One of the mortgages on a rental property we own is serviced by these jokers and it seems that I’m not the only one who feels like this. I’ve asked around about other people’s experience with this company and the sentiments all seem to be the same. LBPS is making a (bad) name for themselves by being incompetent, difficult to work with and annoying in general.

I’ll start with their insurance department: I have heard from no less than 3 property insurance agents who have expressed such frustration in dealing with LBPS that the mere mention of the name elicits groans all around. Apparently, if the insurance agent needs documents or escrow information from LBPS it takes an inordinate amount of time for them to produce these documents. When asked if the documents can be emailed to speed things up, the response from LBPS is that “they don’t do email.” Any documents will have to be sent via US Mail. Now remember, LBPS is a subsidiary of International Business Machines (IBM), one of the largest and oldest computer companies in the world….and their subsidiary “doesn’t do email?”

Next, I’ve heard from a number of their other customers that any request for information about their account is met by some pretty surly requests for unrelated information to “verify their account.” These requests include verification of home phone numbers, cell phone numbers, work phone numbers and email addresses. The last one is interesting because remember, LBPS/IBM “doesn’t do email.” If that’s the case why do they need to verify an email address? If you ask me, all of this “verifying of contact information” sounds like you’re dealing with someone in a collections department, especially the recorded announcement at the beginning of the call that says “we may use any information you give us to collect on a debt.” This leads me to my last point…

I recently received a call from someone at LBPS who again was calling  to “verify contact information.” Basically they called and just started asking questions about contact information. Let me mention at this point that in the 6 years this loan has been active, not once have I made a late payment on the account. At the end of the call the LBPS representative asked me if there was anything else they could do for me today. I said that no, I didn’t have any other questions but that I never had a question in the first place and I was the one being called. I mentioned to the rep that he had still not given me a reason why he was calling. At this point he stumbled and fumbled over his words and told me to “have a nice day.” My conclusion is that if it walks like a collections agent and talks like a collections agent…..it’s probably a collections agent!

The main question is: Why is LBPS having their collections agents call customers who have not made a late payment on a mortgage since the beginning of the loan? And by the way, you can tell the difference between a collections agent and a customer service rep by their “polish”, or lack there of, over the phone. You know, typical collection agents don’t need to speak English properly and clearly, they just need to collect. In my, and others experience this is the only kind of person you’re going to interact with when you make contact with LBPS. In case it’s not clear, we’re not ALL stupid LBPS. We know a duck, or collections agent as the case may be, when we see/hear one.

EDIT: Around the time I was about to publish this post, I opened my LBPS monthly statement so I could make my payment, to find that LBPS had inserted a flyer notifying me that they were, wait for it…..rebranding! Apparently they’re changing their name to SETERUS, Inc. The amusing thing about this turn of events is that typically rebranding does not remove the stench of bad service, only time and actual change can do that. It’s almost like they’re following Wells Fargo‘s unabashed customer abuse tactics.

As a final note, IBM should be ashamed to associate their good name with an organization like LBPS/SETERUS. In another life, I did a whole lot of business with IBM and never have I ever encountered an experience like those described above. The IBM name has always stood for quality and innovation in my eyes and the eyes of the rest of the world. In my opinion, LBPS/SETERUS is diminishing that good name more and more everyday.

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LBPS-Seterus Nonsense

The real estate market has had its ups and downs, with the end result being plummeting rents and massive foreclosure rates.  For the savvy investor, this also means sweet deals on respectable properties.  This, of course, leads us to the question of the hour: should you pay off the mortgage(s) on your rental properties, or do you leverage the equity you’ve built in them to purchase new ones?

Understandably, it’s a tough call.

Paying Off Your Mortgage – Pros

It doesn’t take an accountant to figure out that a property without a mortgage is inherently more profitable.  More of the money that your

tenants pay you go into your pocket, making a mortgage-free property an ideal situation for many.  Not only that, but paying off your mortgage is also much easier to do when the property is rented out- if the tenant is paying the mortgage, you really have nothing to lose aside from a little sweat equity every now and again.

