Monday, August 18, 2008

Furious

low·ball [loh-bawl]
–verb (used with object)
2. to deliberately estimate a lower price for (a service or merchandise) than one intends to charge: to lowball the cost of a move.
3. to give a false estimate or bid for.
Definition from Dictionary.com.

lie [lahy] - noun, verb, lied, ly·ing.
–noun
1. a false statement made with deliberate intent to deceive; an intentional untruth; a falsehood.
2. something intended or serving to convey a false impression; imposture: His flashy car was a lie that deceived no one.
3. an inaccurate or false statement.
4. the charge or accusation of lying: He flung the lie back at his accusers.
–verb (used without object)
5. to speak falsely or utter untruth knowingly, as with intent to deceive.
6. to express what is false; convey a false impression.
Definition from Dictionary.com.


Dear USAA Federal Savings Bank,

Today, you lost a customer. I feel betrayed and embarrassed that I placed my trust in you to finance my mortgage. I've been a USAA customer for over 14 years, and a USAA Federal Savings Bank customer for over 10 years. I've had two previous home mortgages through USAA.

Our realtor wanted us to use a local mortgage broker that she works with on a regular basis. I talked at length with the local mortgage broker and with the USAA loan agents to ask about policies, fees, rates, and closing costs.

The local mortgage broker told me that because my credit score was less than 720, that he was required to charge me an additional 1/8% on my annual interest rate. He assured me that this was standard practice and that when I looked at the rates on any other bank website that I would have to add 1/8% due to my credit score.

That sounded odd to me, and I wanted a second opinion. I called the USAA loan agent and asked: (1) Is it true that all banks will add 1/8% due to my credit score being less than 720? (2) Does USAA practice the same policy of adding 1/8%? His response was, "No, that is not true, and no, USAA will not add 1/8% to your interest rate due to your credit score." I trusted and believed him because I thought USAA would look at my credit report and understand the ridiculous circumstances that lowered my credit score less than 720.

All that being said, I set aside the questions about the interest rates and just compared the bottom line on the Good Faith Estimates from USAA and from the local mortgage broker. USAA's closing costs were $2,200 lower, and USAA's monthly payment was $38 less than the local mortgage broker's payment. The difference in monthly payments wasn't significant enough to sway my decision one way or the other, but the closing costs were.

Our realtor expressed concern that the numbers on the USAA estimate were not accurate and to verify. I didn't want to blindly jump on the USAA band wagon without understanding the reason why there was such a big difference in closing costs. One of the biggest factors was the difference in county taxes. So I called the USAA representative and asked him about the differences line item by line item. He kept reassuring me that of course USAA was going to be lower because USAA didn't have any hidden fees and we're not brokers out to make money - we're here to support YOU. When I very specifically asked about the county taxes, he replied to me on the phone and in an email, "we stand by our estimate."

Based on my history with USAA, I trusted you, and I chose to obtain my mortgage through USAA.

The first episode that challenged my trust in USAA was the phone call that made it clear to me that USAA had thrown me a lowball estimate to lure my business. The loan processor called and informed me that the closing costs were going to be $3,100 more than the original "good faith" estimate, due to things such as the county taxes. I voiced my displeasure with this, and the loan processor said she would run the numbers again and call me back.

After recalculating, she called me back with a new estimate of closing costs that was only $1,200 higher than the original estimate. I told her I still found that unacceptable since I had specifically brought this to the attention of the loan agent when I applied for the loan and he assured me the estimate was correct and "we stand by our estimate." The loan processor was terribly apologetic and said in order to keep my business, they would offer me 0.xx points or $962.50 off at closing. It didn't make up for the entire $1,200 difference, but it was most of it, and I acknowledge that there is some amount of variability in an "estimate."

That episode left a bad taste in my mouth. If my books weren't all in cardboard boxes on their way to Virginia right now, I would pull out my Social Psychology textbook and cite the chapter and page number about high pressure sales tactics and lowball estimates. This episode smacked of a classic lowball case study.

Everything was all set for closing escrow at the end of the month. My wife and I have just been watching the interest rates in order to decide when to lock-in our interest rate. Both the initial loan agent and the subsequent loan processor recommended we sign up for USAA's Rate Watch service that would email us the current interest rates every day. The emails tended to be slow, so I usually ended up checking on the USAA website.

The second and most recent episode that has destroyed my trust in USAA happened this morning. My wife and I decided the time was right, or rather the interest rate was right at 6.5%, and that I should call USAA to lock in my interest rate.

I called and told the USAA representative that I would like to lock in our interest rate. She was very cheerful and happy to help me, and said, "Let's take a look at what the rates are today." She proceeded to tell me that today's interest rate was 6.625%. I said, "Why is the interest rate you are telling me different from the interest rate on the USAA website?" She had to put me on hold to look into it, but when she came back on the line, she said it was because my credit score is less than 720, so they are required to charge me an additional 1/8%.

Saying that I lost my temper would be putting it mildly. I was absolutely furious. My hands were shaking I was so mad. The loan agent who convinced me to obtain my mortgage loan through USAA absolutely lied to me. The loan processor told me she would need to go review my file and call me back within the hour. I allowed her to go do her research while I let my temper cool off.

