The Bank’s Latest Tactic to Shut Down Loan Modification Firms
I got a call today from someone who is in the loan modification business In Arizona. He told me that if you’re a loan modification company, you will not be allowed to have a merchant account with Wells Fargo anymore. Even if you’ve had months of success, no charge-backs, or no complaints… your account will just be terminated because Wells Fargo has apparently decided it doesn’t like what you do for a living.
And that will be that.
Wells Fargo has decided that they’re just not allowing loan modification companies to process credit cards anymore. So may be Bank of America. And throughout the day I’ve talked to one after another that said their bank had terminated their merchant account abruptly and without cause.
I spoke with Blake Campbell of AVP, a national merchant service provider. Blake has been in the merchant account business for the past five years, and will now be working with Mandelman Matters to help loan modification firms obtain a merchant account so they can accept credit cards, a critical component of serving a population that cannot currently make their mortgage payment. He confirmed what I’d been hearing. In fact, one of the business owners that I spoke with was a client of Blake’s, and he confirmed what that business owner had told me.
No charge-backs… no complaints… and no account anyway.
I spoke with Blake at length about what’s happening and he said:
“Recently I’ve been seeing accounts get terminated without any complaints or charge-backs on their records. And the only thing they have in common is that they’re all loan modification firms. Shutting down a merchant account like that at the wrong moment can force a firm out of business. Especially if that firm had no idea it was coming.”
Really? Why that’s positively fascinating.
Now, I know what some of you are going to say: It’s the banks right not to serve an industry, but I don’t think that’s the point. The point is that this is just another tactic in their fight to get rid of private sector loan modification firms. And that seems very wrong to me. Discrimination even.
It seems like the bank is inventing and then enforcing some kind of “rule” in order to obtain a competitive advantage. Like vigilante justice… unfair competition. It seems that way because that’s exactly what it is. Don’t even try to tell me that loan mod scams are the reason, because that would force me to point out some of the things that I can buy on a credit card, which is something I could not do in mixed company.
When a customer is terminated, they’re listed on the Customer Terminated Merchant File (TMF), a database that acts like a black list for banks. Few if any banks will touch an account that’s been TMF’d.
Oh, this is getting better and better… I wonder what took them so long to figure it out.
For more information on how you can protect your firm from the bank’s latest offensive tactic, write to me at mandelman@mac.com or call me at 714-904-2288. I’ll personally recommend you and put you in touch with Blake immediately. This really is a classless move by the banks in my opinion, and Blake and I have worked out several options from which you can choose depending on your individual situation.
We’ve already helped a number of firms and very effectively, I might add.
What if the banks stopped liking some other industry for whatever reason? Or other people. These are the same banks that the government has said are too big to fail. Maybe we should be afraid of them after all.
Anyone feel like cowering?
I don’t cower.
Martin,
Lately, you've been sounding very negative. There's alway two sides to every story. If you take a moment and think this through...I'm sure you'll come to the same conclusion I did. Banks are concerned about the ever escalating incidences of credit card fraud.
These loan modification companies you speak of are frauds. What? You don't believe me? Okay...I can prove it. Ask any homeowner that needs a loan modification if they can give one of these so called legitimate companies their credit card for services. See...I told ya! If they were legit, they'd be able to accept credit cards. They are frauds... and banks don't do business with frauds. And neither should you!
Let that be a lesson to you. Never doubt the bank!
All I can say is.......Thank God they're on my team.
And I'll go a step beyond. Fraud defined: deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage..............it sounds like banks to me. The breach of confidence is that they are over their heads and had to be stress tested after needing bail-outs by the federal government, sole purpose is profit with unfair practices, and are you sure you want to talk about dishonest advantages? And now they can prohibit businesses from doing business blocking merchant accounts for no good reason. They hold the country in ransom as we are all slaves to our own country in the interest alone of the national deficit. They have made it where you can not live in our society without a bank account. You don't believe me? Then try living without a bank account.