This may all seem quite basic to anyone with a bit of financial know-how, but have you really considered all of the finer details?

• Little/no mortgage payments - Using the income derived from your tenants to pay down the principle owing will lower mortgage payments.

• Lower overall overhead -  Reducing mortgage payments and/or interest payments reduces your financial overhead, making it easier for you to obtain profitability.

• More equity available if necessary - Obtaining loans at an excellent interest rate on the value of a paid-off property is surprisingly easy (it’s amazing the value that financial institutions put into debt-free assets).

Paying Off Your Mortgage – Cons

Many people reach this far and say “really, there are cons to paying off my mortgage?”  Well, in fact, there are.  Quite a few of of them actually.

If you’re the financially creative type, paying off your mortgage does indeed reduce your overhead.  It also increases your profitability for each property, and increases the amount of cash flow that you may wind up having to pay taxes on.  There are many tax loopholes that exist for properties that are still mortgaged, and those options start drying up once there is no lien against the property.

As well, using your working capital and income to pay down your mortgage on your rental properties also means that you have less liquid assets available to you for immediate financial purchase or investments.  For some, this will not be a big problem, but for others it can outright stall their investment plan.  Talking to a certified accountant that specializes in real estate accounting is always a good option in determining which road you should take.

Some advantages to keeping your properties mortgage are:

• Constant new cash flow - In rare instances where the market plummets this can be a problem (owning a home worth less than the mortgage is never a good thing), but for the most part a sound property investment will grow in value.  Leveraging the equity in your rental properties via HELOC’s or traditional mortgages can provide a steady, relatively low-risk influx of cash.  Someone else’s cash, as well.

• Tax breaks and profit reduction - For most people it doesn’t make sense to reduce profit, but for those seeking low-risk tax shelters, an investment property is a great way to tie up cash in an appreciating asset.  Homes that are mortgage offer more in the way of tax credits as well, so talk to your account to see what applies to you.

If you are willing to accept some risk in your investment strategy, leveraging the equity of your current rental properties to purchase some new ones can be a great way to increase your investment portfolio.  There are many landlords who have dozens of rental properties, each remortgaged when their mortgage comes up for renewal.  As always, ensure that you think your financial strategy through before making any decisions.

Good luck out there.

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Pay Off the Mortgage or Leverage Your Equity? It’s a Tough Decision.

Apparently a buyer was in contract to purchase a piece of real estate as part of a short-sale. Granted, short-sales are not normal real estate transactions in that there are usually extra variables thrown into the deal which, more often than not, complicate things  sometimes to the point of insanity.

So while the buyer is in contract to purchase a short-sale property, the geniuses at Bank of America all but approve the financing, perform an appraisal, urge the buyer to have the property inspected and surveyed, and then, two days before closing, they kill the deal in underwriting because, and get this, the buyer’s daughter, for whom the buyer receives child-support, is enrolled in a two-year college and not a four-year college. This means that Bank of America allowed child support, for a “child” who is over 18 years-old, to be counted as income on the loan application….

….and then decided that, really that’s not what they want to do…two days before closing? All the while, not returning many multiple phone calls, for weeks, from the agents on both sides of the deal who were inquiring as to the progress of the financing.

I should mention that from personal experience, about five years ago, I swore never to do business with Bank of America again after my own bad experiences.

If these big banks want to say they’re in the mortgage business, they should at least act like it by catching issues like this in the application process and at least TRY to be professional in the process by keeping the people in the loop.

I tend to think that I’m not the only person in America who has a long memory for this kind of bad behavior. Due to my experiences with Bank of America, Wells Fargo and to a lesser extent Citibank, I’m getting to the point where I want to find some small, local credit-union and move all my business there. Mortgages, credit cards, checking accounts, lines-of-credit, the works.

Maybe they value their customers more than the “too-big-to-fail-but-by-the-way-can-we-have-some-TARP-funds” banks.

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Why Bank of America Sucks

The first story is from a real estate agent who, in trying to submit an offer to Wells Fargo for a short-sale encountered utter incompetence on the part of Wells Fargo “work-out department” as they call themselves.

