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The Star-Advertiser’s Sept. 13 article, “State grapples with uncertainty over Kakaako affordable condo project debt,” quotes Albert Palmer, Hawaii Housing Finance and Development Corp.’s development section chief, as telling the board, “As is always the case with all loans, there is always a risk of not recovering the full amount.” That statement is a half-truth that should have been challenged by someone on the board.
By taking a junior position behind $9.8 million first, the extraordinary risk assumed by the state is losing the entire amount of its junior loan in a foreclosure by the senior loan. To be clear, the risk is not recovering any amount at all unless the state pays off the senior loan. The state was foolish not to insist on a senior position.
John Keiser
Makiki
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