Solano Real Estate Scene: Jim Porter
Article By: Jim Porter – July 26, 2024
From 1984 to 1989, I paid thousands of dollars in late fees. I was a real goofball, and because I like to make people laugh, later in life after I learned from my mistakes, I would often joke about how if I was given the opportunity to pay a late fee or penalty from ’84 to ’89, I would do it.
Yes, occasionally it was because I was short of funds to pay the monthly payment on time but most of the time it was because my wife and I were financially disorganized and sloppy. My favorite example of this stupidity was our property taxes of $700 due every six months.
I can’t even tell you how many times I paid this bill one to two days late and paid a 10% penalty for the one day. The property tax was due Nov. 1 and San Mateo County gave me a 40-day grace period – until Dec. 10 – to pay the $700, and I paid it on Dec. 11. I did not have an impound account with Home Savings for taxes and insurance, so it was up to me to pay the property tax.
The San Mateo County tax collector graciously allowed me to pay a day late and if I wanted to pay it 60 days later, the penalty would still have only been 10%. Now, the $70 penalty was certainly small potatoes in comparison to the 10% interest rate and occasional late fees I was paying on my first mortgage or the 15% rate and late fees I was paying on my second mortgage, but after we had to sell our starter home in Pacifica in 1989 to pay off all our debt and start over in Vacaville with four little kids and only $5,000 in our pocket, I looked back and realized how financially painful late fees and penalties can be for middle-class people trying to achieve the American Dream.
San Mateo county basically lent me $700 for one day and charged me $70 for the service. To truly understand how dumb it is to pay this one-day late fee, you must pretend someone lent you the $700 on the 10th and charged you $70 for the one-day loan, which is 10% per day. The mob’s loan sharks charge 10% to 20% “vig” per week for loans, yet I found a way to pay 10% per day, 70% per week, which is an interest rate of 3640% per year.
DMV, credit card companies, financial technology lenders, banks, credit unions and mortgage companies make billions per year on late fees, and 90% of these fees are paid by young people and folks that have a history of constantly struggling with low FICO scores and paying their bills.
Paying late fees and super high interest rates on credit cards to buy food, vacations and clothing is why 50% of all adult Americans have less than $1,500 in savings and why 52% of all Americans over 55 have no retirement plan of pension.
Get smart, teach your kids, and if you are smart but super sloppy, disorganized or busy at work, hire someone to help you get it together.
Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.