Imagine trying to submit a three-page document to a company which they say is required for a deal to close. You send the fax and then call to verify that the document was received. The person you are faxing says they did not get the fax. You fax it again a couple more times and now they say that they only got two of the three pages in the fax which, by the way, each time you received a successful fax-log report.

When you finally get someone at Wells Fargo to admit that they actually have the three pages they requested, they tell you that they actually need a different document and by the way, “Sorry, their mistake.” Then the process starts over again with misplacing faxes and requests for incorrect information. No wonder it takes 4-6 months to close a short-sale. Wells Fargo, if you don’t want to short-sell a mortgaged property, just foreclose on it and be done. Why piss-off a whole team of people who will hate your brand in the coming years?

The second story is one from a homeowner couple trying to refinance their loan. Basically, these people are super frustrated by their dealings with Wells Fargo. Apparently some Wells Fargo employees are too incompetent to operate a fax machine. Once they figure out the fax machine, they can’t seem to figure out how to file documents so they can be found again. Not to mention there doesn’t seem to be a policy in place for something as simple as a mortgage refinance. You can read the homeowner’s story here in their own words. Wells Fargo. Once again you’re pissing off you’re actual customers and not just people trying to work with your company. Judging by the comments in this post, these people would be more than happy to participate in a class-action lawsuit against Wells Fargo.

Remember Bellsouth, Cingular & SBC? They’re now all called AT&T. In my opinion, Wells Fargo should have rebranded themselves as Wachovia, a la AT&T. At least then they could start over with a somewhat decent reputation in the marketplace. But no, Wells Fargo is going to continue as Wells Fargo as I saw in a recent mailing from them. Good luck with that Wells Fargo!

Edit: Since writing this piece, I ran across this post from Kenric about a similar experience.

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Wells Fargo: How Are They Still In Business?

Well, they’re at it again. One of the comments I recently received on one of those prior posts had to do with a mortgage customer who sent in an extra mortgage payment with their regular monthly mortgage payment and explained that it was AN EXTRA MORTGAGE PAYMENT. Wells Fargo, in their wisdom, proceeded to put the extra money into “suspense.” Suspense, in this case, is an accounting term meaning, “I don’t know where this money is supposed to go so I’ll just leave it here “in suspense” until I figure out where it’s supposed to go.” Apparently, the people who process payments can’t read. Anyway…

This brings me to my most recent experience: About 3 months ago, I replaced the homeowner’s insurance policy on one of my rental properties, right about the time when the existing policy was to expire, with a less expensive one. Notifications ended up crossing in the mail and Wells Fargo paid for both the old and new insurance policy premiums thereby causing the monthly payment to increase significantly. I should mention that this was through no fault of their own.

What I take offense to is the following: About 1 month ago, I called in SPECIFICALLY to find out how much I should pay into escrow to make up for the other policy premium that was paid out. The customer service representative gave me an amount which I paid in with the regular monthly payment. No problem there.

This month, when I got the new monthly statement, the amount of the payment had not changed. So, I called in to customer service to find out why.

The first rep I spoke with basically misunderstood my question and quickly handed me off (and then disappeared off the line) to the insurance department who explained that the payment increased because they paid out on two insurance policies, which of course I already knew. I thanked her, hung up and called customer service back.

I explained the story to the next rep who let me know AGAIN why the payment was what it was. AGAIN I explained the situation and asked her to explain to me how the rep that gave me the incorrect amount to pay, arrived at that number.

The representative proceeded to tell me that she did not know how the previous rep arrived at that number and the amount due was WAY more than I had paid. At that point, completely frustrated, I hung up the phone while she was asking me, “Have I answered all your questions today?” The end result is that I will have to continue paying, per month, more than I should because I can’t get correct numbers out of the MORTGAGE company.

