Only an idiot would sign up with the “Loan Payment Administration”
It’s disconcerting how much blatant trickery is out there in the financial world, particularly in the area of home loans. It seems there’s an entire industry around trying to fool people into signing contracts or buying services that are against their own interest, and could ruinous to their finances. I think it’s time for Congress to create the long-awaited Consumer Financial Protection Agency…
The other day, our household received a letter from the so-called “Loan Payment Administration” in Murrysville, Pennsylvania with just such a lure. The letter looks official, and sounds like its from some federal agency.
But a cursory read through made me realize you would have to be a fool to even consider doing business with them. There is no value to their service whatsoever. They just take your money, hold it for a few weeks earning interest, then pass it on to your bank. And I bet they charge you a fee for the privilege of borrowing your money, under the guise of providing a service.
The letter says that their service can pay off your loan sooner and pay less interest. Wrong! The only way to do that is to increase the amount you pay the bank each month. And you can do this without an intermediary. Just write a check for more the minimum due, and write a note, “Please apply additional payment toward principal.”
How can they get away with a lie like this? Isn’t that “wire fraud” or “violation of interstate commerce laws” or something?
You’d be better off keeping your money than doing business with them. Even in a regular checking account, you can earn a few percent interest. And any bank worth its salt has a “bill pay” program these days, so you don’t need these con-men to do it for you.
I think a lot of people will be fooled by this, which made me wonder if this is even legal. How is this not a form of “predatory lending”? They’re trying to sell people a service they don’t want and don’t need.
Here is the complaint that I submitted to the California Attorney General:
We received an extremely deceptive mailing from this company, touting the benefits of using them as an intermediary to help pay our mortgage. They take an automatic debit from your bank account every two weeks, and then send a mortgage payment for you once a month.
Their official-sounding name might fool a lot of people into thinking they are a branch of the federal government. The way the letter is printed, with our bank’s name above our address, it seems they want it to look like they are approved by or affiliated with our bank.
It seems that their business model is to collect your money and hold it for two weeks, then simply pass it on to your bank. There is no mention of the fees or charges for this. Consumers wishing to set up an automatic debit or bill pay to their mortgage company can do that through nearly any bank these days.
This worthless service appears designed to bilk naive consumers. The Attorney General’s office should investigate the legality of this service in order to protect California consumers.