,294 3/2

Kauai Real Estate Market - How was the first half of 2009?

Thu, 09 Jul 2009 08:57:49 -0500

Our Kauai Board of Realtors as a service to the community publishes articles in our local paper, the Garden Island. This weekend’s article in the business section has been adapted to give you a good sense of how our Kauai real estate market is doing through the first half of the year. Normally, the Kauai real estate market is a seasonal one. That is, our market tends to spike in the winter time when the “snowbirds” come to the tropics, and spike during the summer months when tourists vacation with their families while their children are off of school. Not sure if those same tendencies still apply to our current state of affairs, but the numbers don’t lie, that’s for sure.

As the first half of 2009 has just passed, we thought it would be timely to review real estate activity on Kauai. As to be expected in light of the global economic downturn, the results are down in every category versus the same time frame for 2008. Please keep in mind that the Kauai real estate market is an insulated one with a relatively small sampling section, therefore a high or low dollar sale, a new condominium project or subdivision, or a foreclosure in a condotel project (we recently had a large one) can dramatically affect the statistics.

Kauai Year-to-Date Transaction 2008 vs. 2009

# of Sales	YTD 2008	YTD 2009	+/- Number	+/- Percentile
Residential	148	103	<45>	<30.41%>
Condominium	114	116	2	<39.47%>
Vacant Land	61	35	<26>	<42.62%>

Kauai Year-to-Date Sales Volume in Dollars 2008 vs. 2009

Sales Volume	YTD 2008	YTD 2009	+/- Number	+/- Percentile
Residential	$133,342,186	$96,830,519	<$36,511,667>	<27.38%>
Condominium	$81,582,405	$26,483,037	<$55,099,368>	<67.54%>
Vacant Land	$60,819,825	$13,675,500	<47,144,325>	<77.51%>

Kauai Year-to-Date Median Sales Price*

Median Price	YTD 2008	YTD 2009	+/- Number	+/- Percentile
Residential	$657,500	$479,000	<$178,500>	<27.15%>
Condominium	$599,500	$320,000	<$279,500>	<46.64%>
Vacant Land	$700,000	$275,000	<$425,000>	<60.71%>

*Median Sales Price on Kauai represents the midpoint between the most expensive house and the least expensive house sold in an area during a specific
time. The Median Sales Price is often regarded as an indicator of the strength and the direction of a real estate market.

To emphasize where Median Sales Price values are in relation to previous years, enclosed are Median Sale Prices from 2004 – 2007 in the same time period.

Kauai Year-to-Date Median Sales Price 2004 - 2007

Median Price	YTD 2004	YTD 2005	YTD 2006	YTD 2007
Residential	$465,000	$600,00	$679,000	$655,000
Condominium	$375,000	$425,500	$372,000	$525,000
Vacant Land	$315,500	$415,000	$360,000	$650,000

These charts above are based on Information which is provided by Hawaii Information Services, the company which runs the multiple listing service for Kauai and Hawaii, the Big Island.

Using the Median Sales Price as a barometer, the property values on Kauai are now comparable to 2004 values; Condominiums are closer to 2003 Values ($271,469). Regarding broader generalities, the State of Hawaii appears to be tracking closer to what is currently happening on the mainland as opposed to previous trends where there was a 6-9 month lag from what occurred on the mainland until it affected Hawaii. Of course similar to our climates, there are many micro-markets that ebb and flow according to the supply and demand of units on market. Another observation is that Hawaii’s market is also a bit healthier than some of the mainland markets, such as Southern California.

The increase in Hawaii in Median Sales Prices did not rise as high or as sharply and consequently the decrease in Median Sales Prices has not been as steep or dramatic…we have experienced lower highs and higher lows. Hawaii’s two-leading Banks, Bank of Hawaii and First Hawaiian Bank are strong and stable. According to Bank Director’s Magazine “The 2008 Bank Performance Scorecard: America’s Top 150 Banks”, Bank of Hawaii was the 4^th highest rated bank in the U.S.

