Thousands dropping out of loan modification programs

By May of this year, one in seven people who had applied for a loan modification in Florida in January had dropped out of the program.  (SunSentinal article)

That may sound like a shocking headline for a newspaper, but with all the loan mod stories I see every week, I am surprised the number of people dropping out isn’t greater.  If you are familiar with the past abusive tactics of the insurance industry, such as denying all claims the first time they are submitted (because most people won’t resubmit a claim), you can see very similar tactics being used with loan modifications; make it so difficult and frustrating for people that a large number of them simply drop out and let their homes be foreclosed upon. I’ll admit that I’ve given Chase the benefit of the doubt in the past in wondering whether Chase is inept or malicious with regard to loan modifications.  It is starting to seem like Chase has a serious agenda to deny people loan modifications.

Chase claims that people are dropping out because they aren’t complying with the loan modification rules.  If you read some of the loan modification stories on our site, you’ll know that simply can’t be the reason for the majority of people who drop out.  Imagine that you’ve been pursuing a loan modification for nine months, because one of a two-income earner family lost their job and despite looking for 18 months, has been unable to find work.  In that time, you would probably have experienced:

• Chase loosing your paperwork several times
• Chase dragging their feet so long they claim your paperwork was too old and needed to be resubmitted (about the same as starting over)
• Chase not returning your calls, faxes, and emails
• Chase changing the person you had to deal with several times
• Chase pursuing foreclosure while telling you you were almost approved for a loan modification
• Chase telling you to stop paying your mortgage so you could qualify for a loan modification in the first place
• Chase not accepting their own checking statements because the final page was not properly numbered

With all these impediments, it is simply hilarious to hear Chase trying to put the blame on customers.

Or if you are really unlucky, Chase might have approved you for a permanent modification and then claimed you asked to drop out of it.

Welcome, visitors from Chase

Our web logs indicate that we had visitors from Chase last month.

That’s 20 visits for a total of 167 page views. In May they were here about 6 times.  In April it was 7 visits.

I hope your learning something to improve your customer service.

Biggest Chase loan modofication screw-up yet!

This is a strange story but it sure sounds like something Chase would do.  First, a little background.  The percentage of people who apply for a loan modification with Chase is large, and the number that get them, is small.  This might be partially due to the fact that standard operating procedures for Chase loan modifications is for them to lose your paperwork multiple times, causing you to resubmit.  This sounds suspiciously similar to some insurance companies who automatically deny a claim the first time it is submitted.

So, when Robert Davis actually was approved for a permanent loan modification, it was such an anomaly that a news program did a big story on him, profiling his tortuous path to getting approved.

Happy ending to the story, right?

Not quite.

It seems that Chase now claims that he himself requested that his loan modification be canceled.  They also claim that they never received the final paperwork, despite Davis’ Fed-ex tracking that says it was delivered and phone calls to Chase employees who claimed the paperwork had been received.

So where does that leave him?  Chase is now requesting that he begin the process all over again.

Simply astounding that Chase could screw up this badly.

Chase iPhone app

Chase has released a new iPhone app that allows you to take pictures of checks to deposit them directly through the app.

That sounds neat, but I shudder at the implications of Chase screwing this up on the back end.  They haven’t seemed the most tech-competent of banks in the past.

Lobbying by banks takes off

Wonder why the financial reform bill is stalled in Congress and is now missing the new bank tax?  Look no further than the lobbying efforts of banks like JP Morgan Chase, whose spending on lobbying increased in first quarter of 2010 to $1.5 million, a 15% increase over the $1.3 million they spend in the same period last year.  I can only guess that it went up even more in the 2nd quarter, but we’ll have to wait a while to find that out.

New debit overdraft rules start!

Federal Reserve rule E took effect yesterday (July 1st) for new account holders, and August 15th for existing account holders.  Rule E directs banks to only enable overdraft protection for debit card purchases if customers specifically opt-in.

As we have previously reported, Chase trying very hard to convince customers to sign up for overdraft protection through letters and an advertising campaign, and have apparently signed up about 1/3 of their customers using their deliberately confusing and fear-based, like the following advertisement:

There are few things more embarrassing than standing in line with your purchases all bagged up and being told your card has been declined. Besides the embarrassment…

This is no deal for customers as a small purchase, which is often the cause of an overdraft, can cost a whole lot more when you tack on a $35 overdraft fee.  This works out to be thousands of percentage points of interest for borrowing a little bit of money for a short time, and WAY higher than the fees charged by the heavily criticized payday lending industry.

A better option would be to apply for a small overdraft credit line to be attached to your checking account and is used whenever either a debit or check causes your account to go negative.  I have personally done this for years, and the occasional checkbook balancing error which causes an overdraft costs me $7 for a draw from the line of credit, a much more reasonable fee.

