Feel Robbed

[AM13]

What is the name of your state? CA

The cliff notes version of my situation:

1. Got home equity loan from Bank A

2. My wife and I do our collective banking through a different institution (Bank B), but she still has a savings/checking account from her single days with Bank A.

3. All payments to loan are made from the collective account maintained at Bank B, electronically, except for a couple of checks submitted early on in the life of the loan.

4. Payments have never been made towards loan from my wife's account maintained at Bank A

5. After several months of receiving payments on the loan, Bank A somehow pieced together the fact that my wife had an account that they maintained.

6. Bank A then proceeded to automatically withdraw funds from my wife's account without authorization from either of us, nor did they notify us of said action. Simultaneous to this, they continued to receive payment from us from Bank B's account, as we were unaware of the withdrawal Bank A was automatically making. This occurred for 2 - 3 months.

7. We became aware of the situation after receiving a letter from Bank A regarding overdrafts on my wife's account. Given we don't use that account for paying our bills, we don't maintain funds in it to cover such expenses. After Bank A's unauthorized withdrawals exhausted all funds in checking, they began to cover the overdraft by extracting money from the linked savings account, and further to this, charged us additional funds for overdraft protection.

8. Upon contacting Bank A multiple times about the matter, they have been completely unresponsive to the matter. We have contacted them via phone multiple times and by visiting a local branch office. The result of our efforts have been a spatula that the manager at the branch office gave to us as a "good will token."

Further to this, after we learned that Bank A had enrolled us in the auto payment system, I immediately figured out what I needed to do to remove us from that program and did so. To add salt to the wound, within a couple of days of me removing our enrollment in that program, Bank A sent us a letter informing us that the terms of our loan dictate that should one remove themselves from the auto pay system, Bank A had the right to increase our interest rate to a higher rate.

I have a hard time believing that all of this is legal. I am in the process of reviewing my loan documents to confirm whether or not any such clause does exist. Even if it does, it doesn't seem legal to me that they would enroll me without my authorization, especially since it was never a requirement of my loan agreement, then on top of that ,charge me more money to remove myself from a program I never asked to be enrolled in.

It should be noted that all payments made to Bank A were drawn on checks from an account maintained at Bank B and/or submitted electronically from an account at Bank B. At no time was any payment ever made from Bank A's account that my wife holds. As I read the loan statement, it states that checks submitted to them may be used for electronic withdrawal (yet, not auto payment). Again, it seems illegal to me that they would on a whim just pick any account of ours and use that as the basis for the auto payment.

I am seriously considering legal action and at the same time I wonder how many other folks may have had similar experiences.

Thoughts? Thanks in advance.

[Debt Guy]

Did you actually lose any money?

If not, you have no damages on which to base a lawsuit. Oh, you can sue but what is the point?

The ultimate revenge for what the bank did is for you to close your accounts, pay off the loan, write a letter to the chairman of the bank and tell him/her what you did and why and that you intend to tell your story to a hundred other people.

[AM13]

Thanks for your reply. I appreciate it.

Yes, we do have some damages. While it is not a significant amount, we are out the amount that the bank took from the account to cover the "overdraft protection." The bank has been completely unresponsive in refunding those "fees" to us. That's an aside to the amount of personal time we've wasted trying to get them to demonstrate some type of response.

On a more personal note, my wife is rather annoyed that they took nearly all her money from that account. While it was applied to the principal of the loan, it certainly wasn't money she voluntarily remitted towards the cause. That's more an emotional thing on her part I suppose, but I do feel this matter warrants greater attention, hence my consideration of legal action. I am willing to be that I am not the only one who has through something like this.

[efflandt]

Check your original loan papers to see if there was an interest rate difference for autopay or not. Note that paying by check or electronic bill payment does not qualify as autopay, it would have had to be prearranged regular payments through your lender. If your loan terms did not require autopay and you were not behind in your payments, it was wrong for them to take money you did not authorize.

When I refinanced my home the lender gave me an interest bearing checking account to do my own escrow for tax/insurance and loan autopay. They said I could use a different account at another bank for the autopay, but apparently did not set that up properly. Originally my 1st payment was credited, but never came out of my checking account. A week later it showed as unpaid, so I wrote them a check and they credited me as though it had been paid on time. From then on I ended up using their checking account for autopay and do a partial payroll direct deposit to that account. Without autopay, interest would be 0.25% more. I write my own checks from that account for taxes and insurance (no minimum balance, as long as money is there when needed).

[Debt Guy]

hence my consideration of legal action.

OK. Lawyers cost at least $150 an hour. You would probably have to pay a retainer of $1000. You can expect the bank's lawyer to drive your costs to the sky. $3k to $5k is probably not unreasonable as your out of pocket to get to trial.

Then, your chances are 50/50 with any jury. If you win, you might be awarded your attorney fees. If you lose, it is possible that you might be ordered to pay the bank's attorney fees. That would sting.

If you think this is worth it; go ahead.

Not the same situation, but once upon a time I paid over $10k in an effort to keep a minority mineral rights holder off my mother-in-law's land. From the first meeting, the attorney said we would lose because state law is decidedly on the side of the holder of the minority mineral rights. We did it anyway because it was such an emotional issue for my wife. At that time, I could afford it and it made her feel like she had fought the good fight to the bitter end. Today, I could not afford it and all I could tell her to do would be take a baseball bat to their kneecaps when they were looking the other way.

Sometimes it is just smarter to walk away even though you know you have been "wronged".

There are a couple of things you could do to "annoy" the bank. Write a complaint to the BBB (waste of postage), write a letter of complaint to the bank's regulatory agency (waste of oxygen), write of letter of complaint to your congressweasel (waste of brain cells), etc. ad nauseum.

Good luck.