In terms of foreclosures, the State of Hawaii has generally been in the bottom 10 of the 50 States, ranked 36^th in April and that number spiked in May which caused Hawaii to be ranked 15^th among the 50 states. There were 816 foreclosures in state of Hawaii in May according to a recent RealtyTrac report. With one in every 374 housing units receiving a foreclosure filing during the month, Kauai County posted the highest county foreclosure rate in the state amongst the five major counties. RealtyTrac statistics includes commercial properties, which include condo-tels and timeshares in the foreclosure data, and sometimes includes properties multiple times in the three-phase foreclosure process. As I alluded to earlier in the post, there were 145 residential units and 16 commercial units at the Hilton Kauai Beach Resort that were auctioned at a public foreclosure auction on May 6^th that dramatically skew the Kauai foreclosure numbers. iStar Financial, the primary lender at the Hilton Kauai Beach Resort, bid $15 million, outbidding several other bidders. The up tick in Kauai’s foreclosure numbers can also be attributed to mainland buyers and investors defaulting on resort properties/2nd homes purchased over the past few years.

In terms of mortgage delinquencies (percent more than 30-days past due) Hawaii was 45^th among the 50 states according to the Mortgage Bankers Association (Q4 2008). If you factor the condo-tels in, Hawaii may be climbing the ranks in that stat.

In addition to the decline in the Kauai Median Sales Prices, the other dramatic impact to the real estate market on Kauai is in the number of transaction. The numbers of transactions were down 50% between 2005 and 2007 and decreased another 36% in 2008. There were 1,768 total sales on Kauai in 2005 and we are currently at a run rate to have 508 total transactions in 2009 or 28% of the number of transaction that occurred in 2005. That’s a slowdown to be sure.

Currently there are 1 in 14 residences for sale that are in escrow followed by 1 in 16 condominiums and 1 in 16 land parcels.

Total Kauai Properties for Sale as of 7/1/2009

Property Type	Number For Sale
Residential on Kauai	627
Condominiums on Kauai	514
Vacant Land on Kauai	414

Total Kauai Properties in Escrow as of 7/1/2009

Property Type	Number in Escrow
Residential	49
Condominium	34
Vacant Land	28

In as much as the Kauai real estate market has adversely affected Sellers of properties, the construction industry, escrow companies, Realtors, and lenders, it has created a boon for Buyers. You would have to go back to 2002 or 2003 in many instances to find the types of values that exist in today’s market. Motivated Sellers, relatively low interest rates, first-time homebuyer programs, and Seller financing in some cases all equate to a great opportunity for property buyers. That’s the overview of the market for the first half of 2008. Again, thanks to the Kauai Board of Realtors for collating this information.

What’s next? We are in uncharted territory where some of the most accomplished economic experts are having a difficult time forecasting future trends. It does appear though that there are economic indicators and signs that perhaps the worst is behind us and the market is flattening out a bit.

If you would be interested in seeing how your neighborhood is faring contact me at ron@hawaiilife.com and I’ll be happy to generate a comparable market report for your specific property type and location. And of course, the most current list of Kauai foreclosures and short sales is available on an island-wide basis, or by general geographic region, i.e. North Shore, South Shore, Eastside, etc.

Looking forward to the second half of the year as great values abound and there’s so much opportunity for qualified buyers to own their piece of paradise.

FHFA Authorizes Fannie and Freddie 125% LTV Refinances

Wed, 01 Jul 2009 13:38:52 -0500

I hope that the administration can catch up to the actual reality of our market. Increasing the LTV on refinances is hopefully a step in the right direction.

Via Mark MacKenzie Real Estate Planning:

In the latest sign that Washington has been behind the curve on this housing crisis, the FHFA announced today that they are finally changing their original refinance blueprint (Home Affordable Refinance Program, HARP) and are now authorizing Fannie Mae and Freddie Mac to include refinance LTV's of up to 125%, up from the 105% that the original plan had been based on.

