Viva Panama participates

Hispanidad Day parade in Los Angeles

The Viva Panama Organization proudly participates in the Hispanidad Day Parade which forms part of the celebrations of Hispanidad month in Los Angeles each year. Most Central and South American countries are represented. This years parade took place on October 12.

Mortgage brokers make the difference

US bank financing comes to Panama

By Sean Depasquale

US Banks have begun to operate in the Panamanian real estate market. This is partly due to the current market in the US and US banks recognizing the security and stability of lending in Panama. There are currently several US banks offering mortgages for foreigners purchasing and refinancing in Panama, Costa Rica and Dominican Republic. Loans are available to investors, second home buyers and owner occupants up to 80% of the purchase price.

Financing with a US Bank
It is important to educate the local market about US mortgage brokers. Developers and real estate agents in Panama are used to dealing directly with a local bank. Many US banks will only offer their mortgage products on a "wholesale" basis to approved brokers to offer on the "retail" level to the client. These mortgage brokers have been thoroughly screened, and approved by the individual bank and given permission to market the bank’s products. US mortgage brokers are authorized representatives of the banks and are licensed and regulated by the strict lending laws in the US. Mortgage brokers have the ability to offer the mortgage products of several different banks, saving the client from having to visit each bank individually. It also helps if a potential buyer is pre-qualified before shopping for a property. Being pre-qualified can save both the client and the developer/agent time and potential pitfalls later. The process is free and can be done within minutes over the phone or in person. There are several reputable mortgage brokers now operating in Panama who are providing this valuable service. Mortgage brokers offer different loan products and rates so it is a good idea to shop around.

US banks do not require life insurance and do not have any age restrictions. Payments are amortized over 30 years with various fixed periods available. Mortgages do not have any "Fesi" tax on top of the interest rates. Once the fixed periods are up, the rate can adjust 2% per year, 6% maximum over the life of the loan. Rates for foreigners with US banks are usually about 1% higher than rates in Panama. Payments, however, are comparable due to no life insurance requirements with US banks. US banks do not require that buyers have a bank account in Panama. Pre-payments penalties on a US mortgage are for the first 3 years only, set at 3% of the original balance the first year, 2% the second year and just 1% the 3rd year. Borrowers are allowed to pay off extra principle up to 20% per year without penalties during the 3 year penalty period. American banks will only lend on titled property and all loans require title insurance. Loans are not currently available for raw land.

Clients should also check with their country of origin as certain tax benefits may apply by having a US based mortgage.

Full approvals can typically be obtained with US banks within 72 hours. The average time from contract to closing is between 4-6 weeks. All closings are held in Panama and all properties will require building insurance. Buyers do not need to be in Panama to close, and applications can be done on line.

Documents required for approval include:

• Copy of passport and 2nd form of ID
• 1 month most recent pay stubs, and last 2 years W-2 forms if salaried.
• 2 year complete tax returns business and personal if self employed
• Pension letter and SSI awards letter for retirees
• 3 months bank statements business and personal
• 3 months statements for any investment accounts
• Appraisal (must be done by an approved appraiser)
• Copy of sales contract
• US credit report with a 660 minimum middle score (lender to provide)

The overall benefit of foreign banks entering the Panama real estate market is the availability of increased options to potential buyers. Buyers will have the ability to compare several different products from local and foreign banks to determine what product is most suited to their needs. Increased finance options to foreigners help drive more sales as well as bring a mortgage model that foreigners are used to.

For more information contact
Sean@MortgagePanama.us
www.mortgagepanama.us

Islands for sale

Here’s how to snap one up

By Steven Rich, Marketing Manager for Panama Offshore Legal Services

In the last issue, I described Law 2 of 2006 known as the "Island Law" allowing government concessions for foreign tourism development.

The Island Law also allows foreigners to purchase island properties from the Panamanian government. Purchase of island properties for tourism purposes requires that (a) the area must have special significance for tourism; and (b) the investment creates a large economic impact by creating many jobs.

There are restrictions. The most important one is that island properties are only sold for developing tourism projects. Other restrictions are that only up to 50% of an island can be sold to foreigners or foreign owned corporations. Tourism projects cannot exceed 30% of the total area of an island. No sales of designated historical or national heritage areas can occur. They cannot be located within designated Indian lands. They cannot have already been dedicated for environmental protection, forestry preserves, or scientific uses. You cannot construct over coral formations or destroy any ecosystem. Beach properties must maintain a minimum 22-meter easement from the high tide line. Finally, they cannot be located within 10 kilometers from Panama’s borders.

Granting sales of island and coastal properties owned by the government is very discretionary.

A contract to purchase island properties must include:

1. Full description of the area purchased including land area and boundaries;
2. Sale price which cannot be less than the average appraisals from the Ministry of Economics and Finance or the Catastro office;
3. Details of the amount to be invested in the project’s construction including infrastructure and utilities;
4. Full description of the proposed project including completion dates;
5. Environmental Impact Statement (EIS) with an environment Mitigation Plan;
6. Easement of beaches no less than 22 meters from the high tide line;
7. Full description of the public domain areas within the island property;
8. A bond of at least 10% of the contract price valid during the entire period of the project development. The bond reduces proportionally as improvements are registered with the government.

