I think this qualifies as cutting off your face to spite your nose.
UPDATE: It seems our reader may have the last laugh, letting the house go into foreclosure, then buying it back at a discount.
The long and short of this story is that one of our readers was charged an erroneous $25 fee from his bank, so until they fixed it, he wasn’t going to pay his mortgage. They never fixed it, and now his house is going into foreclosure.
I got a Home Equity Line of Credit (HELOC) in 2006 from Citizens Bank. In 2008 I had to file for personal bankruptcy because my business was forced to close and I had several personally guaranteed business loans. When notified of the bankruptcy, Citizens Bank canceled the draw period on my HELOC – which they certainly had every right to do.In August 2008 they charged me a $25 annual fee, which the loan documents describe as a fee that occurs during the draw period – they one they canceled. I calmly phoned Citizens Bank to inform them that this fee was now erroneous. The woman who took my call told me (and this is unbelievable for a $25 charge) that she could not tell me whether it would be waived and that I would have to call back later in the week. Customer service was pretty sub-par to start off. I asked the woman if they could call me, and she said no. I asked if they could send me a letter in the mail. She said they would do that and I would have it within 10 days. I never received the letter.
I phoned back 3 weeks later and reiterated the request to waive the fee. This time the woman flatly told me “no”. I explained that since the fee was erroneous as spelled out in the loan documents, it MUST be waived or they would be breaching the agreement. She refused to budge. Again, this is over a $25 charge.
I then sent letters to both the address on my loan documents and their corporate address, which happens to be 5 miles from where I live. I pointed out that the fee should be waived and why. I even copied and highlighted the section in their agreement and included it. I received no response to either letter.
At this point, I needed to get their attention. I wrote another letter, this time indicating that they were in breach of the agreement and I would halt monthly payments ($200/mo) until they waived the fee. Additionally, I said I would not pay any late charges accrued during this time as this problem is entirely Citizens Bank’s responsibility. I received no response from the letter. I stopped making payments in hopes someone might notice, figure out why, and correct the problem so we could all move on with our lives.
Six months later, I received a polite letter from their attorney indicating I was in default and the amount in back payment that was owed. I replied and explained what I told Citizens Bank. I received no further correspondence from that attorney.
Four months after that I received a packet from Citizens Bank telling me that they understand I am having financial difficulties and trouble paying the loan and offered me some loan modification programs. I replied indicating I had no financial difficulty, that this was a customer service issue, and that as soon as they waived the $25 fee and late charges ($10/mo), I would make all back payments immediately and resume monthly payments. I received no reply. I could have been a jerk and took full advantage of their modification program, but I honest and expected them to act likewise.
Four months later, I received a letter from a different attorney with the same story about me being in default and now included $400 in attorneys fees on top of the missed payments and late charges. To this point, there was absolutely no acknowledgment of the issue I presented to them. I replied to the attorney just as I had to the other attorney, again indicating I was not asking for much here and this should be a no-brainer. I actually received a reply! The reply, which I got 2 months later, said “they will waive the $25 service charge and one month late charge but no other fees”. I was flabbergasted – what a half-ass approach to good customer relations! As I was very clear in my prior letter that ALL late charges would need to be waived, I continued to suspend payments.
Two months ago I received a letter from a new attorney, written as if this was the first attorney to contact me on this matter. I wrote this attorney back indicating that the problem stems entirely from Citizens Bank’s error and that all missed payments would be brought current immediately upon waiver of all late charges and attorneys fees. My letter was ignored.
Last month I received a new letter from that attorney group, with no acknowledgment of my response, indicating simply that a foreclosure sale was scheduled for December 15, 2010 and included a copy of the ad that will run in the newspaper. Now Citizens Bank was resorting to bully tactics!
In summary, Citizens Bank is now foreclosing on my home because they have absolutely no interest in doing the right thing and correcting their mistake. They are using the fact that foreclosure in my state does not require a judge to bully me into paying them whatever they say and if I do not, they will kick me out of my house at Christmas time.
I appreciate the spirit of your epic stand, but better use all that mortgage payment you’ve been saving up to get a lawyer if you want to have any hope of saving your house.
UPDATE: Our reader wrote back. He’s got a plan to still come out ahead.