This action is a result of the plan's initial failure in recognizing just how many homes are actually underwater and were unable to qualify for the 105% LTV.

According to Moody's, there is an estimated 15.4 million homes that are worth less than what is owed.

This number is only going to continue to grow as a result of the ongoing supply and demand imbalance for real estate.

It is these types of economic lapses by the Obama administration that continue to be a drag on the housing market and broader economy. Washington simply does not understand the gravity of the situation. From the banking system, to the housing market, to the economy and the "stimulus" package, the Obama administration continues to undershoot.

$8,000 First Time Homebuyer Tax Credit - Will it be going to $15,000???

Fri, 12 Jun 2009 11:56:15 -0500

Jeff Belonger is a savvy lender who understands FHA. I just am in the process of doing my first FHA loan here on Kauai. At our prices, most of my buyers are not FHA compliant. I'll be interested to see how the tax credit now or the amended one should the number be increased, assists my clients in their first home purchase.

Via Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans (Infinity Home Mortgage Company, Inc):

Tax Credit Alert - $8,000 to $15,000??

Will the flood gates open for home sales? Through some news reports such as Bloomberg and other media outlets, those lawmakers in Congress are looking to change up the current $8,000 first time homebuyers tax credit that ends on November 31st, 2009. The new bill was introduced on June 10th, 2009. This could be some good news for more than just first time homebuyers. But I have a different opinion on just the basics, from raising the tax credit from $8,000 to $15,000. But what are the changes that are being talked about?

New Tax Credit changes ....

The tax credit of $8,000 would be raised to $15,000

They would take away the income restrictions. The current income caps are : Single - $75,000 and Joint return - $150,000.

Making this available to anyone, even if you aren't a first time homebuyer.

Extending this for 1 year after the new bill becomes active.

Let's talk about this now..... I will agree that this could even help those that aren't first time homebuyers. It would help those that owned a home, that are upside down, who sell their home, yet have no money now.

Now, here is my problem about the current first time homebuyers tax credit or even if this is revived shortly. Yes, we will be printing more money then ever before, even from the last stimulus bill. Want I would like to see is the government and HUD put their heads together to come up with a plan to allow the homebuyer to use this money even for their initial 3.5% down payment. If you aren't sure what I am talking about, please read this. First time homebuyer tax credit approved by HUD to get the monies before settlement.

Conclusion: There are some that have argued with me that this new change, that HUD will allow you to get the monies before closing, to be used for part of your down payment and closing costs, will help a lot. I have been arguing this point 2 months after the $7,500 tax credit was approved in early 2008. My argument is that this will help some, a few, but not as many as the government projects or hopes that it will help. My argument? You need some of your own money first to be able to buy. Yes, you still would need 3.5% of your own money and in this economy, not everyone can save this in a timely manner. And many of these people that can't save adequately would still be good to excellent buyers... at least in my opinion, from 16 + years of lending.

Overall, if we could come up with a comprimise to allow all buyers to use this money even for their initial down payment, then that would open up the flood gates. People, keep in mind that we have the USDA loans and VA loans that allow 100% financing. This shouldn't be about having skin in the game, because these 2 programs have a good success rate. I will be writing about this over the weekend, my thoughts on what we can do, so please stay tuned for this. Thoughts? Opinions? thanks

PS..... UPDATE.... Per Lenn Harley's comment & Pat Kennedy's, don't get me wrong, I am not a big fan of printing all of this money. I have talked about this in such blogs as :

I need my quick fix now, please pass me that 4.5% rate now. - why we can't afford to keep lowering the interest rates, thinking that this will help now. This kind of thinking is just for consumer confidence, but will bury us in the very near future, which is mentioned in the next link below, inflation vs deflation.

Inflation vs deflation - Is it criminal? -

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

- Mortgages -

Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger

St. Regis Hotel in Princeville - Super Luxury on Kauai's North Shore

Fri, 29 May 2009 13:30:23 -0500

Well, it looks like the countdown to superb luxury is on in Princeville, Kauai, Hawaii as the promotional articles for the St. Regis in Princeville, formerly the Princeville Hotel and Resort, begin to appear. As the final months of transformation occur and the construction zone morphs into this luxury property located on the bluff above Hanalei Bay on Kauai's Northern Shore.

