Wells Fargo Closes Accounts if Firms Offer Loan Mod Services

 

Last week, when I learned that U.S. banks were systematically canceling the merchant accounts of firms offering loan modification services, thus preventing the firm from accepting payment by credit card, I was stunned. And I thought to myself… well, now I’ve heard everything.

I was wrong, however, I had not yet heard everything.

Today, I was informed that Wells Fargo Bank is unilaterally closing the business checking accounts of companies simply because they are offering loan modification services. Yes, you read that right. Business checking accounts. Because you offer to help people obtain loan modifications from banks… like Wells Fargo.

What’s next… you won’t be allowed to use the bathroom at B of A?

That is truly unbelievable. Can you imagine if that were happening to any other segment? Like coffee shops… banks don’t like coffee shops… so they can’t take credit cards anymore and we’ll cancel their checking account too. It would be on the news every single night. I’ve been all over the world and I can tell you that I’ve seen some sleazy, clip joint places… hey, I was in the service – so sue me… but they all accepted payment by credit card.

But help someone get their mortgage modified so I don’t lose my home to foreclosure and… Oh dear… I’m sorry, no… we simply could not allow that.

Well, you know what? At least that puts an end to the skeptics that thought to themselves: “I wonder if there’s a good reason the banks are canceling merchant accounts for loan mods. Maybe he’s not telling me something. Hmmm…” Sorry, no. It’s the banks and they’re doing this for a very obvious reason… they don’t want people to have help in their negotiations over a mortgage modification. They want loan mod service providers gone.

For the record, the individual that called me and told me about this situation yesterday was no start up, by the way. He’s been a mortgage broker for twenty years. And he’s had no problems with his account, it came as a total surprise. When he asked his banker, with whom he’s had a relationship why he had received such a letter he was told: “It wasn’t me… it come down from above… no business accounts if the firms offer loan modification services.” So, that’s pretty darn clear, wouldn’t you say?

They don’t like what you do for a living.

Or, is there some newfound risk in a business checking account, I’m not aware of? I’ve only had one since 1989. I’m probably not familiar enough with a business checking account to judge. And think about this: I’ve seen banks hesitate more over closing the account of a drug lord than this.

So, that’s Wells Fargo. And who knows who is next. I’m getting on the phone and calling some regional banks. I know the CEO of a couple of them. I’ll let everyone know what I find out. Until then…

Be careful out there.

Don’t play games with your money. When your merchant account gets terminated, they can hold your funds for six months. At the moment, I’m trying to help a firm in Las Vegas get their funds released. Their merchant account was terminated without cause on April 27th. And they keep getting charged a service fee of $600 every month… even though their account is closed!

I’m not kidding about this… don’t wait until it’s too late.

Mandelman out.

Comments

  1. mizzvht says

    Here is another to add to the mix. Apparently PayPal also is flagging loan modification firms that use PayPal as a payment option. We have had a PayPal Merchant Account for almost 7 years without incident yet we received an email 2 weeks ago notifying us that effective June 26th, PayPal will be holding back 20% of all fees for 60 days for each transaction as a security deposit. They were quick to note this was no reflection on our past history. Then, we were provided updates to new PayPal policy which states "Amendment to the PayPal Acceptable Use Policy, Effective Date: June 3, 2009: Beginning June 3, 2009 the PayPal Acceptable Use Policy is being amended to include a new Section 4 as follows: Prohibited Activities - You may not use the PayPal service for activities that: "4. involve the sales of products or services identified by government agencies to have a high likelihood of being fraudulent”

    I checked with several individuals and businesses with PayPal accounts that do not provide loan mod or homeowner advocacy services and they did not receive the infamous email.

    We've been providing these services to homeowners for seven years - before the proverbial Gold Rush - and never have had a chargeback. Amazing that this same government is paying the banks for each loan modification they "negotiate" (self-dealing you say?), but small businesses that are representing them are presumed to be fraudulent and being penalized as a first step to eliminating the so-called competition![/u]

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