If you have a mortgage with Bank of America (NYSE: BAC) and want to refinance, don't bother.
You are not worth the bank's time. Or at least I wasn't.
That's what I learned first-hand last week when I called Bank of America to refinance a home mortgage I've had with them for years.
My jaw practically hit the floor when Alejandro from BofA's mortgage department told me this over the phone.
"Because of excessively high demand," Alejandro said, "we can't accept your refinancing application. But we can take a reservation and have an agent call you in 90 to 120 days."
Huh?...You can't be serious.
Bank of America
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I really have to wait three or four months to even apply for a lower interest rate when I've been an existing customer for years?
Yeah, I bet, I thought to myself...
They'll call me when interest rates are much higher or when BofA works its way through its part of the $25 billion robo-signing settlement reached over its abuses in the foreclosure process.
Of course, all of this is after BofA received $45 billion in taxpayer bailout funding.
And after they reportedly shifted the risks associated with $75 trillion in derivatives from its investment banking and trading units to BofA's depository arm, a unit flush with FDIC-insured deposits.
But that is another story for another day.
How Bank of America Treats its Customers
Suspecting something wasn't quite right, I made a second call to BofA to inquire about a new loan.
Not ten minutes later I was put through immediately to an underwriter who was all too happy to help a new, unknown prospect - a.k.a. me - take on more debt. Imagine that.
I called BofA for a comment on this bothersome situation and spoke with Terry Francisco, VP of Corporate Communications, who sounded genuinely surprised. Not pleased mind you, but surprised.
I feel for the guy. It must be tough to work for a company like Bank of America that is under tremendous pressure from all sides. And this article isn't going to help.
Terry kindly sent me a statement noting that the "random reservation" system that resulted in my refinancing application being summarily denied before the underwriting process got started only "impacts consumers inquiring about a refinance who do not have a Bank of America deposit or investment account relationship."
And that Bank of America "will not sacrifice customer satisfaction for short-term volume."
Apparently having a mortgage in good standing with Bank of America doesn't qualify me as a customer.
Through its actions, Bank of America demonstrated that it is evidently willing to screw pre-existing customers like me who have exemplary payment history, near perfect credit, sufficient assets and income by making it hard to get out of my existing higher rate loan.
Yet, the bank remains perfectly willing to take on new loans at lower rates from customers with whom they have no prior relationships and who represent entirely new risks.
Talk about an anti-marketing message...I can imagine the ad copy now, "if you're considering refinancing your mortgage, don't bother calling us...we'll call you when we're darned good and ready."
Good luck with that.
So if you have any doubts as to where the big banks' priorities are at the moment, my experience with BofA last week ought to dispel them quite clearly.
The direct transfer of risk to taxpayers like you and me without regulatory approval and without public input continues unabated.
Long story short, I'll be taking my business elsewhere.
Three local lenders, incidentally, called me back less than an hour later saying they actually want my business. How refreshing!
Bank of America is the Tip of the Iceberg
Unfortunately, I don't think what happened to me is an isolated incident. And I know that I am not alone because my inbox has been filled with messages from Money Map Report subscribers sharing similar experiences with Bank of America.
Banks like BofA lost their moral compasses a long time ago.
The interests of customers like me have been sidelined for so long that profits at the expense of consumers has become the mantra.
The muppet-gate story at Goldman Sachs last week is just part of a much greater canvas.
Case in point, Lamont Black and Lieu Hazelwood - both of whom are Federal Reserve researchers - recently confirmed what I've told you was going on all along in a just released report called The Effect of TARP on Bank Risk-Taking.
Big banks like BofA actually took on greater risks after being bailed out without lending to consumers and businesses.
Not only that, but Black and Hazelwood noted that the level of business loans issued by big banks declined dramatically after they received taxpayer subsidized bailout funding relative to banks that didn't.
How?
Exactly as I said they would...by underwriting higher risk, higher interest rate loans all while not increasing loan volumes (since volume was the figure the watchdogs were watching).
In other words, big banks knowing and willingly took on greater risks while not accepting greater responsibility to lend to the very taxpayers who had just bailed them out.
As to whether that was conscious or deliberate, lawyers will debate that for years. I have my opinion. No doubt you have yours.
Long story short, thanks to the damning report from Black and Hazelwood, it's no wonder lending hasn't recovered and credit remains tight. Despite lots of lip service, big banks don't give a rats *ss about Main Street and its people, its small businesses, its home buyers nor its homeowners.
Local banks and credit unions are a different story and it's no wonder that many are enjoying a fresh influx of deposits with stories like mine portrayed in excruciated detail all over the Web.
What happened?... I wish I knew.
Big bankers used to be community pillars. They were the guys you could count on to do the right thing. They were heavily involved at every level from helping local businesses to sponsoring the neighborhood baseball diamond.
They cared about their customers and aligned their interests with ours. They were trustworthy.
Now, they're morally bankrupt.
Come to think of it, I haven't heard a single banking executive say thank you to the taxpayers for saving their way of life and their profligate ways...and still haven't. I haven't even heard an apology for the mess they created.
No wonder people call'em "Zombie" banks.
If you've had a similar experience with Bank of America (or any other lender for that matter), I'd like to hear about it. Please write to me at keith@moneymorning.com and share it.
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About the Author
Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.