Sunday, February 12, 2012

Scammy McScammerpants

One of the things I really don't like about becoming a homeowner is the lack of privacy we've just opened ourselves up to. Real estate transactions are public record. It hasn't happened yet, but as soon as the county processes everything, when you google our names you will draw up our real estate tax records and you'll have my physical address right at your fingertips. There's nothing to be done about it without creating a trust and buying the house through the trust, which would make our lives infinitely more complicated than they already are. And I'm probably more paranoid than I need to be, because everyone else I know who owns a house is in the exact same situation. (But I'm mainly irritated because with my new-ish married name, there are fewer than two pages of Google results, all of which are actually me. So this information will be very easy to find.)

However, besides the creepy factor, there's the really annoying deceptive advertising factor. Lots and lots of companies now have our names and mailing address, and there doesn't seem to be much chance of getting that information out of their hands. We're getting all sorts of stupid advertisements in the mail for all sorts of stupid things, but the one that showed up on Friday takes the cake (so far).

It's official looking and addressed to Peanut.* It's from "Nationwide Biweekly Administration" and a big headline says "IMPORTANT SAVINGS NOTICE: OPTIONAL CHANGE OF PAYMENT FREQUENCY" with a note that "A bi-weekly program will eliminate 6-10 years off your current $207,000 loan".

So. The originating name is generic enough that it could be from the bank that holds our mortgage (and since most mortgages are sold soon after closing, as ours was, and we haven't had to make our first payment yet, I'm not even 100% sure at this point who DOES own our mortgage - guaranteed to be confusing). They've also got the amount of our mortgage correct, so it would be pretty easy to mistake this for official paperwork.

We've considered switching to bi-weekly mortgage payments as soon as our student loans are paid off, because it really does save you a lot of money. When we went over our mortgage paperwork, we made sure that this option was available to us and that there was no penalty for paying off the loan earlier than 30 years. The thing is, through our lender, those options are available to us for free - so what's the angle on this offer that just showed up in the mail? Why would they offer to do something for us that we can do free ourselves - unless there was something in it for them? The letter said nothing about fees or charges, just talked about how much we can save by using this method.

So we did some looking around, and Peanut discovered that the most frequent search terms in connection with "Nationwide Biweekly Administration" are words like "scam", "review", "rip off" and "better business bureau". Hmm. The second result for the company's name is a RipoffReport.com review. Hmmmmm. And if you click through to that review, you discover undisclosed nonrefundable fees, even if you never use them to pay your mortgage (I guess you have to give them your account info to register to find out more?). Ah ha! And if you dig around some more, you find out that they charge another $3.50 on every biweekly payment, a neat $91 for them per year. Even if they saved us six years off our mortgage, that would be just over $1,000 made off of something we can do for free ourselves. Multiply that by all the people who fall for this and you can start to see where their profit model comes from. (Also consider the fact that they might be selling your information elsewhere AND the fact that they have your bank account information. It gives me the creeps.)

If you want to pay off your mortgage on a biweekly basis, make arrangements directly with either your lender or your bank to set up automatic payments (watch out for fees from them too!), or set up a calendar reminder to send you an email to write a check or make a payment manually. There is no need to pay for something that you can do for free.

Also make sure to carefully read any paperwork that you get from anyone offering to save you money. Ask yourself why they'd do it for free, and figure out how they make their money. No company is out there doing business for nothing.

Now I'm off to figure out how to get ourselves off this company's mailing list for good...


*Can I complain for a second that everything is showing up in Peanut's name? We took this house as joint tenancy, and my name is on every official document that his name is on, but the water bill shows up automatically to MR. Lastname, as does the gas/electric, trash, mortgage paperwork and everything else. I suddenly became Mrs. Doesn'thandlethebills,she'stoopretty. (I don't think our joint name causes this issue, but maybe it does. Anyone own a house with a partner with a different last name can clarify that for me?) I'd say it doesn't matter, but I may be missing out on valuable credit history information here!

7 comments:

  1. For your * point, I guess I will find out once I refinance the mortgage in both our names since I didn't change mine, it's currently only in his. But we haven't yet gotten any of the scammy mortgage mail which I think is a little strange.

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  2. Oh yes, we get/got these too. And a whole bunch of life insurance and credit card offers...
    But come to think of it, most are addressed to hubby, not me. And I'm pretty sure my name is first on our mortgage paperwork... weird. I actually hadn't really given it any thought before, since we just recycle them.