The revamped resort will be the only St. Regis property in Hawaii. The developers are trying to integrate the elegance of the high-end luxury chain with the resort’s island surroundings.

Lobby Rendering with New wooden Hawaiiana Look and Hanalei Mtns. in the distance - way kewl!

According to the resort’s Facebook page (yes, even luxury resorts have Facebook pages), the redesign is guided by the Hawaiian concept of ahupuaa—or what St. Regis is describing as "living in balance with nature." (The word ahupuaa actually describes a Hawaiian land division system that extended from the ocean to the mountain. The bounty of that land, however, often depended on living in balance with nature.) Consequently, the resort will incorporate natural island elements of sea, sky and earth. If you'd like a map of the Kauai Ahapuaa from earlier Hawaiian life, check out Ken Stokes Ahupuaa map for da real thing.

The resort’s main lobby and common areas will feature native dark wood floors, ceilings of woven matting and large glass panels overlooking the ocean. The resort’s 252 guest rooms and its 51 suites will have contemporary Hawaiian décor, custom furnishings and large, electronically controlled glass reveals.

When the hotel closed last summer, auctioneers spent many months selling off the parts of the prior hotel. From silverware to furnishings and statues, the components of the old hotel which was rebuilt after Hurricane Iniki which devastated Kauai on Sept. 11, 1992. Now a good fifteen years later, the hotel reincarnates under this luxury brand.

Read the full article on HawaiiMagazine.com which appeared yesterday.

To celebrate its debut, the resort is offering the Quintessential Princeville Experience. The deal includes your choice of complimentary activity for two with a five night minimum stay. Choose either two rounds of golf at the Prince Golf Course, an hour-long spa treatment at Halele’a Spa, an adventure package at Princeville Ranch or dinner at Makana Terrace restaurant.The Makai course, 27 holes of Robert Trent Jones Jr. design remains under construction and you can now see a lot of the new fairway grass starting to grow but looks like it might be til next year before those holes are back open to the public.

The Princeville condo markethas been undergoing it's own brand of reconstruction, i.e., major price correction and superb deals triggered by the soft market and short sales and foreclosures. Shoot me an email for the latest list of Princeville, Kauai Foreclosures and Short Sales.

Relief for Hawaii's Distressed Property Owners

Fri, 22 May 2009 12:00:16 -0500

As I've mentioned before, when Hawaii passed Act 137 last year with the intention of protecting consumers from Mortgage Fraud, they made one very drastic mistake in my opinion. THey disallowed realtor's from helping their clients and thus took away one of the consumers best resources. Well, our legislature got the word from the Hawaii Association of Realtors leadership and the results of those efforts have finally paid off.

Hawaii’s Governor Linda Lingle signed Senate Bill 34 into law. This amendment to Hawaii’s Mortgage Rescue Fraud Prevention Act (Act 137), provides an exemption for licensed real estate brokers and salespersons from being defined as “distressed property consultants” under Act 137. Most buyers and sellers were comletely unaware of this law or its consequences unless they attempted to buy or sell a property that was defined as a “Distressed Property”. A Distressed Property” is defined as any property where the owner/borrower was 2 months or more behind in payments to ANY lien holder. Originally, Act 137 prohibited Realtors from communicating directly with lien holders on behalf of their clients OR from coaching their clients on how to communicate and deliver information to their lien holders about the sale of their property!

People who had legitimate hardships, who could no longer pay their mortgages, were left completely ‘unrepresentable’ by Realtors under Act 137. For example (just one of MANY), we’ve represented clients who suffered debilitating illnesses which cost them their jobs and their ability to pay their mortgages… but once they were 2 months behind on their payments, we, their licensed agents and fiduciaries, were no longer allowed to speak with their creditors or even coach our clients on how to proceed with the sale of the property that they hired us to sell!

