There’s something I need to get off of my chest…
With interest rates on the rise I am glad—really glad—that I refinanced my mortgage recently. It is a 15-year adjustable with a starting rate of 2.65%. The rate can’t rise for five years, and any future rate increase after five years is capped.
It’s a good deal for me and my family. As I reflect on it, I’m reminded that consumers need to be vigilant in their financial dealings. It’s too easy to be complacent and let someone else take advantage of your situation. That’s a lesson I should have learned sooner.
You see, once upon a time (really not that long ago at all), I got the runaround from Bank of America.
My new lender is Third Federal Savings & Loan, out of Cleveland, and I was really pleased with the entire process—or I should say I was really pleased with Third Federal.
My prior lender, Bank of America? Not so much.
BofA (actually, its predecessor in interest, LaSalle Bank), you see, loaned me money more than a decade ago and got a second mortgage to secure the loan. I paid the loan off in 2003 and BofA was supposed to release the mortgage lien.
In fact, Illinois law (as do the laws of most states) requires lenders to do so within a certain timeframe and imposes a penalty for failing to do so. Nonetheless, BofA didn’t do this.
When I contacted BofA about the issue, I was told the issue would be resolved in two to five days. Well, that didn’t happen, and BofA next told me it would take more like 10 days. I faxed information to BofA at its request, but regardless of the fax confirmation I had, BofA told me it had never received my fax.
I called repeatedly for status updates, to no avail.
One time I called and I was told (not rudely, but in a way that made me feel like the representative really didn’t care about the matter even a little) there was no update.
The next time I was told the matter would be “accelerated.” Yet, when I called again I learned that the matter had not been accelerated.
It finally got done—more than a month after I first asked BofA to fix its more-than-decade-old error. I almost lost the interest rate lock with Third Federal, but (thankfully) didn’t.
I did pay more interest to BofA than I should have. And I wondered how many other people- maybe with less tenacity or time—or a law degree—simply gave up on refinancing with a bank other than BofA.
Turns out a lot of people seem to be in the same boat; enough that BofA has been sued in no fewer than three separate class actions—in New York, Illinois, and Georgia.
In its New York consolidated class action, BofA settled with plaintiffs for $6.2 million. Each of the 17,058 class members stood to receive between $180 and $780, or just over half of the amount recoverable under New York law. In Georgia, BofA settled by agreeing to pay up to $500 per class member.
And BofA is not alone in its lackadaisical approach to statutory lien release requirements. In fact, other banks such as Countrywide and Wells Fargo have been embroiled in similar class actions for their failure to release mortgage liens per applicable state statutory requirements.
You need to be proactive. Check to make sure you’re treated honestly and take action when those expectations are not met.
Stay vigilant whether it’s counting your change at the cash register, getting a receipt when you return something to a store to prove that you returned it—or making sure a bank does what it is supposed to do when you pay off a loan.
Editor’s Note: If you found this article helpful, you should check out (Alleged) Frauds, Fakes and Ponzis, a regular Financial Poise Column by Adam Hirsch.
You may also benefit from reading How to Identify A Scam.
Jonathan Friedland is a partner with Sugar Felsenthal Grais & Hammer, a law firm with offices in Chicago and New York City. Born and raised in a New York suburb, Friedland graduated SUNY-Albany magna cum laude in three years and then earned his law degree from the University of Pennsylvania Law School. Friedland clerked for…
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