Hiring a lawyer would have cost more than $25. Filing a suit in small claims court would have cost more than $25. In summary, any type of action would have cost more than the fee I was disputing. Too many times in this day and age companies like Citizens Bank charge fees they know they can get away with because the cost of disputing it is greater than the fee. That is the point here.I am not going to literally let them kick me out of my house, obviously. The option to pay is still on the table, but it isn’t right. Believe it or not, I was advised by my attorney to allow the foreclosure to occur, and bid on it myself. Worst case is it becomes an REO and I buy it back from the realtor at a discount.
Godspeed.
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Add another $50 to that and you could have let it burn down, too.
Dude, see a shrink, seriously. You’ve got control issues like nobody’s business. This, and you, are ridiculous.
“I think this qualifies as cutting off your face to spite your nose.”
You sure you got that right?
he is getting what he deserves
I can’t imagine why his business went under.
People seem to think HELOC is not a mortgage, IT IS. The money he drew from it previously is what he is being charged for, and what he has stopped paying. There are not two contracts involved. I suggest mr Amateur lawyer gets a clue. or one who actually passed the bar. You can not unilaterally decide the remedy for a breach of contract. A minor breach does not constitute VOIDING of the contract. Read the documant again and search under remedies. I am glad they foreclosed. I hope he loses his house and every other assrt he ever had. He is a major tool
If it was part of the same contract then it is possible the bank was in breach first. Is this substantial enough to be considered a breach? Probably not.
If one party is in breach, the other party has no duty to perform.
If the bank had a “good faith” error, then the OP would have no right to stop the other payments.
This is clearly a case of double standards.
Ignoring the ramifications of his actions, he’s right in principle.
If corporations want the same rights as people, they need to expect to be treated the same.
They need to be held responsible for their actions and if they’re going to act like dicks, then they should be held accountable for their actions. You can’t roll over and let groups like this steam roll you because they have power. They’re wrong, he wants them to rectify the situation, but they won’t. He said he’d pay them what’s due when they stopped treating him poorly, but they continued to abuse their power; it’s a different issue when he fails to pay after they fix their error and apologize for the issues they’ve caused.
If, for some reason, he really felt it necessary to use his mortgage payments to battle it out with them over this $25 fee… shouldn’t he have just sent a $175 payment for one month, and then kept sending $200/month after that?
Because we need to have principals, they would have taken the same course of action regardless of what he did, short of complying with everything they’ve asked of him.
Maybe he should have kept paying his principal.
is there some kind of Darwin Award in the personal finances category?
You know you fucked up when not even Consumerist can make your story sound positive.
Why is it okay for them to do whatever they want and leave it up to him to suffer the consequences for whatever course of action he takes to get their mistake rectified? Especially when he has held nothing out that they couldn’t get back upon rectifying their mistake.
This guy had a problem with his HELOC account at the bank.
He then stops paying his HOME LOAN which has nothing to do with the HELOC loan.
By the same logic, the next time I’m upset at my Visa card company, I’ll quit paying my home loan.
On what level did this make sense? Of course the lawyers and the bank didn’t respond to his letters, they couldn’t believe anyone would be that dumb, and assumed he had no money to pay his home loan.
1. It’s the same company, different account or not, the money all goes to the same place.
2. Doesn’t matter if they thought he was an idiot, they were wrong and made no effort to cooperate or come to an amicable solution with him long before his mortgage came into question. Why should he continue to cooperate with them in any way?
Because he SIGNED A CONTRACT STATING HE WOULD PAY THEM MONEY AND HE STOPPED.
He signed a contract that he would pay them money. It also said there would be a $25 annual fee as long as the account stayed open. When they closed the line and still charged him the fee THEY violated the contract. His stance was he wouldn’t honor his end of the contract until they honored theirs!
I am sure I would have kept paying the rest of it and disputing the fee. But I’m glad someone will stand there ground when the banks act like this.
Before I read the update I had wondered if that very outcome would be possible. Sounds like the OP is coming out way ahead. He has a 2 year old bankruptcy, a foreclosure isn’t going to beat his credit up too much more.
Exactly my point. They both signed a contract, one of them violated it and he’s holding them accountable. He has done nothing wrong.
From my understanding, he stopped paying the HELOC. I don’t know any mortgage payment that is $200 a month. A HELOC is considered a second lien on a mortgage, and a bank can foreclose from it.
wow, banks have no problem taking your money, but not fixing their problems
its like legal robbery
I know we’re not supposed to blame the OP, but how are we not to for this one?
