Solano Real Estate Scene: Honor our veterans
California and much of the country is experiencing the biggest housing shortage since the late 1940s.
The shortage after World War II was a result of the country focused on building ships and military equipment to defeat evil rather than building homes and although we sadly lost more than 400,000 men and women in combat, millions came home and many were short on money and many were wounded in action. The GI bill passed in 1944 to help veterans with education and housing.
Our housing shortage today is a result of a different and less-deadly evil called greed.
Builders stopped building houses when the 100 percent LTV liar loans went away in June 2007. From 2003 to mid-2007, Wall Street created, allowed and sustained more mortgage and real estate fraud than the previous 70 years combined.
The easy-to-get mortgages artificially inflated home values 80 percent to even 120 percent in some neighborhoods in Solano County from 2003 to 2007 until the bubble burst, resulting in a 50-percent to sometimes 75-percent drop in market values, causing more foreclosures and short sales in California than the previous 40 years combined.
Solano County ranked among the top 10 foreclosure counties in the entire country and, sadly, many Travis Air Force Base active duty service people and lots of former military veterans were victimized by the absurd lending practices of our largest banks along with the thousands of companies and individuals that entered the mortgage and real estate industry from 2002 to 2007.
Most of these people and companies that got into the mortgage and real estate business for the easy profits are now out of business. Thousands of mortgage companies big and small went out of business when the gig was up and when being a real estate or mortgage “professional” returned to normalcy and integrity and always doing your best for your client meant something again.
During this four years – from 2004 to 2007 – very few VA purchase money loans were done in Solano County because the VA didn’t offer stated income loans, also known as liar loans, and the demand for houses outweighed the supply. One hundred percent financing was available on conventional loans, which has always been the special niche offered to veterans via the GI bill.
The other reason very few VA loans closed during this easy-money period of time is because sellers would often take conventional loan offers over VA because of the perception that a VA loan was more difficult to process and took longer to close escrow. Conventional subprime and even prime lenders could close a conventional loan purchase transaction in 15 days because no proof of income or job verification was required and no down payment had to be verified.
Finally, the other reason we couldn’t get sellers to accept VA offers was because the VA requires a termite report and clearance and conventional lenders don’t unless the appraiser notes dry rot or visible signs of termites.
Sadly, this is occasionally happening today because of inventory shortages.
When a home for sale in Solano County gets multiple offers, the VA offer is often put at the bottom of the pile, which makes me sick. It makes me sick because the perception that VA is a more time-consuming process is not reality unless the property has huge amounts of dry rot and pest problems.
The perception that the appraisal takes longer and the VA appraiser is more conservative is just not true. Sure, the seller would prefer to sell their home as-is but the VA now allows the buyer to pay for the repairs and some of us lenders will even allow the dry rot repairs to be done after close of escrow as long as there aren’t any serious health and safety issues.
VA loan qualification and underwriting guidelines today are actually easier and more flexible than conventional Freddie Mac and Fannie Mae and lenders like me usually have our VA buyers totally approved prior to even writing an offer.
I encourage our community to accept VA offers and don’t be scared of VA buyers. Even if a VA buyer takes a couple of extra days to close and even if you find $500 to $1,000 worth of termites, let’s treat our veterans with the gratitude and fairness they deserve. Many of these people have dodged bullets and bombs for us and many have a percentage of service-connected disability.
Support our veterans!
