Posts Tagged ‘consumer’

Attorney Jonathan Stein has blogged about Capitol One’s raising the credit card interest rates of 70-75% of its customers. Because …. you know the answer: It Can.



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JP Morgan Chase has decided not to discriminate against small business owners by tripling their commercial interest rates. Now consumers can share the wealth, too — with Chase, of course. USA Today reported on 2/8/2008 that Chase has added a $10 a MONTH fee to low-rate credit card accounts. Yep: $120 a year. Not only that, the fee is added to the card balance, which means it bears interest.

I believe we’ve found a new circle of Hell!

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I received notice from JP Morgan Chase yesterday that it’s tripling the annual percentage rate on my business line of credit. The hike was “in response to market conditions and to maintain profitability on your account.”

A NY Times report shows that JP Morgan Chase’s approved share of the first stimulus package is $25,000 million (see http://projects.nytimes.com/creditcrisis/recipients/table). And the purpose of that package was to do what again? Stimulate the economy by increasing the availability of credit? What Chase is doing is the opposite: discouraging small business borrowers from using their commercial lines of credit.

I thought Congress might like to know what Chase is doing with its stimulus package and have written to the relevant heads of the Senate and House committees. I encourage you to do the same if you, too, get a rate hike that has nothing to do with your behavior or credit. To make it easier, here are addresses:

Senator Max Baucus
Chairman, Senate Committee on Finance
511 Hart Senate Office Building
Washington, DC 20510

Senator Chuck Grassley
Ranking Member, Senate Committee on Finance
135 Hart Senate Office Building
Washington, DC 20510

Representative Barney Frank
Chairman, House Financial Services Committee
2252 Rayburn Building
Washington, DC 20515

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If Franz Kafka were alive today, he would be writing about the labyrinthine horrors of big corporations. Given some of what I’ve seen lately, he may as well be writing the script.

A client and I have been trying for five months to get two things from the company  servicing her mortgage, which I’ll call BigMortgage:  a complete copy of her file and verification of whether the original note holder still owns the retained interest he claims. We’ve tried the usual tools:  Calls. Email. Faxes. Demand letters, to the director of operations as well as to the legal department. But BigMortgage operates in its own universe, which is untainted by responsive communication, customer service, accountability and professional courtesy between lawyers. And honesty, I am coming to see.

Communication is set up to be stymied. Her account manager does not have a phone number;  we must either send her faxes or leave messages  on the voicemail of her supervisor (who is out one workday a week) and wait for someone to get around to calling.  Her account manager is also not  permitted to receive outside email, or so she says, and instructs my client not to use it again when she digs up an address.  We’re sent bits and pieces of the file but never near the 300 pages my client was previously told the file contains.  When she offers to drive to BigMortgage’s headquarters to look at her file herself, she is told not to bother; customers are not allowed in the building.

As for the issue of the retained interest — the only consistency is inconsistency. BigMortgage gives us a copy of a note purchase agreement that establishes the existence and the amount of the claimed interest. Then it says it won’t pay it and won’t explain why. Then it says it will pay and confirms the amount during the closing of the sale of my client’s house. My client, not yet appreciating that she is dealing with BigMortgage at the Brigadoonlike intersection point between its universe and ours, agrees to escrow that amount of money from the sale proceeds so that the retained interest claimant will release the weird lien he has placed on her property, which is what made  my client a supplicant at BigMortgage’s cold and unwelcoming altar in the first place.  BigMortgage is told on the spot that the escrow is being made relying on this representation. Two days later, the research department employee who communicated this news is no longer at his extension.  Attempts to track him down fail. Six weeks later, BigMortgage issues a letter saying it owes nothing. The legal department has not responded to my letter demanding payment of the interest before the escrow agreement deadline or an explanation of why it is not owed. And customer service is saying it will take 60 days to get a copy of the file and they’ll call back. Which they haven’t.

Friends who’ve worked at mortgage companies tell me files are notoriously incomplete. Probably BigMortgage can’t find the document that explains its position, they say, although it’s possible that the loan simply got entered incorrectly into the system.

Other attorneys tell me worse.  One has a client who renegotiated his loan, got a signed agreement out of BigMortgage, sent in his first payment under the new agreement and had it rejected as insufficient. Another tells me he has never, ever resolved a problem with BigMortgage by dealing with its own staff; it has always taken filing a lawsuit and getting outside counsel involved for anything to happen.  He says the corporation has a pattern of stonewalling — the  very word both my client and I have been using in the last months.  He has come to suspect that when BigMortgage acquires loans by absorbing other companies (as happened in my client’s case), its employees code all the loans the same, without looking at the originating documents.  Then it takes an absolute position of nonresponsiveness, which forces the affected consumer to bear the expense and responsibility of cleaning up however BigMortgage has messed up his account.

What a business model: We’re holding the money and the documents, and we won’t explain what we’ve done with either unless you sue and make us.   An approach like this would destroy a small business .  Make the customer responsible for your problem? He’ll not only leave; he’ll badmouth you to everyone he knows.  Grow big enough and  accountability becomes diffused and evaporates, especially if you hinder customers’ ability to reach the front line of employees. If honoring your own legal commitments or protecting the reputation of your brand isn’t enough, what incentive is there to be accountable when it’s so time-consuming and expensive for customers to leave you for a competitor?  How many consumers have the money or energy to battle this? How many people just give in, because they don’t have the resources to fight?

Dribbles of individual lawsuits haven’t to date inspired  BigMortgage or its competitors to adopt better business practices.  But other avenues may trigger systemic reform, especially if more and more people start walking down  them.   Alerting state and federal representatives to abusive and deceptive business practices.  Filing complaints with regulators. Feeding leads to investigative reporters.  Taking out mortgages with local banks, even if they cost a little more.  I will not be surprised if the current scrutiny of mortgage companies eventually extends to what they do to people who are not in default.

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