Dear Consumerist Moderaors,
I know that you say we can not simply make a post blaming the OP, but there are exceptions to every rule, so in this situation can we blame the OP please?
Sincerely,
Consumerist Readers
I think this is only appropriate as they kick him out on the street:
http://www.youtube.com/user/chuckieart#p/a/u/0/J—aiyznGQ
Citizen’s Bank: “Yipee – look at all that free equity we’ll be getting when we reposess THAT house!!! Don’t correct the $25 error!!”
So much fail… I can’t imagine being willing to give up the roof over my family’s head over $25.
From the bank’s standpoint, if the draw period was cancelled at some point during 2008, why wouldn’t he be assessed the annual fee? The draw was available for part of the year.
Also, how much did he spend on stamps during this letter writing campaign? If he sent everything certified (as he should have for this type of issue), he probably spent well over the $25 in question.
This is one of those times where the consumer deserves to be foreclosed on. Sometimes, they are just too dumb…
“Believe it or not, I was advised by my attorney to allow the foreclosure to occur, and bid on it myself. Worst case is it becomes an REO and I buy it back from the realtor at a discount.”
Worst case is that someone else buys it. However, you’d have to show proof at the sale that you have a loan or cash to cover the price of the bid. I think you’ll have a hard time securing a loan with both a bankruptcy and a year’s worth of delinquent payments under your belt.
I bet you think you’re pretty hot stuff for this buyback plan your lawyer cooked up, huh?
I still think you’re a schmuck, OP.
The let it go to foreclosure and buy it back scheme sounds like something cooked up to save face on the interwebs. Just another horrible and loony idea.
He’s turned a $25 error into a several thousand dollar cluster hump with a side of potential homelessness.
Worst case is it becomes an REO and I buy it back from the realtor at a discount.
Yeah, keep telling yourself that. Most-likely case is that someone else buys it back at a discount.
” Believe it or not, I was advised by my attorney to allow the foreclosure to occur, and bid on it myself. Worst case is it becomes an REO and I buy it back from the realtor at a discount.”
Where did he get his attorney, out of a cereal box?
So, there’s a huge amount of missing information here, but let’s assume that his house is worth more than the combined balance of his mortgage and HELOC. Say the house is worth $200k and the total loans are $100k.
The bank forecloses, and puts the house up for sale. To buy it back, he’ll have to pay $200k, and he’ll have to fund it with cash, since there’s no way with a recent foreclosure and a 2008 bankruptcy, he’s going to qualify for a mortgage.
So, assume he’s got $200k lying around (if so, why was he in bankruptcy?), and he buys the house back. He’ll be out $200k (plus purchase costs), and the bank will pay him $200k (the sale price) minus $100k (the loan balance) minus fees (could be $10k or more), so figure $90k. Net/net, he’s out $110k. Previously, he had $200k in cash and $100k in home equity. Now he has $90k in cash, and $200k in home equity, he’s down $10k (the foreclosure costs).
If, of course, he’s underwater on the house (worth $150k, he owes $200k), then this could be a simple strategic default, where he hopes to buy it back for $150k, and, instead of being $50k underwater, be even. Of course, this again assumes he HAS $150k to buy it.
There are so many myths about small claims court. How much more than $25 would it have costed?
I just filed a small claims case and it was ~$150.
But, when you file, you’re suing the other party for the amount owed PLUS COURT COSTS.
So assuming you win, the other guy will have to pay you back for the filing fees.
When I purchased a foreclosed home I had to sign something saying that I was not the previous owner nor a relative to them….
The correct way to go about this is to pay the mortgage, but not the $25 they want (or any interest on it). Thus they cannot foreclose and will instead go to court to attempt recovery of the $25 (+interest) in question. Once in court, they will lose and you’re still good for the mortgage.
Talk about throwing the baby out with the bathwater!
The guy wrote:
“Hiring a lawyer would have cost more than $25….Believe it or not, I was advised by my attorney to allow the foreclosure to occur”
So he must’ve found an attorney willing to work for free.
I call shenanigans on the OP’s update. Sounds like he is trying to save face.
