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Tom Kelly: Personal touch getting lost in mortgage marketplace

Several years ago, an airline launched a provocative television advertisement featuring a veteran business owner sharing his angst with employees over the loss of an old and reliable client. The client, it seemed, needed a more personal touch – in-person appearances instead of phone calls, emails and faxes.

The commercial ended with the business owner handing out airline tickets to all his employees and instructing them to make personal appearances to all of their clients. The ad captured the state of personal service in some parts of the business community. (Who doesn’t sometimes wonder whether there were successful businesses before voice mail and email?) But the ad should also allay the fears of terrific service providers: High tech cannot replace all customer service.

The topic surfaced again last week when a longtime friend explained his frustration at not being able to speak “to a real person” regarding the changes in his home loan. My friend, Ken, held a fixed-rate loan with Bank of America for several years. His mortgage payment, plus an additional $500 principal payment, was automatically withdrawn every month from his checking account.

Recently, Ken discovered his monthly mortgage payments were no longer listed on his statement, so he called the bank for an answer. The B of A representative informed Ken his loan had been sold to Nationstar Mortgage and that it was now the new owner’s responsibility to provide monthly and annual statements.

“The problem is the call center is automated,” Ken said. “The phone prompts did not address my concerns about how to handle the additional principal payment. The recorded message even states that the only calls they make are for collections. When I tried to clarify that I needed to explain a specific problem, the message simply disconnected me.”

Feeling caught in a process that would never include human interaction, Ken’s frustration mounted and reached a tipping point when he received another email:

“Unfortunately, we cannot assign an agent to contact you directly because we are an inbound call center. The only outbound calls we conduct are collection calls, which are solely managed by our automated system. That being said, it would be best for you to discuss this with one of our customer services representatives.”

“At that point, I began taking steps to refinance my loan,” Ken said. “While I am a firm believer in automation, I refuse to do business with a company that offers no chance to speak to someone when there is clearly a problem.”

Several years ago, I also experienced a lender who would not speak with me. As a result, I will never do business with that lender again. Here’s what happened.

When we refinanced, the mortgage contained a “prepayment addendum” commonly known as a “soft prepay penalty” – a requirement some lenders demanded to discourage borrowers from quickly refinancing their loans as soon as interest rates drop. The “soft” limitation allows the borrower to prepay the loan without penalty only if the home is sold. If the loan is refinanced, however, during a specific period of time, typically three to five years, the borrower faces a prepayment penalty that could amount to thousands of dollars.

I thought this to be a reasonable request until the country started funneling cash to banks for the purpose of making more loans for small business – money most banks chose to use elsewhere. Why should I pay a penalty for not performing while the lenders were not held to the same accountability? Long-term rates had dropped considerably. Why not reduce my rate and keep me as a future customer?

I was told there was no way that the investor that bought the mortgage (Bank of New York) would be willing to waive the prepayment penalty. The reason given was that there was no incentive to do so – the home had plenty of equity and if we defaulted, the bank could sell the home and be repaid all of the outstanding mortgage, plus fees and expenses.

When a representative from the Bank of New York refused to speak with me about a compromise, I moved to cash out my loan as soon as possible when the penalty period expired.

Why do business with a company that refuses to speak to you? Regardless of how much information is available online and on the phone, if I pay for a service, I expect to receive service – from a real person.

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