So, the end result was that people in Hawaii who needed the assistance of a Realtor the most were prevented from getting it.

This new law will be Act 66 of the 2009 Legislative Session, and is effective immediately. The bill also prohibits a licensed real estate broker or salesperson from acquiring an ownership interest in the distressed property, directly or indirectly, within 365 days after a listing agreement for the same distressed property has expired, or is terminated. You can read the letter from our Hawaii Association of Realtors to our Governor. Hawaii’s property owners who are faced with financial hardship, and perhaps foreclosure, will now be able to have the guidance and expertise of Realtors who in many cases understand the dynamics of short sales, foreclosures, and dealing with banks.

Did you have to deal with this type of legislation in your area?

Visitor Industry Charity Walk - Tourism gives back to our Kauai Community

Sun, 17 May 2009 12:32:13 -0500

Over fifteen hundred people, and that's a big crowd on Kauai, showed up this morning for this year's 31st Visitor Industry Charity Walk. The Charity Walk began at the Historic County Building, headed down Rice Street, turned left on Ho‘olako Street, went up Ka‘ana Street, turned left on Kapule Highway, left on Ahukini Road, turned left on Umi Street, and ended at the Historic County Building.

Streets were closed to accomdoate the large groups beginning at about 6:45 this morning. The CHARITY WALK is a statewide event that occurs simultaneously on Oahu, Maui, the Big Island and Kauai on the 3rd Saturday in May. In 2008, more than 9,500 walkers raised over $1.12 million and helped over 190 of our local charities. In 1974, the Hawai'i Hotel Association sponsored a charitable "Superwalk" to benefit one major charitable organization. In 1978, the Hawai'i Hotel Association members voted to extend the reach of support offered by the Walk's fund-raising capability. The Visitor Industry CHARITY WALK is the result of this decision. Over the years, the HHLA's annual walk has grown to become one of the largest single-day fundraising events by a non-profit organization in the State of Hawaii. Since its inception in 1978, over $20 million has been raised, helping hundreds of local charities throughout the State.

As with so many fundraisers in these challenging times, all of the numbers statewide were down. Despite the large turnout on a beautiful sunny morning in Lihue, the mass of people did not meet the goal of $200,000 as it was announced that total collections amounted to roughly $165,000.

Overall, the Walk, sponsored by the Hawai‘i Hotel & Lodging Association, raised a total of $925,000 statewide, states a release from McNeil Wilson. There were a total of 6,585 walkers taking part in the effort on O‘ahu, Maui, Kaua‘i and the Big Island to raise funds benefiting more than 100 Hawai‘i charities.The Walk is one of the largest single-day fundraisers in the state, providing an opportunity for the visitor industry to collectively give back to the local community.

One of my friends was telling me yesterday that our economy is like a two-legged stool. Those two legs he said are tourism and construction. Of course he's in construction so he may be a bit biased. Still, tourism is essential to our island economy and even with tourism down 25% for the year, it's great to the see the community come out and support this Charity Walk event

Safeway Movin' Forward on Kauai

Thu, 07 May 2009 15:47:29 -0500

Safeway said today it has completed purchase of the land for its Hokulei Village shopping complex between Lihue and Puhi and is going forward with development of a new Safeway Lifestyle store and surrounding retailers. Sale of the property — a 22.8-acre commercial-zoned parcel at the corner of Kaumualii Highway and Nuhou Street owned by Grove Farm — was finalized last week.

Now Safeway needs to secure a couple of more tenants and according to the news release in today's Honolulu Advertiser, they are currently talking to fourteen potential tenants. If you look at the aerial overview below, you will see planned Hokulei Village on the left of the image. There are also a number of commercial lots for sale in what is known as Kukui Grove West. Despite the pricing correction that is happening in the residential market of Kauai, the commercial market is still strong because there is very little commercial space on this entire island.