It seems to me that not only do these people not care about solving problems, they are not trained, managed and/or equipped by Wells Fargo to do a competent job. I guess Wells Fargo is waiting for the Federal Trade Commission to open an inquiry into this kind of behavior or better yet, they’re waiting for a class-action lawsuit from their own customers who just can’t take it anymore. How this division of Wells Fargo is still in business, I just don’t know.

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Incompetence Rules At Wells Fargo Home Mortgage

1. Wells Fargo Home Mortgage sucks and they just don’t care. Their goal, it seems, is providing bad customer service along with mortgage financing. You can read more about their bad behavior in this post and this post. After I wrote the first post, I was contacted by Wells Fargo corporate as detailed in the second post. Then, I received a letter saying basically we’re allowed to behave like this as specified in the mortgage documents you signed and we’re going to continue on like this and you’re going to like it.
2. In this humble little blog, the first post (above) has been a freaking magnet for disgruntled Wells Fargo Home Mortgage customers. Every week since I made that post I get at least 2 comments and they’re all bad experiences from other home owners. Any more and I may set up a separate web site for this.
3. Wells Fargo Home Mortgage collections department likes to use technology to “do their job better” in the form of a badly designed call-center automation system. Well, I can also play at that game. Wells Fargo, meet Asterisk.

I wrote about Asterisk earlier in this post about how to keep tenants’ and contractors’ phone manners in check using this system but it turns out that it’s also ideally suited to dealing with this annoying company as well.

First some background; Asterisk is an open-source telephony platform that runs on Linux. Basically it’s a pretty powerful phone system that can run on an old PC. It can do everything from handle VoIP calls to provide voice mail.

Another feature it has is called “zapateller.” This feature is used to inform the call-center automation system used by Wells Fargo and telemarketers alike, that your phone line is no longer in service. It does this by playing a special tone which is recognized by these systems.

When the call-center systems hears this tone, it removes your number from its list because it’s “out of service.” I’ve gone a step further and compiled a list of caller-id numbers that get this treatment. Oh ya, and by the way, the entire city of Des Moines, Iowa gets this treatment as well. Des Moines is where Wells Fargo’s headquarters are. In fact, when calls come in from any number on this list, my phone doesn’t even ring. They get the “out of service” tone and then straight to voice mail.

At this point, if Wells Fargo wanted to talk to me, they would need to send someone to my door or send a certified letter since most anything with the Wells Fargo logo on the envelope goes straight into the round file anyway.

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How To Avoid Wells Fargo Collections Dept. Via Phone

It’s been over a week since I was first contacted by a couple of “reputation management” people from Wells Fargo corporate. Roughly four days after the post was published, I was contacted by someone via the “contact me” link on the blog asking me to contact him at my convenience about how Wells Fargo could improve my experience with them.

First, I was surprised that a company of this size actually has people that do this kind of thing. And second, if you do a search on Google for the terms “Wells Fargo sucks” you should get a result set of about 200,000 web pages. The fact that there are so many web pages containing these terms, I was surprised that they contacted me. Did they also contact the thousands of other unhappy customers? Anyway…

I contacted the guy who sent the email, expressed my concerns and he assured me that someone from “higher up” would be calling me on the phone. I should mention that I emailed him with my full name, loan number and phone number so they could look at the account history, etc.

Two days later I was contacted via phone by a woman who didn’t seem to have a title but she mentioned that she was from Wells Fargo corporate. She attempted to verify the problems I was having but had the story all wrong. After telling her this, she explained that she would have to do more research and get back to me and this was about 10 days ago.

The very next day, there was a comment made to the original post about this which seemed to come from someone obviously biased toward Wells Fargo. Following is the comment:

1. Collector Says:
   March 17th, 2007 at 8:13 am Have you not been reading the news? Mortgage delinquencies are at an ALL TIME HIGH and you wonder why they send you to the collection department when calling in AFTER your due date. No one can forecast when you have made your LAST payment on your loan so they will do everything possible to solve a potential problem. Grace periods were not created by the lenders, they were invented by regulators that felt �occasional� issues could arise that caused a payment to come in slightly late (IE- hurricane, ice storm, etc). Pay on time or deal with the �hassle�, it is YOUR choice.

