I called the OCC today to find out whether Citi overcharged me PMI. The lady told me to fill out an online complaint form which doubles as a request for information. So I briefly explained in the form how I felt I had been wronged. I think I’m supposed to hear back within 48 hours.
Archive for March 2011
So why bother worrying about a few hundred dollars here and there? It’s a lot of work to fight with an organization, especially a large one that’s not particularly reputable. And in the end, there is a good chance you’ll get nothing for your work. If you spend 40 hours trying to recoup $200, you’re making less than minimum wage.
The most important reason to fight back is to make the leaders of the organization think twice before creating a culture of ripping off the customer. If the customer is apathetic, there is nothing to stop a company from taking its customers’ money from now until the end of time. And the people who work there understand well that there is not a lot of incentive for the customers to fight (read lawsuit) over relatively small amounts of money. On the other side of the equation there is a lot of incentive to steal a little here and a little there. If you have a lot customers, the volume can quickly add up to millions.
Another reason, though, is that small amounts of money do add up over time. Suppose you pass on an opportunity to recover $1000 per year for 50 years. This isn’t really unreasonable. It’s probably not far off from what I’ve lost in the past few years either due to incompetence, mistakes, or outright fraud. Assuming 8% interest in the stock market after inflation, the present value of that money is about $13,000. The accumulated value 50 years from now is well over $600,000. That’s three Harvard educations! How do you feel about that $1000/year now?
When I was in high school I needed a method of backing up data. Standard 3.5″ floppy disks were too small. This was around the time that zip drives were becoming popular. I bought a Sony HiFD thinking I was being clever because it was backwards compatible with 3.5″ disks. It never worked correctly. Within a year or so, it vanished; everyone was using zip drives.
Since then I’ve decided I don’t want to be an early adopter. Don’t get me wrong — I love technology. I just don’t want to be the one to suffer through all the bugs and failures. I usually prefer to buy the previous generation of technology. That way I know it’s at least somewhat stable.
A few years ago I was bitten by a similar problem. I replaced my thermostat with a programmable ritetemp. It only cost $50-$60, and it was almost entirely electronic except for a few buttons. I wasn’t really worried about it failing. Due to problems with my heat pump the programmable features were never used after the first month following installation.
For the most part it worked for about two years, although all the features confused some of my roommates. Then it failed. Actually, it appears to me like it’s still working, but the HVAC guy who replaced it said it was the cause of the heat not turning on. I estimate the installation, diagnosis and re-installation, plus the two devices cost about $500. And I got absolutely nothing for that $500 except another (non-programmable) digital thermostat that might fail. The old one had probably been there since the house was built in the 1980s. The cost of the device was no big deal. The problem was the labor.
If you’re going to install new technology (or even old technology) in your house or your car, you have to consider not only what the cost of installation is, but what it will cost to get it replaced if it fails. If it’s not broke, don’t fix it. So often, it’s true!
My parents meticulously check every penny of every purchase on the receipt. The compare the receipts against the credit card statement. They check utility bills, etc. And they are frequently finding mistakes.
I rarely check receipts and bills closely. I understand that I’m probably being slightly overcharged on a fairly regular basis, but I have decided that the time and energy it takes to carefully audit every single receipt and bill is not worth the money it might save me. On the other hand, I do attempt to at least make a quick estimate of the correct amount of the receipt or bill. It takes only a few seconds to decide whether or not the total is at least in the ball park. I usually spend about 30 seconds scanning down my credit card statement to make sure there is nothing suspicious on there. Twice I’ve discovered that I was double charged. The first time, I disputed the charge with the bank and was eventually credited that amount. The second time, I called the company and they credited the amount back to my card. A few seconds of work can save you money.
See last post. First they made the claim that they had already offered to reduce my total points from 4.125 to 3.5, which wasn’t true. They then offered to reduce the points to 3.625. Even though this was not as good as what they were offering on their web site, I obviously wasn’t going to get anything better, so I took it.
The next day I was told they had relocked at 3.5 points. They were apparently so disorganized that they cost themselves .125 points. I received the new rate lock agreements for loans at 3.25% and 3.5 origination points, which I promptly signed and returned. As usual, they didn’t bother to correct any of the dates on the paperwork they gave me. In addition, the loan amounts still appeared to be wrong, but they were at least close to what I believed the correct amounts would ultimately be. About two weeks later, my loan originator again sent me the same rate lock agreements but changed the points to 3.625. I complained; they told me they would honor the original agreement of 3.5 points that was already signed.