It will be great to have another large supermarket in Lihue in addition to Star Market and Big Save. And then of course, there's Costco, whose prices are amazing but their selection is sometimes limited.

Read the article in today's Honolulu Advertiser, detailing Safeway's commitment to Hawaii and Kauai. Here's to the hopes that they are able to follow through in today's economic climate.

Top 8 Ways That Pre-Approval Will Benefit You

Tue, 21 Apr 2009 10:01:45 -0500

In this buyer's market with uncertaining lending conditions, it's really a good idea to get pre-approved. Standards for debt to income ratio's have gotten more stringent, and if you are at all leveraged, best to know what you can qualify for. Read this simple list below of eight benefits of pre-approval. Aloha from Kauai...

Via Olathe Real Estate Agent - Brad Papa (RE/MAX State Line):

1. Interest rates are usually locked for a set period. Getting pre-approved will let you know in advance exactly what your payments will be on offers you choose to make.

2. You won't waste time considering homes you cannot afford.

3. You can select the best loan package without being under pressure.

4. Most seller's require a pre-approval letter along with the contract, so it will make your offer more enticing.

5. You will have an estimate of total closing/purchase costs along with their explanations.

6. You will have the opportunity for your mortgage broker to explain the different financing alternatives and help you select the one best suited for you.

7. You will be able to accurately guess your monthly mortgage payment including principal, interest, private mortgage insurance (PMI), taxes and escrow.

8. Since you have the pre-approval step completed, your real estate agent will have ample time to discuss home styles, availability, location, schools and any specific features you desire.

Don't find the perfect house and then realize you can't afford it! Get pre-approved today and start looking for your future home. Contact Brad Papa if you have any questions or what to start your home buying journey!

Brad Papa
RE/MAX State Line
913-526-4985
bradleypapa@remax.net
www.PapasInTheHouse.com
Come to Papa For All Your Real Estate Needs!

Lush Kauai co-exists with Agrochemical Efforts

Mon, 20 Apr 2009 10:45:35 -0500

I just read a pretty provocative article about the GMO efforts happening on Kauai's west side and how much of our food on island is chemically processed and imported. Did not make me feel too good although we buy most of our produce from locally held farmer's markets. Read this compelling story about Kauai and some of the research that happens here. The author is clearly passionate but i felt there was enough good info here to link to it. THis little snippet below is taken from the article. I'm fortunate to have a good friend who grows organic dwarfed apple bananas and papaya on Kauai's NOrth Shore and shares them with me every week.

Kauai's North Shore is a lush place of almost heartbreaking beauty with a vibrant, racially mixed local culture. There, the Waipa Foundation hosts a weekly farmers market selling organic local food to support its work reviving traditional foodways. Like many Native Hawaiian organizations, they have a Hawaiian-language immersion school that integrates traditional food, farming, and fishing into their curriculum. They connect local farmers with schools, which are getting young people out of the classroom and into the mud of the taro patch. Activists on the island and throughout Hawai‘i are working toward food security. They achieved a ban on genetically modified coffee and are bringing back the original “gift economy” of exchanging traditional varieties of taro.

Just up the road from the Waipa farmers market, Limahuli Garden is restoring the traditional Hawaiian land-use system called an ahupua‘a. Kawika Winter, an engaging young ethnobotanist, Native Hawaiian, and the garden’s director, says the name lima huli means “turned hand.” It refers to a Hawaiian proverb which, roughly translated, says, “If your hand is turned up, you will be hungry; if your hand is turned down, toward the soil, your belly will be full.” The up-turned hand, Winter says, is not a positive symbol for Hawaiians. It is a sign of supplication. The down-turned hand, however, represents the hard work of cultivating the land.

Winter explains that the work they are doing there is all about remembering that the land is our ancestor. “We know that the way to get through difficult times is to use what was left to us—our land and our traditional knowledge. That will carry us into the future,” he says. “This is also our gift to the world.”

Visit Kauai's Sunshine markets to procure some of the locally grown and organic food available on the Garden Island

Kauai Tax Assessments are Makin' Me Boil...

