New Wrinkle for Underinsured Condos

I wrote last week about many condo projects in our state having insufficient hurricane coverage.  As of this date, I don’t know of any lender that is willing to lend in a project with insufficient coverage.

 

I was discussing this issue with my wife and business partner Michelle, who brought up a very important fact I hadn’t thought of.  All these projects that have insufficient insurance coverage not only prevent new financing from taking place, but every condo with an existing mortgage is now in default of the provisions of their mortgage.

 

Your mortgage document, that nearly 20-page form that no one ever really reads, is a contract between you and the lender.  It spells out in clear terms what both you and the lender agree to abide by until your loan is paid off.  One of those provisions is that YOU must keep adequate insurance on the property, the collateral for the loan.  That only makes sense.  If something were to happen that destroyed your home, the lender needs to know there’s sufficient insurance in place to rebuild the property.

 

When you own a condo, there’s a condo rider to your mortgage.  That document contains additional covenants because there’s an association the homeowner is a part of.  That document says that so long as the association maintains adequate insurance, the homeowner doesn’t need to have their own coverage for insurance kept by the association.  But if the association fails to maintain adequate coverage, the homeowner is ultimately responsible.  Understand this very important fact - you are technically in default of your mortgage.  The lender could force-place insurance on your unit, and you are required to pay that additional fee.  They could also call your mortgage due for being in default.

 

The banks are very aware of this situation.  Their legal teams are meeting to decide what to do.  Below I list all the projects that currently have insufficient coverage.  The current list has over 200 projects throughout the state.  There are thousands of mortgages affected by this insurance issue.

 

If you live in one of the projects listed below.  Maybe it’s time you go to one of your condo board meetings and bring up the issue of why the board has put the association and your home in this precarious situation.

 

 

 

The Current List of Condos with Insufficient Insurance

If your condo is on the list below, you need to understand that financing is currently not available for your project.  Also, you are technically in violation of the terms of your mortgage – you are in default.

 

Some projects are listed by their address.  Some by their name.  Some are listed alphabetically when the project name starts with “The”.

 

This is the most comprehensive list as of January 19, 2024.  Each project may have made recent changes to their coverage that this list doesn’t reflect.  It is always best to confirm the project’s coverage with the Master Insurance Summary available from the property management company.

 

