The Benn Pacific Blog

Sort by Month: June 2009

Tuesday, June 16, 2009

HAMPERING THE RECOVERY

Wall Street seems to think the worst of the recession is over… 48 straight days of increasing oil prices and increasing interest rates likely means that consumers will limit their discretionary spending at a time when we need an increase in spending to revive the economy.  The sick thing is that oil demand is not excessive, it’s just speculators again…and the Fed lending rate to the institutions is still at zero so it’s the bond investors driving yields (rates) up also.  In my opinion Wall Street is way ahead of the curve in anticipating the worse is over and starting the unwinding on its own… 

Just ranting today…!

Posted by Trevor Benn on June 16, 2009 at 09:38 AM
Real Estate News • (12) CommentsPermalink

Thursday, June 04, 2009

LEASEHOLD LOANS GO BYE BYE

As of June 1, 2009 Fannie Mae and Freddie Mac will no longer accept leasehold loans.  What does this mean for the market?  Well. for the US as a whole it’s probably not that big a deal but for Hawaii is a BIG deal.  Hawaii is a unique market where there are several large Trust organizations that own huge tracks of land. 

So here’s the history in a nutshell…  Many of these large Trusts actually date back to the original “Great Mahele” in which Hawaiian royalty divided up the lands amongst their relatives or favored advisors.  Well, historically these Trusts have often been tasked with creating income for the organization’s charitable causes without actually selling the underlying asset (land).  So the answer was to lease the land to developers to construct buildings etc.  Many of these leasehold buildings were developed in the 60’s and 70’s during the construction boom of Honolulu and most were on 75 year leases.  That means many of them are about halfway through their lease terms.  So there still exists hundreds, if not thousands, of indivdually owned leasehold units that no longer qualify to refinance or sell their units to buyers that want to get conventional financing.  That shrinks the buyer pool considerably!

A buyer can still get portfolio loans or FHA approved loans provided the lease expiration is at least 10 years longer than the loan term and meets a half a dozen other restrictions… probably a tough one!

So in the end… if you live in a leasehold condo and your Lessor offers the fee for purchase… BUY IT!
 

Posted by Trevor Benn on June 04, 2009 at 11:48 AM
Real Estate News • (62) CommentsPermalink
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