Fri, 17 Apr 2009 12:01:21 -0500

On April 8th, The Garden Island published an article about a new value allocation approach being applied to Kauai condo's. According to the article, "After conducting site visits to all condominium properties on the island, the real property assessment office determined that the allocation of values between building and land for these properties needed to take into account differences in view planes and location within each project to better mirror their market values". This, according a a county news release.

Additionally, I received an email sent to all Realtors from the Real Property Review Officer further explaining, "For 2009, there was a major shift in how the total market value was allocation between land and building. Since land tax rates ($6.90 per $1,000) are lower than building tax rates ($7.90 per $1,000), it made sense - in lieu of a single assessed value and/or single tax rate - to reevaluate this means of allocation. The method utilized in prior assessments is known as “building extraction”, which places enormous weight on the improvements. In trying to be more equitable, the relationship between land values (as derived from vacant comps) and building values (as determined from the replacement cost less depreciation) was examined and applied proportionally to the overall values. The City & County of Honolulu began using these ratios to allocate total value between land and building before they eventually switched to single values. With the Real Property Tax Initiative before the Kauai County Council, albeit deferred for the time being, it is imperative to appropriately account for the value contribution between land and buildings since the recommended tax rates for land and building may have a 3:1 relationship (i.e. $9.00 for buildings and $3.00 for land). Naturally, with the current market conditions continuing to deteriorate in 2009 , I’m sure it is difficult for property owners to see their assessed values above what they believe they can now sell their properties for. Unfortunately, I am required to render the valuations as of a specific point in time using empirical data that was available to me prior to that date.

"In the Garden Island article, there was a small column stating that active listings not subject to distress situation were utilized as collateral data AND that the short sales, real estate owned properties and foreclosures were regarded as indicators of liquidation rather than market value. HELLO! Are these people serious or totally out of touch? The liquidation value IS the market value. Between 30 to 40% of the actual sales are distressed sales and it's the great bargains on Kauai that are finally moving the market. How the assessor can disregard this fact is completely beyond me. I have clients with a lot for sale at $995,000. We have not yet received offers after four months on market, YET, their assessment went up 35% percent for 2009. Adding to the confusion, many appraisals done for lenders are now coming in LOW. Appraisers and assessors are obviously working from a different playbook.

Walter Lewis, a frequent contributor to the Garden Island, published an article entitled, Not a Fair Fight, where he detailed the "kangaroo court conditions" that appear to be the modus operandi of the Kauai County Council and their tax constituency. We would like to see the county taxation reflect the reality of our realty market, not what was true several years ago. Unfair taxes have a way of hurting everyone.

What are the tax assessors doing in your community? If you live in a market that experienced great appreciation, are your assessed values reflecting the current market conditions? Let me hear from you...

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17 Years After - Poipu Beach Hotel reincarnates as Koa Kea Hotel

Wed, 15 Apr 2009 13:20:39 -0500

The Ko'a Kea Hotel & Resort officially resumed business yesterday as a boutique hotel, after years of renovation and permit processing, preceded by even more years of mouldering in place on Kauai's sunny South Shore. I've been hearing about this hotel for at least a year as my friend, Paul Koulbanis, started working there long before the place officially opened. Paul was formally the food and beverage manager at the PRINCEVILLE RESORT, and the timing of this opportunity at this new hotel turned out to be perfect for him.

The pocket resort, located next to Marriott's Waiohai Beach Club and Kiahuna Plantation, has a Hawaiian-themed spa with five treatment rooms, including a couples' suite; oceanfront massages are available. Treatments use "natural and indigenous ingredients, such as seaweed, pineapple, awapuhi root, red Kauai clay, guava and coconut," according to the press release.

Unlike the budget Poipu Beach Hotel of 20 years ago, this incarnation is obviously going for a romantic, grownups-oriented atmosphere, given the intimate ambience (only 121 rooms, with serene-chic interior design by Anita Brooks), posh amenities (L'Occitane toiletries, 42-inch flat-panel HDTV, iPod docking stations) -- and pre-recession prices.

