Saturday, February 07, 2009

How Chase Bank's inflexibility is costing it money

My mortgage has been purchased by Chase Bank a couple of times (after the first time, I refinanced with another bank and then Chase bought my mortgage from them), and they're my current lender. I pay extra principal with every payment, usually about 30% more. For my February payment, I decided to reduce the extra principal a bit, for various reasons including keeping a bit more cash on hand in current economic conditions.

Unfortunately, I made a $100 error in my payment. Rather than paying an extra $40.37, I underpaid the monthly payment by $59.63. I learned my mistake when I received my mortgage statement, indicating that my entire payment was in "suspense funds received" and had not been applied to my mortgage at all.

I immediately called Chase. Even though it was an hour before their call center closed, I was unable to get to a human being. Instead, after being told I was being transferred to customer service, I got an automated message saying that my call could not by completed. I looked for online options for payment, but the Chase website referred me instead to their phone-based "FastPay" system. The "FastPay" system by phone charges a $15 fee (which the phone system says can be avoided by using the online payment system) and only allows making a full payment.

I tried again the next morning, and got through to Tonja, a customer service rep who told me that I could only make a full payment through the phone (not the $100 I wanted to pay), but said if I connected an external bank account online, I could make the payment that way, and as soon as the extra $100 was received, the payment would be applied as normal. I'm also well within the 15-day grace period for a payment, so I don't have to worry about late fees.

Online, I searched through some counter-intuitive menu options--within the mortgage account, payment options send you to the page about FastPay over the phone--I finally found that from the front page I could get to an option to connect an external account. I started the process, and learned that my bank could not be connected instantly by putting in my online banking authentication information, but had to use a method of verification where Chase puts two small deposits in my account and I come back later and input those amounts back to Chase to prove that it's my account (or at least that I have access to it). It then allowed me to attempt the instant verification method, despite its previous claim that my bank didn't accept it, but that failed (and I probably shouldn't have tried--Chase shouldn't have my authentication credentials to another bank). It then said it would take up to two business days for these deposits to go through.

The next day, my bank showed me that there were two pending deposits from Chase (yet another cost Chase is incurring), so I went back to the verification page and entered those amounts. Chase's website informed me that because those deposits had not been made yet, I was not allowed to verify the amounts yet. Dumb design. I tried again later in the evening, and my verification was accepted. Now I went to the page to make a payment, only to find that once again, the only option is to make an entire payment. Contrary to what Tonja told me, I cannot pay just an additional $100, because there is an outstanding payment that hasn't been made, and my $1100 sitting in "suspense funds" doesn't count and can't be used.

Well, I've got the money in savings, so I decided that if Chase is going to make things so difficult, I'm going to go ahead and make a full extra payment and deprive them of a little more interest over the life of my loan, in addition to the overhead costs they've incurred through this episode. The website told me it would take two business days to process, so it will be applied on February 11--still during the grace period. But now I still am not sure that the $1100 will be applied to principal reduction, so I called in again and spoke with Kim. I explained what has happened, and pointed out to her that Chase is losing money from its inflexibility, and she offered to move $100 from my January extra payment to February so that I could cancel the additional payment. I thanked her for the option (which I would have needed to take if I didn't have the money to spare), but declined, since that would result in an increase in interest. I asked if she could verify that the $1100 would be applied correctly, and she suggested that I call in again after I see online that the new payment is applied--which will incur yet further costs to Chase.

This is a nice demonstration of how an inflexible payment system doesn't deal well with partial payments can cost a company money and customer goodwill.


donna said...

They are an evil company. I spent five years fighting with JP Morgan/Chase to settle my mom's estate. They truly suck.
If my sister and nephew's trust funds weren't still with them, I would wish really hard for them to fail completely.

Sorry you have to deal with them at all. I sincerely hope all the current creators of this mortgage mess are soon drummed out of all these companies, and replaced with sane people.

martin rosolowski said...

I wish I read this blog before choosing chase to handle the sale of my house. 18 weeks and still counting. They even had the nerve to question a county court order giving me the right to sell. How arrogant!

dlontos said...

I would advise that no one uses Chase Bank. They have so much non-value added waste in their processes it is no wonder they needed government money (and they are still making a profit). The majority of their CSR's have no idea what they are talking about and I have spent hours being bounced back and forth from the same two departments (neither that I needed or requested). At any rate, I have taken my banking elsewhere and suggest everyone does the same.

Raymond Cudar said...

Chase Bank is not a good company to do business with, especially for personal accounts. They are very inflexible. I was a WAMU customer before they acquired Washington Mutual. I have several checking accounts, savings and credit card accounts, and have been treated bad from a customer standpoint by Chase Corporate. The local branches are pleasant enough, but have no real power, or at least that is what they say. Credit cards rate through the roof, savings accounts minimum requirements raised, extra fees added and assessed at every turn. Believe me when I say I have a long list of how Chase does not care about its customers. Now they have had a “server crash”, which does happen to all companies, but it looks more like a security breach. My userID was changed, and all of my on-line bill-pay information wiped out. The only good thing Chase had going for it was its systems, and now if those have been compromised …… don’t walk but run away from them.

Lippard said...

Raymond: Looks like Chase had a 3-day online service outage for unspecified "technical reasons."

Caroline said...

I had $800 in suspense (my original payments were 896) this is the account where chase holds your money until a full payment is received. I entered a trial modification for 781.33: sent the 1st payment certified mail, I called and asked if I can use that 800 I already had in suspense to make the second payment-the rep said that some of that went to fees I would have to add twenty dollars to it and I did getting her name and confirmation number. Made the third payment by certified mail. I had not heard from anyone by the time the first rolled around again. I called they (the rep that answered the phone)said continue to make the same payment amounts until I hear from them and I did on Feb. 25-I did not send this through certified mail since this was not a trial payment. Since there was 28 days in Feb and the 25 was on a Friday I called on the 1st to see if they had received the payment-they had not and instructed me to give it a week and call back the following Monday to see if it had posted yet. So I waited and called back- to my surprise they cancelled my modification stating I did not make the three payments. Apparently they were not suppose to take monies out of suspense for a payment and therefore did not count my second payment. They thought my Feb. payment was a very late 3rd one. After several attempts I finally was able to talk to my relationship manager. She said she would speak to her manager to open the modification back up in the meantime I was to send in my updated information because they would need that for the permanent modification. I faxed it all that same evening. The next day I called to make sure they received the fax (they did) and I was told I had a new relationship manager and she won’t be in until the 14th. To make this long story short-I am now in debt further (thousands) then what I was before I first started this journey. I do not have enough money to stop any foreclosure and I am scared I will loose my home if this ball gets dropped again.