There is a humorous side to your post: Logic dictates that if your first statement is correct (Mod companies cannot accept cards), then your last statement means that all Loan Mod companies that can accept Credit Cards are legit!
Let me assure you there are many Attorney firms and Loan Modification companies that accept credit cards.
Accepting credit cards still does not mean that any particular company has a successful track record.
Yes indeed humor is needed in this day and time. I was finding the same humorous side in the posting above me saying that all loan mod companies are frauds. But you really have to hand it to the banks that control the world and the fact that they will control an industry by not allowing them merchant credit card services.
Randall... According to Blake Campbell, the number of loan modification companies that will be allowed to take credit cards is dropping like a stone. It seems that the banks have found a way to systematically choke off a loan mod firm's ability to conduct business.
Apparently in Arizona, according to James Wexler, a CEO of a loan modification company there that is completing 100 mods a month who contacted Wells Fargo after his account was closed for no reason, Wells Fargo no longer accepts merchant accounts if you do loan modifications. He had 0 complaints and 0 charge-backs. Blake verified his story after review of his account.
Also, once the bank puts you on the black list, you won't be able to get another bank on board. This practice seems very wrong to me. It is discrimination against a type of business.
Hand it to them? Looky here...They're simply protecting the public. Much the same way they protect you from overextending yourself when they cut off your credit lines needed for you to continue buisness.
It would be a irresponsible for them to allow you to take that kind of risk. The fact that you've never missed a payment, and have a 750+ fico is not a determining factor. The fact is the economy is in a slowdown.
If you were allowed to try...and you failed...you would most certainly damage your credit.
Cutting off credit card processesing for mod companies falls under protecting the public. The ones that are cut off are frauds! The bank would never do that to a legitimate company, unless the bank determined they were a fraud. Which of course they are because the banks offer loan mods for free.
You...are not too big to fail.
Since when do the banks care about the public's best interests? Do you really feel the banks have the public's best interests in mind? Let me answer that for you. No! They don't! If you or someone you loved, god forbid, was in the hospital in a coma, do you think the bank or your creditors would send you a get well soon card? Of course they wouldn't. But you would probably have dozens of voice mails on your cell phone from one of the bank's collectors calling you and asking where your payment is.
The banks are trying to cut out the modification companies because if they do that, they won't have to give the homeowner a deal that is good as a reputable modification negotiator could get the homeowner. Why would the bank want to give someone who doesn't qualify for a government subsidized modification a 3% interest rate that a negotiator negotiated for the homeowner, when the bank can cut out the negotiator and give the homeowner 3.5% or 4.0%? I ask this question because banks do modify loans for people who don't qualify for Obama's plan. The fact of the matter is, they would rather have the homeowner pay more if they can get away with it.
So instead of the homeowner having 3 options for help, ie.. Doing it themselves, which is usually an exercise in futility; getting help from a HUD approved counseling agency; which let's face it, is like having a public defender represent someone in a legal case; or hiring a qualified professional; and admit it; not all loan modification companies are the boogie man; the homeowner is the one that loses out because they are left to fend for themselves or get inadequate help from a government backed agency? Ever go to the DMV? How bright are those people?
C'mon...Whose going to buy that argument? You sound like a right wing nut! This is a free modfication service, paid for by tax payers.
It's being administered by trustworthy government, non-profits, banks and lenders alike. You have to admit, it's not like they're capitalists trying to make a buck from a crisis. These entities have endangered...oops...
"in danger" homeowners best interests at heart. Give em a chance...
they've already modified a staggering number of home loans.
Once they prove themselves competent with this minor crisis, I'm supporting nationalized health care, H.R. 1728 and increased taxes across the board!
KUMBAYA LORD, KUMBAYA!