All island projects must comply with local zoning under a master plan prepared by the government. Developers may submit their own zoning plan to the "Ventanilla Unica" (Express Window) of Catastro until the government prepares its own plan. This office will be in charge of approving direct purchases of island properties.

Second and vacation homes get tax incentives from Law 2 in order to promote residential tourism investments. These vacation or retirement homes and condominium buildings built on coastal lands and islands designated as tourism development zones by the government are limited to one parcel per applicant.

In conclusion, the Island law allows coastal and island property development to take off at unprecedented levels. Foreigners are encouraged to develop these types of properties for tourism activities through government concessions or outright purchases from the government.

Kunas tackle problems (and benefits) of tourism

By Howard Walker

How can communities and areas with tourist attractions benefit from the positives of international tourism without suffering from its disadvantages? How can local economies be enhanced, jobs created, local values and cultures respected and the natural environment protected?

In Kuna Yala, the independent comarca (reservation) of the Kuna (San Blas) Indians on the Caribbean shore of Panama, they have considered the problem and are taking steps to tackle it. They have realized that, too often, visitors come to a tranquil beauty spot because of its special qualities and then proceed to destroy, through development-project overkill and population crowding, what they first came seeking. Obviously, this is unacceptable and can be prevented by having in place appropriate controls and then ensuring that they are enforced. The Mayor of booming Bocas del Toro, for example, lacking the means to cope, has been vocal, even desperate, in his pleas for assistance from the national government in light of the environmental and infrastructural problems facing his community.

Tourism affairs secretary appointed for Comarca. Photo by Lina Isaza.

Kuna Yala, another of Panama’s sensitive tourist areas, recently came into the spotlight at a special assembly of the Kuna General Congress held in Gardi Sugdup (Carti). As reported in ISGAR, the Kuna bimonthly bulletin, the theme of the meeting was tourism in Kuna Yala, and its purpose was to develop consensus about future direction among the delegates of the 40 island communities that attended. After several days of discussion from the 21st.to 23rd.,some very clearly stated norms for future tourist development were agreed upon. It has long been a policy that investment in Kuna territory must be by the Kuna people themselves, and this was reaffirmed. Furthermore, the maximum size of any development was prescribed.

Individual tourist projects located within an inhabited community will not be allowed to exceed a capacity of 40 overnight guests. This total can be increased to up to 60 overnight guests on uninhabited islands.

The impact of tourism on ocean waters, as well as land was considered. Clandestine "floating hotels," namely yachts on which passenger-guests have been staying for lengths of time around the islands of Kuna Yala will now be subject to much greater control. The maximum number of vessels permitted in the territory at any one time will be limited to two hundred, and the duration of each visit per yacht cannot exceed thirty days.

The Congress approved the appointment of a Tourism Affairs Secretary. As the name implies, all matters relating to tourism will go through this appointee prior to consideration by the Congress. Project applications, in conjunction with an assistant with technical/ multidisciplinary qualifications, will be examined for sustainability in design and operation.

Howard V.Walker. The writer is a retired Canadian architect, now living in Panama.

Hubba Hubba is a fun novel set in the land of the big coconuts

By Ken Jones

I had the pleasure of meeting Cindy Cody when she personally delivered a copy of her book, hot off the press, to our offices. I admit I had reservations about accepting her book "Hubba Hubba" for review. Was this going to be a tedious account of her experiences as an expat resident of Bocas Del Toro?

What a pleasant surprise! "Hubba Hubba" is a novel which should make it to the international best-seller lists for its pure entertainment value. But if you are Panamanian or a resident who knows the area, this book is especially fascinating because you will relate in a more personal way to the larger-than-life characters and hilarious situations the author conjures up.

While you might recognise some similarities, her characters hopefully will not be confused with real people, especially the corrupt mayor and the murderous chairman of the Municipal Council. At any rate her sly portrayals of both gringos and Bocatorenos will keep you chuckling page after page.

The book’s hero is a middle aged Florida multi-millionaire who accidentally finds himself on the Caribbean island of Hubba Hubba and is so fascinated by the beauty, the laid-back pace and the people so different from his monied circle in Florida, that he decides to leave his philandering wife and tedious business partner and make a new life in Hubba Hubba.

Of course its not easy but with guts, gringo aplomb and quite a few million dollars he wins his battles and gets the girl – a glorious, golden Hubba Hubban.

You may ask as I had to: what does Hubba Hubba mean? Apparently it is an expression coined among WW11 GI serving in the tropics--an exclamation of satisfaction but especially of admiration for the physical attributes of bosomy, sexy women and therefore translates as the land of the big coconuts.

Cindy Cody is an excellent writer with a talent to amuse and a keen eye. In Bocas she has found plenty to observe and serves it up with pithy descriptions and sparkling dialogue, laced with nicely interpreted Bocas dialect.

"Hubba Hubba" has a well-developed plot, plenty of excitement, sex and romance and is cleverly structured to include an element of social commentary in that although it points up the culture gap between the Hubba Hubbans (Bocato-raneans) and the gringos, it also shows that the gap is easily bridged.

This is a book you should make an effort to get hold of. Good job, Cindy Cody.