I should mention that when someone leaves a comment on this blog (and most blogs) an email address is required and the person’s IP address is recorded. I did a quick lookup of the IP address and interestingly enough the IP address belongs to an internet service provider just outside of Des Moines, IA which is where Wells Fargo corporate is.

This person also put his personal email address on the comment which is composed of his real name. Again, a quick search of the name and Wells Fargo, in quotes, revealed a link to this Wells Fargo mortgage broker. Nice move!

Yesterday, I called in to customer service about an unrelated issue and surprisingly, I was NOT transferred directly to collections. Instead, I was correctly transferred to customer service but needed to be transferred to another department. During that transfer operation, their phone system dropped the line. Thanks for that!

I proceeded to dial back in two more times before I was connected to the correct department. So, I guess that the moral of the story is…..Wells Fargo NEEDS a new phone system.

It amazes me that a company this large can’t figure out that their phone system is as important as having friendly customer service reps. As a customer, those two are typically all we interact with when doing business with the company so shouldn’t they at least TRY to put forth a good effort on those two fronts?

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Wells Fargo Home Mortgage follow-up

From day one, every time I have had occasion to call into their customer support department, I am treated like a total degenerate. For some reason, Wells Fargo must consider my loan “less than desirable” and I have no idea why. It’s a normal 30-year fixed totally run-of-the-mill loan.

When I first call in, their phone system front-end asks for the loan number which is normal. What is abnormal is that I automatically get routed to the collections department. Bear in mind that I have NEVER made a late payment in the two years I have had this loan. Next, I am greeted with the disclaimer from the rep that “this is an attempt to collect on a debt and any information gleaned from this call will be used for that purpose” or words to that effect, which automatically raises my hackles.

When I inquire as to why I am speaking with the collections department, they don’t seem to know but continue with the following line of questioning:

They want to know why my payment is running late this month. Now, keep in mind, like most mortgages, the payment is due on the first of the month and considered late on the 16th. I mail my payment on the 9th so that it gets where it’s going at most by the 14th. So basically, IT’S NOT LATE.

Then they ask me where I get the money to pay this loan. (WTF?) They want to know if it’s income from a job or investments or taxes. (again WTF!?) What does that have to do with anything? Their ONLY concern should be is that the payment is made and and made on-time. Which it ALWAYS is.

This is something like the 3rd “run in” I’ve had with these people and Wells Fargo persists with this policy. And, of course, when I get a little heated with the rep and make them look up my payment history to show them that I have never so much as paid late, they go into “collections rep” mode and basically stop listening. They can’t even defend their own company’s idiotic policy of hassling their customers.

WTF Wells Fargo? Do you treat all your mortgage customers like this, or is it just me?

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Why Wells Fargo Home Mortgage Sucks

In January 2006, mortgage company Ameriquest Mortgage, a subsidiary of ACC CapitalHoldings Corp., settled a class-action lawsuit with 49 states and the District of Columbia where it was sued for predatory lending practices between 1999 and 2005.

The LA Times investigation also revealed that, in the Niger Delta, where the Gates Foundation funds programs to fight polio and measles – the Foundation has also invested more than $400 million dollars in companies including Royal Dutch Shell, Exxon Mobil Corp, and Chevron. These oil firms have been responsible for much of the pollution that many blame for respiratory problems and other illnesses among the local population.

The Gates Foundation also holds investments in sixty-nine of the worst polluting companies in the US and Canada, including Dow Chemical. It owns stock in pharmaceutical companies whose drugs cost far more than what most AIDS patients around the world can afford. Other companies in the Foundation’s portfolio have been accused of transgressions including forcing thousands of people to lose their homes.

Overall, the LA Times says nearly $9 billion in Gates Foundation money is tied up in companies whose practices run counter to the foundation’s charitable goals and social mission.

Nice Bill. Run your Foundation like Microsoft why don’t ya!

(link to audio and video report on Democracy Now! with Amy Goodman)

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Gates Foundation Invests In Company Sued for Predatory Lending Practices