Credit Unions are Worth a Second Look

Wall Street Bankster
Wall Street Bankster

Credit Unions are Promoting Themselves as an Alternative to Big Banks

Many credit unions are capitalizing on the outrage against Wall Street banks, aggressively promoting their advantages such as more personalized service and fewer and lower fees compared to the big Wall Street banks. The television commercials attack the big banks as greedy institutions which charge exorbitant credit card interest rates, late charges save and other fees and with overpaid executives.

More by this Author


Comments 16 comments

sabu singh profile image

sabu singh 6 years ago

Very interesting Hub Ralph, and a perspective we don't get in India. I think we do not have institutions like Credit Unions in India. It would be worthwhile knowing more.


ethel smith profile image

ethel smith 6 years ago from Kingston-Upon-Hull

There are a few around in the UK. Perhaps the amount is set to rise with all the banking problems


chasingcars 6 years ago

From recent experience, I can attest to the superority of credit unions, which, as in the case of the one I use, is set up to stay just ahead of the wolf and way behind the big banks' economical high jinx. I have, unfortunely, a house lien with Bank of America, who have made my life a living hell, despite the fact that I always pay my bills on time and in full. I have an excellent credit rating. My bankcard is with a credit union whose members join together to serve the banking leads of their members, who are always courteous and caring about out problems, and who charges the least interest practiable for the bank to stay in business. I have never been charged any fees from the credit union. I would have nothing to do with rude bullies and manipulators like B of A could I get out from under their grasping claws. Credit unions serve the consumer, not their wealthy overlords.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

Thanks for your comment. I had a bad experience years ago with Chase Manhattan Bank. A year or so after refinancing our home mortgage with GMAC we received a bill from Chase for something like $3200 for a homeowners insurance policy the bank had taken out on our house because it claimed that in violation of our mortgage terms we had allowed our policy to lapse. There were only two thing wrong with the bank's claim: 1. We had not allowed our policy to lapse. It had been in effect continuously since we bought the house 15 or so years previously, and 2. The $3200 Chase wanted us to pay was nearly triple we were paying for comparable coverage. At the very least the bank hadn't sought out the best price available from a reputable insurance company and at worst somebody at the bank or the bank itself was getting a kickback out of the exorbitant $3200 fee. It took a year of phone calls letters and faxes of my insurance policy, threats to write my senator, to call David Rockefeller, CEO of Chase, at home at midnight, to write the state insurance commissioner, etc, to get Chase off my back. Finally the bank backed off with the lame excuse that Chemical Bank had purchased the mortgage from GMAC and when Chase purchased Chemical Bank the record of my insurance was lost or misplaced. I still don't believe their explanation which lacked a reason for refusing to cancel the $3200 policy after I told them and furnished proof that my policy had not lapsed as the bank alleged. I've been skeptical of Wall Street banks ever since.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

My experience with Chase sounds similar to some of the crooked practices at Countrywide and Wells Fargo described by Gretchen Morgenson in today's NYTimes.

WHILE the wheels of justice have turned very slowly in the years since our nation’s financiers and regulators nearly cratered our economy, the Federal Trade Commission’s settlement last Monday with Countrywide Home Loans suggests that they haven’t entirely ground to a halt.

Cuntrywide, now a unit of Bank of America, was once led by Angelo Mozilo and was the nation’s largest mortgage lender in the glorious, pre-crisis days of the housing boom. But it was also a predatory institution, and the F.T.C., citing Countrywide’s serial abuse of troubled borrowers, extracted a $108 million fine from Bank of America last week.

That money will go back to some 200,000 customers whom Countrywide forced to pay outsized fees for foreclosure services. These included billing a borrower $300 to have a property’s lawn mowed and levying $2,500 in trustees’ fees on another borrower, when the going rate for that service was about $600.

Though Countrywide’s mortgage contracts specifically barred such practices, they served the company well by generating income during downturns when it was harder to keep making money off new mortgages. This “counter-cyclical diversification strategy,” as Countrywide called it, was designed to “extract the last dollar out of the pockets of the most desperate consumers,” said Jon Leibowitz, the F.T.C. chairman.

Mr. Leibowitz also said Countrywide made bogus claims about what homeowners owed during the resolution of bankruptcy cases and added fees to borrowers’ obligations without notice. His office’s investigation turned up cases in which Countrywide tried to collect improper fees years after a bankruptcy case was over.

In some cases, Mr. Leibowitz said, even after a distressed homeowner became up-to-date on all of his or her payments, Countrywide would start another foreclosure proceeding against the same borrower.

PRETTY shameful, all in all. But nothing new to lawyers who represent troubled borrowers. They say these kinds of abuses still occur.