It’s important to understand at this point, now almost three months into this refinance, that I still did not know how much money I was going to have to bring to settlement. I told them I needed to know the amount a few days ahead of time because it takes time to move money from one account to another. I received the following response:
RESPA laws require that we have the final numbers to you the day before settlement. Unfortunately we will not be able to accommodate your request to have the package for review 3 days in advance. You’ll need to make other arrangements for bringing funds to the table.
As you can imagine, I was pretty upset about this, but at least they were telling me that they were bound by law to send me the salient information at least 24 hours before settlement. I told them that I would hold them to the loan amounts specified in the rate lock agreement.
The loan amounts given were:
[address and loans removed]
3.25% @ 3.5 points (includes origination fee)
This is what I will hold you to. These loans should cover most or all
of the closing costs.
We’re more than happy, if not legally obligated, to honor the rate and points on your signed lock-in agreement.
I should have followed up on this response since the amount of the loans was not specifically addressed. However, given that this was an immediate and direct response to the very clear email above, I felt that they had confirmed (and stated that there were legally bound by) the amount of the loans we had agreed to in writing. So I was satisfied.
On a side note, a few days before this exchange was going on, NASA FCU suddenly started hounding me for further paperwork: verification of employment, PUD documents, and questions about previous loan applications. They ignored me for weeks and then, with less than two weeks before settlement, they suddenly started demanding paperwork. And it wasn’t easy to get. The homeowners’ association wanted to charge me for some of the electronic documents. After an uncertain delay, and a nasty email from me to the HOA, this was resolved.
The day before settlement, I asked NASA FCU to send me the closing paperwork. As they noted in the quote above, the law requires disclosure of the HUD-1 at least a day in advance. As usual, they ignored the law. The next day I talked to my loan originator. He refused to send me the closing paperwork and told me I had to contact the title company (actually my settlement attorney) to get a copy. I did, however they had only received what they needed from NASA FCU the night before, and thus could only send me preliminary versions of the HUD-1. I never did see the rest of the paperwork before settlement.
The attorney’s office sent the HUD-1 estimate. The loan amounts had changed. In fact, I was expecting to go to settlement with little or no money. Instead, I had to come up with about $10,000.00. Fearing something like this might happen, I made sure I had extra money in my checking account; it was enough to cover the extra closing costs. If I had not let that money build up in my checking account, I would not have been able to close. It was due only to NASA FCU’s repeated incompetence that I had the foresight to make sure I had far more funds available than they told me I would need. Needless to say, a lot of angry emails between NASA FCU went back and forth. They, of course, denied any wrong doing. I went to settlement without ever seeing the final HUD-1 or any of the rest of the documents, some of which had errors. In fact, I made them fix at least one document at settlement. The preliminary HUD-1 I had been given was not identical to the one I was given at settlement; they increased the amount I owed for the appraisal. To this day, I have never received the final HUD-1 for either property.
In addition to changing the loan amounts on the day of settlement, they also charged me an extra $285 origination fee on each loan. This was not disclosed anywhere. It was not in the GFE. It was not in the rate lock agreement. It simply materialized at settlement. Also, the extra $100 dollars I was charged for each appraisal was not part of the original charge. About two months after the initial appraisal, NASA FCU ordered a rent schedule. The appraisals specifically stated that the income approach was not used, which means the appraiser did not think the properties should be valued based on rent (which is how I would have done it). So why did I have to pay for rent schedules? I’ll never know. My mom’s theory is that NASA FCU was hoping to increase the loan amounts (which would increase the origination fees they collect) by using the income approach. This would help explain why they refused to tell me the correct amount of the loans. But it’s hard to know for sure without seeing written, incriminating evidence.
A few days after settlement, I complained to the BBB. I figured I would simply be ignored, but it was relatively easy to do and not very time consuming. To my surprise, I was eventually contacted by someone at NASA FCU by phone. But he was completely useless; he denied any wrong doing. Then I sent a packet of information to the NCUA, which regulates credit unions. I am still waiting for their response.
In the mean time they are still screwing up important paperwork. They sold my loans to USBank. There were delays in receiving my initial mortgage statements because my address was wrong.
I’ve purchased warranties on relatively low cost items before. It wasn’t something I gave much thought to. I was asked “do you want to warranty on those tires?” I said yes. Then ten minutes later I thought to myself: Gee, that was a waste of money. Even if something had happened to the tire during the the warranty period, it would have been cheaper to go to Walmart and have the hole plugged than to pay for the warranty.
On the other hand, sometimes that warranty is an important insurance policy. I don’t have enough experience to know when you need a warranty and when you don’t, but I can say that I’ve had bad experiences with HVAC. HVAC labor is probably the most expensive I’ve had to pay for. And that’s when things go as planned. When things go wrong, watch out!