I'm hoping to be playing some evening jazz there in the fine restaurant once the business gets up and running.

Read the full review from sfgate.com

Cool lobby and reception area at the Koa Kea Hotel

Pool and Ocean at the newly opened Koa Kea Hotel.

Ag Forum gathers key sustainability leaders of Kauai

Tue, 07 Apr 2009 16:00:55 -0500

Ken Stokes reports on his SuSHI sustainability blog about the ag forum that happened on Kauai this weekend. Read all about Kauai Ag Forum and Sustainability

Be sure to check all of the links in Ken's posts. They are each little pearls of wisdom unto themselves. I saw Ken for coffee last week and he mentioned a community in Toronto where a group of people are growing food in people's back yards. In other words, the property owners let this group manage their garden because they know how to, and perhaps the owners are too busy. Then, this food is distributed amongst the 500 folks who are participating in this system. And that's in Toronto.

Imagine what would be possible on an island like Kauai, where everything grows whether you want it to or not!

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Vacation Rental Ordinance still creating confusion on Kauai

Fri, 03 Apr 2009 16:53:32 -0500

At our GMM (general membership meeting) this morning, we had an engaging discussion about the state of Transient Vacation Rentals on Kauai.You see, the County Council passed an ordinance that went into effect last March, 2008, defining the rules and regulations of operating a transient vacation rental on our island. There were really two main components of this ordinance. First were the rules and regulations for those owners who were operating transient vacation rentals outside the VDA (visitor destination area). This means that anyone North of Princeville, say Hanalei, Wainiha, or Haena, with homes along or nearby to the beach, would be considered outside the VDA. The county established some extremely contingent criteria for what an owner had to submit in order to receive a NCUC (non-conforming use certificate) from the Planning Department of the County of Kauai. Along with a long list of criteria, the owners of these vacation rentals outside the VDA had to provide a "notarized affidavit". The ordinance stated that each owner needed to have their NCUC by March 31st, 2009.

Today we learned from Louie Abrams, our realtor board's super committed community expert and veteran of real estate and vacation renting, that over 200 applications over the approximately 500 that were submitted, were sent back, many because the affidavits were not notarized. This issue should not be taken lightly. The county's current attitude does not seem to be demonstrating much leniency on this issue and if these applications are eventually rejected, that means the properties in question will NOT be able to vacation rent their properties legally. For many buyers who purchase second homes on Kauai, generating cashflow from renting the home when an owner is off-island is important to the overall financial cost of ownership. A four-bedroom home on Hanalei Bay might rent for 6-7K a week and be occupied 75% of the time. That's a good chunk of cash to be generated by a home that you use part of the time. So, we're coming down to the wire ( over the next several months) with regards to the status on the properties outside the VDA.

This Hanalei Bay Home is outside the VDA but could possibly be a legal vacation rental with a proper Non-conforming Use Certificate

The second group of properties, are the hundreds, perhaps thousands of owners of condos and single-family homes, that are within the visitor destination area of Kauai. The planning department has not even begun to get to the applications of these properties. But, not to worry. Even if you missed the deadline for filing for your permit for this type of property, you can approach the county at any time to get your license. The county of Kauai is wanting owners to put their operating license number of the vacation rental on any marketing, advertising, and promotional stuff. This is a new twist to a business that has been operating for several decades very informally.

Princeville Caravan Update - April 1st

Fri, 03 Apr 2009 11:27:51 -0500

This week i took a video camera along to provide a visual update from a few of the seventeen properties that were on this week's caravan in Princeville. The caravan featured an assortment of condos and homes. From Puu Poa to Queen Emma's Bluff on the eastern edge of Princeville, there was plenty to see.

Title Guaranty provided a superb lunch catered by Mark's place. If you want further info on any of these lovely condos on the North Shore of Kauai,
shoot me an email - ron@hawaiilife.com

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