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The Honolulu Advertiser
Posted on: Tuesday, December 31, 2002

Year-end mortgage transactions mounting

By Andrew Gomes
Advertiser Staff Writer

The state Bureau of Conveyances has been swamped for the past three months because of increases in home sales, refinancing and time-share transactions. The bureau's registrar expects 34,000 filings this month.

Advertiser library photo • Oct. 9, 2002

A rush to finalize home purchases and refinance mortgages by the end of the year today has put a strain on the state Bureau of Conveyances as buyers and sellers of property try to complete a substantially higher number of transactions.

Carl Watanabe, department registrar, said at least 4,000 more filings are expected to be processed this month for an estimated total of about 34,000 — a level in December not seen in six to eight years.

The 15 percent increase in documents recorded with the state has created a lot of overtime for the department's staff of 50, many of whom are working late hours and coming in on weekends.

"We're scrambling," Watanabe said. "But everyone's handling it well."

Conveyance supervisor Susan Okamoto said employees have maintained same-day processing of hand-delivered documents and the typical two- to three-day backlog for mailed documents, which involve out-of-state and some Neighbor Island buyers or sellers.

A document recording surge during the past three months of the year is typical, Okamoto said. But special factors have added to the filing flurry this year, such as more homes sold, more refinancing and more time-share transactions.

Typically, it takes two or three months to complete a property transaction, so many purchase agreements being recorded this month were signed in October and November — two of the three most active months this year for home sales.

There were 1,684 sales of existing homes on O'ahu in October and November, 427 more than in the same two months last year. Sales of new homes also are expected to be higher with developers rushing to close sales so they can count revenue in the current year.

Mortgage documents are coming in with even higher frequency because interest rates dropped last week, prompting another surge of refinancing.

Time-share transactions have been higher all year, which multiplies recording work because there are 52 or 104 week or half-week interval deeds recorded for each unit in a time-share project, Okamoto said.

Only slight tax advantages are available to buyers completing a sale before the new year, as points, or fees paid to obtain a lower mortgage rate, are tax-deductible. Points paid to refinance also can be deducted.

Mike Pietsch, president of Title Guaranty of Hawaii Inc., said a number of high-end homes are usually purchased toward the end of the year to avoid capital gains taxes that a buyer would have incurred had the purchase money not been reinvested in real estate.

Daryl Hu, a local accountant with Miyamoto Togo & Hu LLP, added that a greater number of deeds are transferred at the end of the year by owners wanting to give property to their children for tax purposes.

Watanabe said he expects the greater flow of documents, which has been up since July, to continue into next year for at least six months. The department's receiving section is open for normal business hours today from 8:01 a.m. to 3:29 p.m.

Meanwhile, national home resales declined in November for the first time in three months and Chicago-area manufacturing slowed in December, indicating the U.S. economy is still struggling to recover.

November's resales fell 3.5 percent from a revised rate of 5.76 million units in October, with existing home sales lower in three of four regions. They fell 5.9 percent in the Northeast to a 640,000-unit pace, 4.8 percent in the South to a rate of 2.2 million units, and 3.9 percent in the Midwest to 1.22 million units. Resales in the West held at a 1.5 million-unit rate.

The Associated Press contributed to this story.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.

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Correction: • The delay in recording documents mailed to the state Bureau of Conveyances is two to three days. Information in an earlier version of this story was incorrect because of a reporter's error.