When she called back, she said she had reviewed my file and spoken with the loan agent. She tried to tell me that he didn't lie to me. She said it was because the interest rate he quoted me on the phone when we first talked already included that additional 1/8%, he was supposedly being truthful with me and telling me exactly the interest rate I was going to get.

She didn't get it.

I specifically asked him, "Does USAA add 1/8% to the interest rate because my credit score is less than 720?" He said, "No." Please tell me, how is that NOT lying? Plus, at NO point when the loan agent or the loan processor recommended that I sign up for the USAA Rate Watch program did EITHER of them say, "You will need to add 1/8% to the published interest rate because your credit score is less than 720."

That loan agent most certainly, flat out, absolutely, 100%, unequivocally, obviously, and unmistakenly

LIED TO ME

about the interest rate and

LOWBALLED

the initial "good faith" estimate in order to lure me in to choosing USAA over the other bank.

The loan processor was unwilling to acknowledge that the loan agent had lied, and she would not offer any other compensation for the difference. Her justification was that the closing costs now are the same as the closing costs on the good faith estimate (the updated one, after they fixed the lowball). I told her this wasn't about the closing costs. This was now about the interest rate and the subsequent monthly payment.

Looking at the table of interest rates and points on the USAA website, I saw that it cost 0.5 points to lower the interest rate 0.125%, so I suggested that she give me the 6.5% that is advertised on the USAA website and not charge me the 0.5 points. She said there is no way she could do that because she had already given me 0.xx points off. My rebuttal was that 0.xx points off was to compensate me for the initial lowball estimate and didn't have anything to do with the loan agent lying to me about the interest rate, but she refused to budge.

Luckily for me, the loan agent at the local mortgage broker was very understanding when I called him today. He still had all my pre-approved loan paperwork and said he would have no problem achieving our desired closing date. I obtained a new good faith estimates from both USAA and the local mortgage broker, and the local mortgage broker's interest rate, monthly payment, and bottom line closing costs are all lower than the updated USAA estimates.

Since USAA has violated my trust by lowballing me and lying to me, I am cancelling my loan application with USAA, and I'm going with the local mortgage broker.

In my previous blog post on this topic, I did not mention the name of USAA Federal Savings Bank, because I was giving USAA the benefit of the doubt. I assumed it was an isolated incident, and I didn't want to publicly criticize the bank for an isolated incident.

Now that it is clear to me from speaking to multiple personnel at USAA that USAA was not interested in maintaining me as a customer and unwilling to put their money where their mouth is. I am writing this as an open letter on the internet so that others can learn from my experience and be wary of future business dealings with USAA Federal Savings Bank.

Your absolutely furious and formerly loyal customer,
Kevin

13 comments:

divrchk said...

So, now I have to ask which bank and insurance company are you switching to for checking and insurance? LW had said you weren't switching those, but if you're saying they've lost a customer, I assume you're pulling everything from them? Just curious...

J120 Bowman said...

Being 10 years removed from my last home buying experience and being a loyal customer with USAA, thanks for the information. I have the possibility to relocate for my job and your experience only reinforces my past mental scars and anguish with my previous three home buying experiences.

In the new world order of the "credit crisis" I see the banking/mortgage industry has circled the wagons to keep their profits up at our expense.

Good luck!

blunoz said...

At this point, I do not intend to switch my insurance. As for the bank, that will take some more research. I realize that USAA farms out their mortgage services to some sort of subsidiary company, and someone told me yesterday that they recently changed hands to a new company. I need to research if that's true or not. I know that when you start out on the USAA Federal Savings Bank website and then click on mortgages, it tells you that you're LEAVING the USAA website and it's taking you to the website of whatever contract company is providing their mortgage services.

So for the time being, they lost a mortgage customer. I will research the affiliation of the bank versus the mortgage company, and I may file a complaint with the bank and/or the Better Business Bureau.

BossLadyB said...

We had great service with them until we moved here and they partnered with Experian. They messed up our car loan and tried to make us pay the "loan fee" again. They put a hold on our credit card multiple times saying our credit was bad because of their Experian report which was wrong. I logged on and our credit score was almost perfect. I called to correct them and they "noted" it and then offered to sign us up with Experian. They also messed up my parent's homeowners insurance. I could write a book on that. It was awful.
Anyway, we are not big fans. I am sorry you guys are having to deal with all this. It is insane.

One Crazy Adventure said...

Oh no... that stinks, to put it lightly. We have had great experiences with them, but we have never done a home loan with them. Thanks for the heads up.

divrchk said...

Let me know what you find out in regards to how USAA is truly related to the mortgage company with their name on the bills. I would go ahead and file with the BBB. There's obviously nothing that they can do for you at this point, but I don't think that it would be a waste of time.

Robie Cline said...