My 23 year-old heat pump failed about a year after I bought my house. I was given a few estimates, after which I decided not to go cheap. The estimates seemed to come in at about the same price for the same heat pump, but only one of the companies made any attempt to do everything by the book. Britts Mechanical (I think was the name) made all the measurements to determine the correct heat pump capacity. They offered a one year warranty and said they would pull all the necessary permits. Even though they cost a little more, I didn’t want to take any risks.
Almost immediately after getting the new heat pump and air handler, my electric bill went way up. Now remember, my ancient heat pump from the 1980s probably had about half the efficiency of the modern one. I was expecting a bill that was 20%-40% lower. Unfortunately for me, I have a lot of self-doubt, especially when I don’t understand something very well. And I don’t have a clue how a heat pump works or what a normal August electric bill in North Carolina is. Also, I only had one data point; the high bills disappeared as soon as it cooled down.
In any case, I still complained to the owner that I believed something was wrong. He said he could come by and take a look and told me to contact the electric company to get information about average temperatures. Well I was doubting myself even more after that, so I declined and said I would keep an eye on it. So the next summer I lost my job and moved to Maryland. I got two very large electric bills during the summer but assumed it was because my roommates had simply turned the a/c way up (which was true) while I was gone. What I didn’t realize until the following summer was that they had turned the a/c up because it wasn’t working (and of course they never said anything about it).
Two years had passed, and I now had tenants living there. They were having problems with the a/c and eventually received a ridiculous electric bill. My warranty had, of course, expired by this point, but I contacted the company that did the HVAC work. Apparently they had gone out of business, but I didn’t know this yet. More about that soon. I was given the number for Air Experts, which at the time, I believed was the same company that had done the original work. The lady on the phone insisted that the problem was due to the high temperatures. After discussing it for a few minutes, I finally caved and accepted her conclusion. I gave my tenants the company’s contact information and went on vacation.
My tenants had the company come out more than once. Apparently the first time they couldn’t find the problem, so they did some maintenance instead. Eventually they found a few problems. The air handler wasn’t draining, and the heat sequensor was stuck which was causing the auxiliary heat to run continuously (whatever that means). It had obviously been this way since they installed it. I have no idea whether they did the installation wrong or if they just sold me a broken heat pump.
Many weeks went by without a bill ever appearing. I assumed they were embarrassed over the whole thing and weren’t going to send a bill. This had already cost maybe $1000 in excess electric bills, and I would think that for the two summers the thing was running with serious problems, its life span was probably shortened. Since I was partly at fault, I didn’t push the matter.
Then the bill did come. Apparently they had sent it to my tenants’ address instead of my current address. I felt like this was adding insult to injury. How many times am I going to have to pay for another person’s screw up? So I sent a nasty email. This was when I was told that the two companies were actually not the same. One had bought the assets and hired the employees of the other, and so they technically had no obligations to me. Sounds fishy, right? Ultimately, they agreed to drop most of the charges. Why I still had to pay for maintenance that I never even asked for, I don’t understand. I was irritated again a few months later when I received a letter that went out to all their customers stating that they the two companies had merged. To this day, I’m still not sure if one of them really ever went out of business. However, I was lucky to get any concession at all since the warranty had expired.
So I guess the lesson behind all this is to not only get a warranty, but make sure you use it. Don’t sit on it until it’s too late! I think you can see how you can quickly have costs mounting into the thousands of dollars.
That was the first bad experience. I had not learned my lesson yet. At almost the same time this was going on, the a/c compressor in my car failed. It cost around $750 to get it replaced. Here again, the labor was not cheap. I noticed almost immediately that the new one didn’t seem to be doing as good a job as the old one. However, I had just changed jobs and was only driving two miles to work, so I assumed it was just taking a while before it started cooling. I know, I know, I should have figured this out. I don’t even think a/c takes any start-up time like heat.
After a few months, I drove to North Carolina on a very hot day. I learned very quickly that the a/c was not working at all. I ended up making 10 trips in total to the mechanic (5 there and 5 back). On one of those trips, the company that sold the compressor, SPI Distribution, sent the wrong compressor, according to the mechanic. Ultimately, I wasted about a day’s worth of time making trips back and forth, and it cost me an extra $222, again for mistakes that were 100% another person’s fault. This time there was no warranty on the labor, and I wish I had thought about that before they did the work. I never made an attempt to get any of the money back. I had no warranty. I hadn’t directly done business withe the company that sold the part, and I couldn’t even get my mechanic to give me the receipt.
In the future, I won’t pay for any labor or parts that involve heating or cooling systems without a warranty. If it’s just duct work, maybe that’s OK, but expensive mechanical equipment needs a warranty. Perhaps I’ve just had some bad luck. What are your experiences?