Chase calls their new opt-in protection Chase Debit Card Overdraft Coverage, and you can find the details here.  Their existing overdraft protection program still exists and is a much better deal, as it allows you to connect your checking account to a line of credit, savings account, or credit card for overdrafts, and it will only cost you $10 each day that overdrafts are covered this way.

Also somewhat alarming if you read the fine print, is the fact that overdraft protection doesn’t actually always “protect” you, as the fine-print specifies that Chase can choose not to cover an overdraft anytime they don’t want to.  The fine-print also specifies that automatic payments may continue to be paid (and rack up an overdraft charge) when your account goes negative even if you have NOT opted-in to their program.

Chase to target affluent customers

As reported in this Wall Street Journal article, Chase hopes to target more affluent customers, those between the average Joe and the high net worth individuals targeted by its private client services group by naming a new head to its Retail and Affluent Investment Services group, which oversees 2,700 financial advisers in its 5,100 branches.

Chase is doing this because it realized that these types of customers, while around only 8% of all banking customers, represent 2/3 of all deposits and investments at retail banks.  I can only think that by specifically targeting these customers, Chase is admitting they don’t have their fair share of them right now.

That is all well and good, but the real kink in Chase’s strategy is its inability to get basic customer service working properly.  With all the nightmare stories of pure ineptitude and systems failures (or poor design of systems) reported by a wide variety of Chase customers, I an easily imagine a scenario where affluent customers are signed up but then quickly depart when the realize that their most basic banking needs are not well handled. It is no secret that wealthier individuals put more credence on good customer service and less on pricing.

On the bright side, Chase’s desire to court such customers might actually force them to improve operations (make less mistakes) across the board, although I doubt it would cause them to change the way the actually treat the average customer.

Good luck Chase.

Chase Blueprint – good or bad?

When I started reading about Chase Blueprint, I thought I had finally found something Chase had done right.  Blueprint is what Chase calls a financial management tool that is attached to a subset of their credit cards and allows card holders to create plans for paying off various things they have charged on their credit card.  There is no additional charge for using Blueprint.

But, like most things with Chase, I decided to dig a little deeper and see if there was anything fishy behind it, and there was.

The first thing that struck me odd was the fact that Blueprint is being presented by Chase as a financial management tool.  Hey, that’s great, I am all for people learning how to manage their money better.  When it comes to your money, there are two main things you can do with it, save it or spend it.  Well, Blueprint fails overall as a financial management tool because in order to manage your finances with Blueprint, you have to first spend your money, which, isn’t exactly one of the cornerstone principles of good personal financial management.

When you spend money, you can either spend money you have, or money you don’t have.  One of the whole premises behind Blueprint is that it help you break up your credit card bills into subsets of spending so that you can make plans to pay off various things in various time frames, all the while happily paying interest to Chase.  Because it only applies to the spending of money you don’t have, once again it fails as a good financial management tool.

What is Blueprint really for?

1. To make people feel more comfortable keeping balances for longer periods of time.
2. To help Chase customers who tend to rack up large balances on their credit cards be more diligent about paying it ALL off eventually.

Yes, it is a tool to help Chase get people to hold onto their balances longer, and be more likely to pay them off eventually.  Yes, it is a tool that primarily benefits Chase.  On the one hand, you have to give Chase credit; Blueprint does make good business sense for them.

Ok, so, big deal, it benefits Chase.  It’s free anyways, so who cares.  Right?  Wrong.  The Blueprint service only applies to a subset of Chase credit cards, the Platinum, Slate, Freedom, Sapphire, and Chase business cards.  Almost all of these cards have much higher APR’s or an annual fee than other cards many customers have from one of the many institutions that Chase has acquired over the last five or more years.  The majority of the cards that have Blueprint have a VERY HIGH initial APR if you have only average credit scores.  You would have to have PERFECT credit scores to get the lowest advertised APR of around 13% on most of these cards, which itself is not a very good rate anyways.  And if your credit score goes down for some reason (for instance because Chase lowers your credit limit on another card) they can move you to a higher interest rate despite the new rules in the Credit Card Act of 2009, because the tiered interest rate is built into most of these cards from the start.

So, in order to benefit from Blueprint many Chase customers would have to switch to a higher cost card.

If you really want a tool that improves your ability to manage your finances, try one of the great online personal financial management tools like GreenSherpa, a service that allows you to aggregate financial information from not just your credit card, but your bank and other accounts as well, all in one place.  You are much more likely to practice proactive financial management (i.e. BEFORE you spend) with a tool like GreenSherpa than with Blueprint.

Also, read the book Your Money or Your Life to get a handle on what you spend your money on and why.