"This is Robie Cline from USAA. We apologize for the poor service and incorrect information you received; we are reviewing our processes to determine where the breakdown was and how we can prevent it in the future. Please know that your experience is not typical. If you will send me an e-mail at robie.cline@usaa.com with your name and phone number I can assure you that a senior executive with our Mortgage department will contact you to find out how we can regain your trust."

blunoz said...

Follow Up: I emailed Robie Cline in response to his comment on my blog post and said I would be happy to answer any questions they have about my experience.

This afternoon I received a very nice phone call from Barbara Johnson at USAA. She very patiently listened to me explain my perspective of events, and she apologized for the bad experience I had with USAA.

Her answers to my previous questions here in the comments were actually kinda interesting and not what I expected.

USAA used to farm out their mortgage services to a company called PHH Mortgage. That rang a bell for me. It was PHH that handled our previous two mortgages that we got via USAA.

As it turns out, USAA recently shifted from PHH to handling the mortgage administrative stuff in-house, supposedly in order to provide better customer service. Ms. Johnson said she felt embarrassed that I had received better service from PHH than from their in-house USAA people.

In the end, it was a very positive phone call. She acknowledged it was too late to win me back for this mortgage. She apologized for the service I received and agreed it should not have been that way. She said they would use my experiences in training their representatives and provide better service to other customers.

I sincerely hope that USAA learns and grows through this experience, for the benefit of other USAA customers.

a_former_elt_2jv said...

Dude, not to make you feel bad or anything, but I locked in at 4.5% with 1.625 points on a 100% VA loan. USAA was a little more accomidating than NFCU, so I'm going with them. And with the VA loan, there's no "credit score" rate adjustments.

Did you ever consider using a VA loan?

Stephanie Provines said...

This is so interesting for me, as I'm a first-time buyer having nothing but horrible experiences with my USAA home loan, and I appreciate finding this as a reference.

I had the highest expectations of USAA because all the other business I've done with them in the past (not mortgage related) has been stellar.

Until it came time to buy. I tried using the Movers Advantage service, which was a joke, but I did go ahead with the mortgage service.

(Interesting note for you specifically: When the rates they quoted were higher than I expected, I came back with, hey, aren't they a bit lower for me because my credit score is over 800? Their answer is they treat all their customers the same and they do not offer lower rates to higher credit scores.)

Back to my problem. The short story was screw-up #1: When I called to covert the pre-approval to a loan, they said, "OK, the first thing is we lock in your interest rate." They did not tell me about the rate lock policy and that I had the choice to wait; I only found this out later when I got the disclosure packet and loan documents. This was bad on one level because lower rates have been available since, and I would have chosen not to lock that day if I were informed that I actually had a choice.

This is also bad now that screw-up #2 has occurred, yet another schmo there who has made yet another decision on my behalf--to extend my rate lock and charge me associated fees rather than let it expire and relock later (which is probably cheaper since rates are). So this is the second time some employee has made a choice on my behalf without consulting me. The reason I'm not closing on time is a recalcitrant tenant not letting us in for the appraisal, so it's not my fault. These are the two MAJOR screw-ups, but there have been several others along the way.

Did you file w/BBB? I hadn't thought of it but am considering it now!

Stephanie Provines said...

This is so interesting for me, as I'm a first-time buyer having nothing but horrible experiences with my USAA home loan, and I appreciate finding this as a reference.

I had the highest expectations of USAA because all the other business I've done with them in the past (not mortgage related) has been stellar.

Until it came time to buy. I tried using the Movers Advantage service, which was a joke, but I did go ahead with the mortgage service.

(Interesting note for you specifically: When the rates they quoted were higher than I expected, I came back with, hey, aren't they a bit lower for me because my credit score is over 800? Their answer is they treat all their customers the same and they do not offer lower rates to higher credit scores.)

Back to my problem. The short story was screw-up #1: When I called to covert the pre-approval to a loan, they said, "OK, the first thing is we lock in your interest rate." They did not tell me about the rate lock policy and that I had the choice to wait; I only found this out later when I got the disclosure packet and loan documents. This was bad on one level because lower rates have been available since, and I would have chosen not to lock that day if I were informed that I actually had a choice.

This is also bad now that screw-up #2 has occurred, yet another schmo there who has made yet another decision on my behalf--to extend my rate lock and charge me associated fees rather than let it expire and relock later (which is probably cheaper since rates are). So this is the second time some employee has made a choice on my behalf without consulting me. The reason I'm not closing on time is a recalcitrant tenant not letting us in for the appraisal, so it's not my fault. These are the two MAJOR screw-ups, but there have been several others along the way.

Did you file w/BBB? I hadn't thought of it but am considering it now!

blunoz said...

Another data point on USAA's mortgage service here:

http://f1nancialthoughts.blogspot.com/2010/02/furious-with-usaa-mortgage.html

blunoz said...

For the record, I've had two additional shipmates recently tell me new horror stories about the horrible service they have received from USAA mortgage. One was an O-5 in CT and the other was an E-7 in VA. Sounds to me like USAA hasn't quite figured it out yet and continues to cause a lot of heartache for their customers. I'm getting ready to PCS and will NOT be using USAA this time around (maybe in a few years if they get their act together).