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  3. I never knew that information is made public. I wonder if the same applies to my country?

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  4. You should read the letter you received. It clearly states that Nationwide Biweekly Administration is NOT your lender (at least mine did). This was an agreement made with the state of Ohio a few years ago. Also note that the posting on Ripoffreports states that the fee for the program was not hidden & that it was clearly stated in the contract. I am very happy that you were a saavy enough as home buyer to actually realize that a biweekly program is beneficial. It is also good that your current lender offers a free in house program. I assume you are also aware of the fact that 95% of usa lender do not have biweekly programs & refuse biweekly payments. Note also that since the majority of mortgage loans are not biweekly, the interest is accrued on a monthly basis not daily. That being the case, most Third party programs are designed to provide the scheduled discipline of biweekly debits while still paying your lender monthly. Also note that new laws have gone into effect that force lenders to reject partial mortgage payments. You should note that Nationwide Biweekly Administration specifically tells their customers about all fees, record the calls & will play the entire call back to the customer upon request. There is a resaon why they have been able to maintain an 'A' rating with the BBB without being "Accredited". Factor in the fact that they will audit your loan each year for free, Give your a lifetime membership with 100% transferability, give a money back guarantee on their loan payback analysis, have US based customer service that actively assist you when your lender messes up, they are listed with Dun and Bradstreet & are the only biweekly administrator that has had an accredited CPA firm do an independent audit of their entire company, I believe you do them a disservice by blanketly disparaging a company that is currently servicing over 350,000 happy customers. I do agree that the steps we must take to protect information that should be considered private have gone to a ridiculous level. However, this is the American way. If you want a wall between yourself and the world you need to use corporations. Sorry about the rant on NBA I just like the company compared to the other choices out there.

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    1. Hmmm, it sounds perhaps like someone works for NBA or does business with them?

      I assume you are also aware of the fact that 95% of usa lender do not have biweekly programs & refuse biweekly payments. Source, please? Our mortgage broker assured us that the majority of loans available nowadays do in fact allow biweekly payments with no prepayment penalty - and what's more, there is no fee to make such payments and no requirement to enroll in any program. Perhaps in the past it was more difficult to pull this off on your own, but that certainly doesn't seem to be the case anymore.

      Also note that new laws have gone into effect that force lenders to reject partial mortgage payments. Source, please? The mortgage we just purchased a month ago would be subject to any such laws, and our lender is not required to reject partial payments. I guess any given lender could choose to do so, but I can't find any evidence that there are laws "forcing" them to reject this.

      My gripe with NBA and any similar company is that they are charging a fee for something that a consumer can do for themselves, for free and automatically - so the argument that they "need" this service is false. Not only that, but their advertising is purposefully deceitful and designed to make the recipient believe that the paperwork is from their own lender. Any company that relies on trickery and deception to get my attention is one with whom I will not do business, and won't recommend to others.

      So, my advice still stands: readers, carefully review any paperwork you receive about any financial product. Figure out how the company makes money and whether you feel it's worth paying for. Determine who they actually represent, whether it's your lender or a third party. Do a google search for companies you are considering doing business with and pay attention to the automatically-generated search terms google offers you. If the majority are "rip-off" and "scam" instead of "phone number," understand that while they may have many happy customers, a significant portion are looking for stories like theirs. Determine for yourself which category you want to be in.

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  5. Paying half the amount twice a month instead of full amount once a month will save you very little money. I'm pretty sure that blogger made a calculation mistake. There's no way that person could be saving ~$3000 using that method. I would calculate it closer to about $100.
    What does save you a good amount of money is half the amount in biweekly payments because you effectively end up making an extra payment every year. If you are disciplined enough you could simply make an extra payment every year. Or increase your payment every month by about 8%. This will get you almost all the benefit with requiring any changes or special programs.

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    1. Yes, you're exactly right - making half-payments twice a month really doesn't do much good. It's making half-payments every other week that makes the difference and results in an extra payment every year. However, financially biweekly payments are still a better option than making an additional payment every year, because of the way interest is calculated.

      For example, biweekly payments for us would save us a little more than $24,500 in interest. Making an extra payment once every year (whether that's through twice-monthly payments or a single payment once per year) would save us just a hair over $24,000. A few hundred bucks - not a ton of money, but, financially speaking, it IS the better option.

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