Wow, what a bunch of passive ass-hats here. I say “Way to go, OP!” The reason that these sh*thole banks can continue to push around their customers over BS fees is because no one will do precisely what you have done, call them to the carpet. Your level of bravery (what everyone else here is incorrectly referring to as stupidity) should be commended, not down-played. Whether I, or anyone else here, would have the level of strength that you have had facing down impending foreclosure in this game of chicken is one thing, but you certainly don’t deserve the crap these comments are handing out to you. Thanks for fighting the fight, and I hope you prevail, either through Citizens Bank acknowledging their mistake and waiving all the extra fees, or through getting your house back at a discount.
Do me a favor, Google this:
“Choosing your battles”
“Choose your battles” is about individual choices, and you don’t know what battles he’s forgone already. In other words, this may be the battle he chose. He’s weighed his risk, he’s weighed his options, and he’s fighting the battle. His option to come and share his battle with Consumerist wasn’t, I’m sure, to garnish the sites hatred because it’s not what *you* or many others would have done (certainly not the way I would have fought it either) and it’s discouraging to see the backlash the OP is getting for fighting a fight against a problem that we all agree is a problem.
If he plays chicken with the bank and loses, then he has no one to blame, and I don’t see anything stating that he feels any differently. Until then, what’s wrong with showing a little support? You’d certainly want it if you chose a battle that others thought was stupid.
“”Choose your battles” is about individual choices, and you don’t know what battles he’s forgone already.”
Neither do you.
“His option to come and share his battle with Consumerist wasn’t, I’m sure, to garnish the sites hatred because it’s not what *you* or many others would have done …”
The opinion of those commenting on this article is not necessarily influence by his intent for submitting the story.
“… it’s discouraging to see the backlash the OP is getting for fighting a fight against a problem that we all agree is a problem.”
More like, it’s discouraging to you to see that not everyone agrees with your opinion. I think the comments have made it clear that most folks here would agree the $25 fee is a problem, but that losing your house is a bigger and more important problem.
“If he plays chicken with the bank and loses, then he has no one to blame, and I don’t see anything stating that he feels any differently. Until then, what’s wrong with showing a little support?”
I’m under no obligation to feel sorry for this guy or to shape my opinion of him based on feeling sorry for him. So what’s wrong with showing support? Nothing, unless that’s not your opinion.
“You’d certainly want it if you chose a battle that others thought was stupid.”
Same as above, feeling sorry for the guy doesn’t change my opinion.
We’re not belittling what he’s trying to do. Banks are big enough and pushy enough as it is.
It’s the completely moronic way he’s going about it that makes everyone want to tear into him. Foreclosing on his house and then buying back at a discount still means the bank walks away with more money than he does, regardless.
There are many ways to “stick it to the man” without the risk of losing your house and destroying your credit (that was likely already questionable with a bankrupcy). When I purchased my current home, the builder dropped several balls at the last minute that left me unable to move in to my new home for a week, and without an apartment, and no place to store my belongings. I was left with no choice but to put all of my belongings into storage and live in a hotel for a week. Even after I was able to move in, they failed to complete several tasks making it impossible for me to cook dinner, so I did the first rational thing that came to mind, I sent them a detailed invoice for all of my out of pocket expenses that were as a direct result of their dropping the ball. I expensed them for rental of a second moving van, storage of my belongings, 3 meals every day for a week, hotel, cleaning expenses, and the cost and labor to personally fix what they did not finish so I could get on with my life and start using my home. Several weeks later I received a check for the full amount.
Several years later, I had a delivery person damage my wall due to their carelessness. They were giving me the runaround, saying they had to have their insurance adjustor come out and look at it, but the adjustor would never show up when promised, so I documented the damage, made the repair myself and sent them an invoice with an explanation of what the charge was for. A few weeks later, I had a check compensating me for the damage.
The point being, if normal complaint channels don’t work, try a back door approach by sending an invoice to their accounting department. They have the processes and procedures in place to track the issue and no accountant likes an unpaid invoice, so they will take the complaint up the chain of command and resolve the issue.
ON THE UPDATE:
lol….so how can he buy it back if he can’t qualify for a mortgage since his CR is shot! lol…..I pity the fool.
he should have burned his house down or bulldozed it like the other nut jobs
RE: The Update
No actually the worst case is you lose the house to someone else.
I’m all for sticking it to the man, and standing up for your principles…but $25 to keep your home and prevent your credit rating from going to hell? Really?
