Wednesday, July 11, 2012

Banks - same game, new rules

Had a recent situation I wanted to share and warn you about:  A family member recently obtained a mortgage to purchase a home.  The bank offered her the split the payment option so she pays her mortgage in two segments each month.  When this option was first developed it became popular because by doing it this way 7 years will eventually be cut from the time frame of the mortgage due to the positive effect it has on bringing the interest down so much quicker.

After one year of paying this way she inquired at the bank regarding her payments and was told after much questioning that "NO" the early part of the payment was not being applied directly to the mortgage it was being HELD until the second half was received and then a single payment was made to her loan.  Needless to say she was irate!  The bank simply maintained her funds to the benefit of THEIR use but did not apply it to the loan amount for HER benefit.  It was all a smokescreen from which no benefit was occurring.

This is a significant change to the way the bank handles payments than in the past AND the sales pitch is almost identical so one is led to believe that it is the same program.  If you have selected this option with your bank, ASK.  You may just be going down another primrose path expecting that your mortgage is being reduced when in fact it may not be.

One cannot help but wonder how many millions Wells Fargo and other major banks are holding and using in this program under the innocent wrong expectations of their customers and how many rude awakenings there will be in the future.

This cartoon seems to sum it up best:
In other news:

A mother took her 4 year old to the doctor for some tests. After the appointment a $20 bill was received and paid.  A month later another bill arrived.  The mother called and told the billing department that she had mailed the payment .  They looked at the account and said they had indeed received the payment and it was applied to the account under the mothers name not the daughters so one account had a credit balance and the other showed a past due.  They assured her they would fix it. 

Soon a second bill came and the mother ignored it figuring that the timing was off and it would be corrected by the next billing cycle.  The third month past and she called again.  Finally the forth month arrived with a bill saying the 4 year old child had been turned into COLLECTIONS for lack of payment.

The mother then had a chance to work on her new patience (not patients) development skills and called the office again and explaining the situation while trying to keep her irate attitude in check.

From the archives:


Practical Parsimony said...

Thanks for the warning on the scam banks are perpetrating.

What kind of accounting system does the doctor's office use? None?

Carol Schultz said...

One of those systems where the right hand does not know what the left hand is doing.

Rosemary said...

I have wondered about this very thing. Thank you for making it as clear as I thought it probably was. Another way my dau in law (without knowing it) wanted me to get caught. Her bank wanted her to make a 1/2 payment every two weeks. and she thought it would help me to do that BUT like I pointed out to her being on SS several months a year I would be making 3 payments in a month ( some months have 5 weeks) I couldn't afford that. That would give them even more of your money to use like your article says!!! Really enjoy your articles.

Carol Schultz said...

It's sad and makes one angry that the industry we should be able to trust help us make good financial decisions is the one we now have to watch out for. And, thank you so much for your long term readership and feedback!

Barry Trujillo said...

I think it's time we have a private agency that will keep banks in check. Not possible? Because we can't trust the government to do better either. This is somewhat frustrating because corporations can cheat and steal millions of dollars and still get away with it. If they lose money, the government will bail them out. Whatever happened to America?

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Carol Schultz said...

Thanks for stopping by Barry. I do think Elizabeth Warren is a good start. Hope she has not be overtaken by politics.