Monday, April 1, 2013

Our Bank's Wily New Game with Mortgage Bills

Ordinarily, when a bank wants its customers to do something, it makes the desired action appealing. If the bank wants more CDs purchased, it offers competitive rates and time periods to encourage people to buy them. If it wants more checking account customers, it offers free checking, free checks, free overdraft coverage, or a host of other amenities.

But what if a bank wants you to pay your mortgage automatically online every month? But does not want to offer any positive incentives? Our bank has thought of a clever way to drive traffic to online mortgage payments: Send the mortgage invoice so late in the month that you'll chance a late payment if you don't mail your check the very day after you receive your invoice. Create stress, so customers try to relieve that stress by agreeing to online automatic payments. No need to make online automatic payments appealing except as a safer bet than waiting all month for an invoice to arrive by mail.

In February, our mortgage invoice had a statement date of 2/21/13, but arrived in the mail on 2/27/13. According to the person I raised on the phone after waiting half an hour because of call volume, the bank had accidentally mailed the statements a bit late because of the President's Day holiday. Plausible answer.

In March, our mortgage invoice had a statement date of 3/15/13, a week earlier, but arrived in the mail on 3/28/13. I did not bother to call and ask what important holiday in mid-March mysteriously made it impossible for our bank to mail its mortgage invoices promptly. The only March celebration this year was St. Patrick's Day and I don't like the idea that my bank was too hung over to mail the bills on time.

Mortgage invoices state a due date of the first of the month. As far as I know, legally, anyone sending a bill has to give the receiver two weeks to pay it. Our bank has obviously decided that those two weeks should be after the invoice is due, just to rattle as many of its customers as possible and send them in the direction of skipping the hassle and just signing up to pay online.

This is sheer genius, although of course it's also pretty rotten to send bills deliberately so they arrive almost late. The U.S. postal system has fewer pieces of mail to move these days and so I can't ascribe these late-arriving invoices to the mail moving slowly. There was no cancellation on the envelope to prove my supposition that the mortgage invoices are deliberately being mailed very late in the month to push its customers to pay online instead of stressing out over a situation our bank has created itself. This is all my guesswork. Perhaps in March our bank simply could not get its newly redesigned mortgage invoice (which now uses TWO pieces of paper instead of ONE--way to save the planet!) into the mail at the proper time because of a printer delay.




Why would a bank want online automatic payments?

1. It can lay off people who currently monitor its snail mail and send the checks through the check machines.
2. It can stop mailing paper invoices, thus saving itself postage and printing costs, and again, making it possible to lay off the staff that handles the outgoing mail function.
3. It can take the money on a set day of the month every month, instead of waiting for the checks to arrive and then having to ask another bank to make good on a paper check and possibly wait an hour or two. (Yes, interbank business is that fast these days.) Again, fewer staff positions are needed.
4. If a bank gains control of millions of dollars even two or three days earlier than it usually does each month, it can manipulate that cash to earn itself lots of money. You and I can't make any money that way, but a bank can.
5. By making it almost impossible to respond to the mortgage invoice on time unless you pay very good attention and send the check the day after the invoice arrives, our bank also is deliberately encouraging its customers to pay late and incur penalties. Some people don't sit down and pay their bills the very day each bill arrives; they wait a week or so until they get their next paycheck. If a customer sees the bill and tosses it on a pile, the chances of the payment not being made on time increase dramatically. In the past, other banks have been convicted of deliberately holding mailed payments, sometimes without even opening the envelopes, until the payments are late. In this situation, our bank has created a scenario for easy abuse. Does it really take the Post Office six days to get a letter from one state to the contiguous state? I have a feeling some people could end up arguing about this with our bank. Meanwhile, our bank pockets many late payment fees from low-risk customers who actually do have the money to pay their mortgages but simply got caught by this late-arriving invoice game.
6. Finally, if a mortgage payment posts late, it can create negative credit information that will lower your credit score, thus making the cost of banking services such as consumer loans more expensive. Why would our bank want that to happen? Well, why not? Banks are in business to make as much profit as they can.

Could I be wrong about this? Could our bank simply be incompetent about getting its mortgage invoices in the mail by the middle of the month? Am I merely fantasizing that this is all a very clever and nasty method of wringing more money out of mortgage servicing? I don't think so.

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