I don’t think he’ll be buying the house back, especially if the price is lowered…don’t forget, he now owes the bank the original principle, plus interest and penalties and foreclosure costs, minus whatever they recover from seizing it. They’re not going to sell him a house until he can pay back that huge debt (which is now unsecured). Even if they waive the debt, it’s reported as income and he’s probably going to have a 5-digit tax bill in his future.
Didn’t they change or suspend that law during the recession?
its a gamble
its a soft market, overall, but in his area, it might not be
even then, if he has to refinance his mortgage, a collections sent against him would place him at a higher rate
the same bank might not even offer him a mortgage as a “F” you to him
“Believe it or not, I was advised by my attorney to allow the foreclosure to occur, and bid on it myself. Worst case is it becomes an REO and I buy it back from the realtor at a discount.”
Great plan. Good luck getting someone to loan you the money to buy it back.
Commenting on the update: He’s not going to “let” the bank take his house? They are gonna take it. And the minimum bid in a foreclosure auction is usually the outstanding amount on his mortgage(s). And his credit is STILL going to be destroyed.
And you can recover costs in small claims. So yes, it would have cost more than $25 up front, but he would have gotten it back when/if he won.
Good luck buying it back as an REO if the OP doesn’t have CASH. There’s little chance he’ll ever get a mortgage for repurchasing his foreclosure.
” The option to pay is still on the table, but it isn’t right.”
It isn’t right that they expect you to pay back the money they loaned you? Paying back a loan shouldn’t be seen as an “option”, it’s something you’re contractually obligated to so. They give you money, you agree to pay it back and you don’t. That puts the you in the wrong, irregardless of whether they wronged you first on a different issue or not.
“Believe it or not, I was advised by my attorney to allow the foreclosure to occur, and bid on it myself. Worst case is it becomes an REO and I buy it back from the realtor at a discount.”
1) Get a new attorney. Anyone that guarantees that you’ll be able to get the house back if it goes into foreclosure is either woefully misinformed or straight up lying.
2) No, the worst case scenario is still that you would lose your house. They call it bidding and not selling for a reason – other people can bid on it as well and, if someone bids $1 less than you, they get your house. I remember a Consumerist story a few months back about someone who was in foreclosure and wasn’t being allowed to catch up on the payments at that point. They were told to just let it go through the foreclosure process and then they’d be able to bid on it afterward. IIRC, when he tried to bid on it, he was told that it had already been sold before it got to the bidding process. Probably an inside deal, but the point is that he lost his house.
Even if he does manage to keep the house somehow, it doesn’t make him the hero he thinks he is. This isn’t the little guy standing up to the man, it’s just bullheaded, cut-off-your-nose-to-spite-your-face stupid to risk losing your house over $25. Even if he “wins”, it’s still foolish and wrong to not make the loan payments and risk the house over a minor issue.
As a credit minded banker, let me point something out. Bank examiners and short sell, foreclosure, and OREO (not REO) regulations would not allow the bank to sell this property back to the original owner or anyone who could be connected to the original owner. This is done to prevent this type of FRAUD from happening.
Enjoy suing your attorney for malpractice.
Also, if you have not paid your mortgage for all this time, the option to pay is no longer on the table. Once the loan is in foreclosure, the bank has already taken a write down for the loss. There is little incentive for the bank to do anything but take back the propert as Other Real Estate Owned and sell it fast. The remaining balance (principal, interest, fees, and big legal fees) will be given a summary judgement and garnishment against your future earnings. Since you have already declared BK, you may have trouble refiling.
I suggest that you retain better counsel.
FREEEEEEEDOOOOMMMMMM!!!!!!!
Is this on the level? Would someone actually let his home go into foreclosure so he could brag about it on Consumerist?
If he thought the $25 fee was unfair, he could have just not paid it. He should have still made payments on his mortage and his second mortgage.
Either this whole story is fake and phony, or this writer is seriously insane.
All you had to do was submit your next mortgage payment minus the $25 erroneus fee with a letter and copies highlighting why, along with a letter to yourself.
Won’t work. They will set your mortgage payment against the fee and mark your account as overdue.
There’s no incentive to make a part mortgage payment without written agreement from the provider.
I actually see this as recklessly genius. I applaud you good sir. He seems to have a good plan, as reckless as it is. I’m rooting for you bud.
Re: the update, I thought there was some rule against bidding on your own property at foreclosure?