Folks...the reason a bank cancels a merchant account is predominantly due to consumer charge-backs. If a customer pays $1000 or $2000 or more on a credit card, then for WHATEVER reason doesn't want to pay for the service, they can request a refund. In many cases, loan mod companies that have already performed a great deal of work, or are frauds, still will refute the refund. BAM! Customer files a complain with the credit card company and its a chargeback. More than 1 or 2% for any company triggers a review, and usually an increase in discount rate or cancellation. Its the way the merchant processing system works. If the industry has a high degree of charge-backs, most major merchant processors won't handle it. Its a business decision by and large, probably not a consipiracy against loan mod companies by Wells Fargo...they have much, much bigger problems.
It doesn't make any sense that an industry that may be having higher than normal chargebacks would cause a bank to start cutting off companies that haven't had one.
Martin may be paranoid when it comes to the banks, but it doesn't mean he's not right. Think of it, why wouldn't the banks want the paid-up-front loan mod companies out of business? Those are the guys who have already gotten their money, and if they don't get a good result they'll have to return it. Isn't that a more motivated company than one that has not been paid, and has to keep looking at their time commitments to see when it's time to pull the plug on a file?
It's common knowledge that the banks' first offer in a loan mod is where negotiations begin, not where they end. If, however, you are a loan mod company that has not been paid yet, you will be limited in how many times you can refuse offers. Banks will stretch those companies out, just like they would if you were suing them and you couldn't really afford the lawyer fees.
The naivete of people with regard to the banks is really shocking to me. What have they done in the past two years to deserve such benefit of the doubt? Lobbied for changes in bankruptcy laws (just for individuals, not for corporations), raised credit card rates on long-time customers with perfect records, stopped lending altogether, even when the government gave them the money to do it with? What does it take?
Okay 1b1141...
Perhaps I wasn't clear enough in my article... I am only talking about the cancellation of merchant accounts WITHOUT cause... no chargebacks... no complaints. None. Zippo. Nil. And still... cancelled without notice or cause. According to Wells Fargo in Arizona... if you're in the loan modification field then you won't be getting a merchant account with them in Arizona. I have two calls into Wells in San Fran, and I'm sure they're getting their story straight.
Since hearing from Mr. Wexler, I have heard from dozens of loan modification firms across the country and they've confirmed the situation. In a few cases, even checking accounts have been pulled.
I've found a perfect solution, however, and if any loan modification company reading this has a problem related to their merchant account THEY SHOULD REACH ME IMMEDIATELY. I've got the answer you're hoping for, and I've even arranged for loan modification firms to get priority treatment when they call through me. I've got the goods... even a cell number if it's after hours.
Do yourself a favor... don't wait until they freeze yours. It's time for a preemptive strike. Be ready and have an alternative up your sleeve.
As to your last comments LB141... what in the world could Wells Fargo have to worry about? They certainly aren't at risk of going under, that's for sure. The only moral of the story is... I have no idea, actually.
Martin may be paranoid when it comes to the banks, but it doesn't mean he's not right. Think of it, why wouldn't the banks want the paid-up-front loan mod companies out of business? Those are the guys who have already gotten their money, and if they don't get a good result they'll have to return it. Isn't that a more motivated company than one that has not been paid, and has to keep looking at their time commitments to see when it's time to pull the plug on a file?
It's common knowledge that the banks' first offer in a loan mod is where negotiations begin, not where they end. If, however, you are a loan mod company that has not been paid yet, you will be limited in how many times you can refuse offers. Banks will stretch those companies out, just like they would if you were suing them and you couldn't really afford the lawyer fees.
The naivete of people with regard to the banks is really shocking to me. What have they done in the past two years to deserve such benefit of the doubt? Lobbied for changes in bankruptcy laws (just for individuals, not for corporations), raised credit card rates on long-time customers with perfect records, stopped lending altogether, even when the government gave them the money to do it with? What does it take?
It takes pitchforks and torches! Remember AIG Bonuses... That's what we need. That's what it will take. Nothing else.