383 Kalaimoku

400 Keawe

444 Nahua

465 Kapahulu

802 Punahou

909 Kapiolani

965 Prospect

1001 Queen

1133 Waimanu

1288 Ala Moana

1330 Wilder

1350 Ala Moana

1448 Young

1450 Young

1551 Ala Wai

1718 Ana Puni

2233 Ala Wai

2987 Kalakaua

3019 Kalakaua

3388 Salt Lake

7000 Hawaii Kai Drive (Hale Ka Lae) Bldgs. 2 & 3

A'ali'i

Admiral Thomas Apartments

Aeo

Ala Moana Hotel

Ala Wai Cove

Ala Wai Plaza Skyrise

Ala Wai Terrace

Alexander Arms

Alexander Towers

Allure Waikiki

Aloha Lani

Anga Roa

Atkinson Plaza

Beach Villas at Ko Olina

Bellevue Tower

Big Surf

Bishop Gardens

Canterbury Place

Capitol Place

Century Park Plaza

Century West

Chandelier

Chateau Waikiki

Clairmont

Clark Street Apartments

Colonnade on the Greens

Commodore

Commodore Waikiki

Coral Terrace

Coty Towers

Country Club Village Phase 2, Bldgs 4 & 5

Country Club Village Phase 1, Bldgs 1,2,3

Country Club Vista

Courtyards at Punahou

Craigside

Diamond Head Apartments

Diamond Head Plaza

Dominis West

East Lake Apartments

Executive Centre

Fairway House

Fairway Manor

Fairway Villa

Fountains at Makiki

Governor Cleghorn

Haiku Hale

Hale Aloha

Hale Anaole

Hale Kulanui

Hale O Naia

Hapuna Beach Residences

Harbour Ridge

Hawaiian Monarch

Hawaiki Tower

Heritage House

Hokua

Hokuahi Apartments

Holiday lakeview

Holiday Village

Holomua

Honolulu Park Place

Honolulu Tower

Honolulu Towers

Ilima West Apartments

Imperial Plaza

Iolani Court Plaza

Jason Apartments

Kaanapali Shores

Kahala Towers

Kailani

Kaimana Lanais

Kaimuki Parkside

Kaiolu Sunrise

Kalakaua Sands

Kapiolani Gardens

Kapiolani Manor

Kapiolani Townhouse

Kaualana Manor I

Kemoo by the Lake

Keola La'i

Kinau Lanais

King Manor

Kings Gate

Ko’ula

Kokea Gardens

Kona Aui

Kona Plaza

Ko'olani

Ko'ula

Kuhio Plaza

Kunawai Terrace

La Casa

Lakecrest

Lakeside West

Lakeview Plaza

Lakeview Sands

Lanikea at Waikiki

Lehua Manor

Leisure Heritage Apartments

Leolua Gardens

Lilikoi

Liliuokalani Gardens

Lima Apartments

Loft at Waikiki

Luana Waikiki

Lunalilo Tower

Maile Terrace

Makaha Shores

Makaha Valley Towers

Makiki Bel Aire

Makiki Park Place

Makiki Plaza

Makiki Towers

Makini at Kinau

Marina Gardens

Marina Towers

Meridian East

Moana Pacific

Moana Vista

Mokulani Apartments

Nalanui Hale

Nauru Tower

Northbrook Melemanu Woodlands

Nuuanu Brookside

Nuuanu Parkside

Oahu Surf II

Ocean Villas at Turtle Bay Resort

Ode Rancho

Pacific Grand

Pacific Monarch

Pacifica Honolulu

Pacificana Atlas

Pakalana

Parkland Gardens

Parkview

Pearl I

Pearl II

Pearl Regency

Pearl Ridge Gardens and Tower

Piikoi Towers

Pinnacle Honolulu

Plaza at Century Court

Plumeria Hale

Pohakea Point Phase IV

Princess Kealoha

Prospect Tower

Pulelehua

Punahou Chalet

Punahou Gardens

Punahou Regency

Punahou Royale

Punahou Sunset

Punahou Towers

Queen Emma Gardens

Royal Aloha

Royal Court

Royal Iolani

Royal Kuhio

Royal Towers

Sandalwood Place

Scenic Towers

Su Casa

Sunset Lakeview

Symphony Honolulu

Tahitienne

The Central Ala Moana

The Collection

The Consulate

The Elms

The Kamaaina

The Kona Plaza

The Park at Pearlridge

The Pumehana

The Residence at Makiki

The Ritz-Carlton Waikiki

The Roselei

The Sovereign

The Watermark

The Windsor

The Woodwinds

Tradewinds Hotel

Trump International Hotel & Tower

Valleyview-Melemanu

Victoria Mansion

Victoria Plaza

Waialae Gardens

Waihonua at Kewalo

Waikiki Banyan

Waikiki Beach Tower

Waikiki Cove

Waikiki Grand

Waikiki Lanais

Wilder at Piikoi

Wilder Tower

Windward Cove

Windward Passage

Woodrose

 

 

 

 

 

 

And now the week’s economic news…….

 

Strong Economic Data

Strong data on consumer spending and the labor market raised the investor outlook for economic growth this year.  This was negative for mortgage rates, which ended the week higher.

 

Despite higher prices and credit card rates, consumer spending remained strong during the holiday shopping period and again outperformed the forecasts of economists.  In December, retail sales rose 0.6% from November, above the consensus for an increase of 0.4%.  Retail sales are not adjusted for inflation yet were 5.6% higher than a year ago, exceeding the increase in prices over that period.

 

The Department of Labor releases the total number of new claims for unemployment insurance each week, and the most recent reading was just 187,000, the fewest since September 2022.  This was down sharply from the inflated figures seen during the early months of the pandemic and a little lower than the levels which were typical during 2019.  Although some other recent economic reports such as nonfarm payroll growth and job openings have suggested some easing of labor market conditions, the data on jobless claims has remained consistently strong.

 

Sales of existing homes in December fell slightly from November and were 6% lower than last year at this time.  Inventory levels remain stuck near historic lows, standing at just a 3.2-month supply nationally, below the 4.3-month supply typical in a balanced market.  The median existing-home price of $382,600 was 4% higher than last year at this time.

 

Additional inventory of homes continues to be badly needed in many areas, and the latest data was mixed.  In December, single-family housing starts fell 9% from November (following a huge 18% increase last month) but were still 16% higher than a year ago.  Single-family building permits, a leading indicator of future construction, rose to the best level since May 2022.  In addition, a separate survey of home builder sentiment on housing market conditions from the NAHB unexpectedly jumped from 37 to 44.

 

 

 

 

Next Week

Investors will continue to watch for Fed officials to elaborate on their plans for future monetary policy.  For economic reports, New Home Sales and Gross Domestic Product (GDP), the broadest measure of economic growth, will be released on Thursday.  Personal Income and the PCE price index, the inflation indicator favored by the Fed, will come out on Friday.  The next Fed meeting will take place on January 31.

 

 

Until next week…….