Solano Real Estate Scene: ‘Know before you owe’ mantra remains good advice

Solano Real Estate Scene: Jim Porter

Article By: Jim Porter – November 4, 2022

Since the crash of 2008 there have been tons of new regulations that have been implemented by the government and the Consumer Finance Protection Bureau to protect the public from predatory lenders and Wall Street-backed subprime mortgages.

Tens of thousands of California loan officers left the business in 2008 when selling mortgage loans returned to a profession that had always been a challenging career choice because nobody loves borrowing money, and purchasing a home is always the largest financial transaction of a person’s life.

My readers are probably aware that I can be pretty darn critical of the government, but I and many loan officers and Realtors who witnessed what happened from 2003 to 2008 celebrated when all the unprofessional and unethical competitors left the business. Credit and income underwriting returned to normal, and borrowers had to qualify for a mortgage. Liar loans and horrible adjustable-rate mortgages were outlawed.

These opportunists who got in the business for the easy money selling loans and homes left markets like Solano County in ruins.

Our market has fully recovered over the past 14 years and home values are now approximately 10 to 15% higher than they were in 2006. Ethical and professional lenders have been practicing the Consumer Finance Protection Bureau theme of “Know Before You Owe” since the Fair Housing Act and the Truth in Lending Act was passed in 1968, and the crooks who have creeped in over the years never last because they eventually get caught and Realtors will not refer buyers to lenders they don’t trust.

In 1990, I helped an awesome first-time homebuyer couple buy their first house for $110,000. My escrow officer called me while my clients were signing the final loan documents and told me Mrs. Mendoza was crying because her cash to close escrow was $400 more than she expected, and she didn’t have the $400. Jeanne put my client on the phone with me and I assured her we would cover that $400 and not to worry.

I immediately drove across the street to review the loan docs and noticed my bank had a $1,000 flood insurance premium added to the cash to close, which was a mistake because the home was a block away from the flood zone. The $1,000 was removed and the buyer’s cash to close was $600 lower than she and her husband expected and had in their bank. They were joyful, to say the least.

I had only been on the job in Vacaville for one year after moving here from the San Francisco market and I learned a valuable lesson from the Mendoza family. Buying your first home is stressful and homebuyer education well in advance of even writing an offer to purchase is critical to reducing the stress.

I suggest getting prequalified and reviewing some estimates right now at no cost or obligation even if you are not going to buy until next year. It’s free education and no student loan is required.

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.