“We’ve been screaming about these practices for I don’t know how many years now,” said David B. Shaev, a lawyer in New York City who represents consumers. “A lot of the fees seem like nickel-and-dime charges, but they add up to big money. The $108 million in the Countrywide case is the tip of the iceberg.”

The other dubious Countrywide actions identified by the F.T.C. — pursuing foreclosure improperly, adding fees without notice — also sound familiar to consumer lawyers across the country.

Consider a recent federal bankruptcy case in Houston involving Wells Fargo. The facts of the case were outlined last month in a harsh contempt ruling against the bank by Judge Jeff Bohm.

Back in 2003, Antoinette and Lenord De La Fuente filed for bankruptcy protection after they fell behind on their Washington Mutual mortgage. Court filings show they proposed a restructuring plan that called for 60 monthly payments to the bankruptcy trustee, who would in turn distribute the money to their creditors. The bankruptcy court agreed to the couple’s plan in June 2004.

The couple dutifully made their payments. Wells Fargo took over their loan in June 2007 and the next January sent the couple a letter accusing them of being delinquent by $8,400. Wells told them that they had until mid-February to come up with the money or the bank would start foreclosure proceedings.

The court documents show that the borrowers tried unsuccessfully to argue that Wells was wrong. But Wells refused to back down; afraid they would lose their home, the couple struck a forbearance agreement and received a loan modification in April 2008.

This loan modification violated the borrowers’ repayment plan. “Wells Fargo frightened the De La Fuentes into making payments to Wells Fargo in violation of the confirmation order,” Judge Bohm wrote.

In June 2008, the couple hired a lawyer to investigate the dispute with Wells; they filed a lawsuit against the bank that August. About a year later, Wells offered to settle with the couple. In a court-approved settlement, Wells stated that the couple were indeed current on their $66,572 mortgage and owed no outstanding fees or charges. Wells agreed to pay the couple about $30,000 for their legal fees.

With that, the couple thought their problem with Wells had been solved.

But in November 2009, Wells told them their mortgage balance had mysteriously increased to almost $71,000, even though they had made all of their payments. Two months later, Mrs. De La Fuente noticed that Wells had reversed several of the mortgage payments she and her husband had made. When she asked Wells why, she was told her loan was in bankruptcy status; if she wanted to resolve the problem, she would have to pay almost $9,000. Late fees were also accruing.

The couple and their lawyer went back to court and accused Wells of violating the settlement agreement. After hearing testimony, the court agreed. It also didn’t buy the argument of Wells that errors, including a computer glitch, caused the couple’s problems.

“The court certainly agrees that ‘mistakes happen,’ ” Judge Bohm wrote. “However, when mistakes happen not once, not twice, but repeatedly, and when actions are not taken to correct these mistakes within a reasonable period of time, the failure to right the wrong — particularly when the basis for the problem is a months-long violation of an agreed judgment — the excuse of ‘mistakes happen’ has no credence.”

Judge Bohm also punted Wells’s claim that its problems with the couple were anomalies. He cited three other federal cases — one in Florida and two in Louisiana — in which Wells improperly collected money from borrowers, applied payments inappropriately, overcharged borrowers or failed to keep accurate records. The judge imposed $11,825 in fines on Wells and required it to pay $4,544 in lawyer’s fees to the De La Fuentes.

Teri Schrettenbrunner, a Wells Fargo spokeswoman, said, “There is no doubt here that we didn’t handle this case well, but it is rare that you see a confluence of this many errors coming together as you did on this case.”

She contended that a vast majority of Wells’s mortgage customers are satisfied with it and that its operations are nothing like Countrywide’s. “There are significant contrasts between the way Countrywide did business and the way we do business,” she said.

NEVERTHELESS, for imperiled borrowers, the new scrutiny on foreclosure practices is long overdue. Thankfully, the United States Trustee, the Department of Justice unit that oversees the nation’s bankruptcy courts, is also investigating possible improprieties among lenders, mortgage servicers and the law firms that represent them in bankruptcy cases against homeowners. The trustee’s office assisted the F.T.C. in the Countrywide matter.

It’s a slow process, to be sure. But at least it is proceeding.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

I also had issues with a CityGroup credit card which, after I paid in full on time for a couple of years, charged me a fee because a payment was a couple days late plus an inflated interest rate on the late balance which I paid in full. CityGroup and the others were big users of the universal default rule which meant that if you were late paying another bill they jacked up your interest rate even though you weren't late or behind in your payments on their card. Big banks have no conscience.


jiberish profile image

jiberish 6 years ago from florida

Ralph good article. I worked for both BOA and Capital One, training customer service. After leaving I closed all my credit cards and headed straight for the credit union. I've been very happy with them. BOA offered me a job recently, and I had to turn them down based on their unethical practices.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

Thanks for a very telling comment.


KKalmes profile image

KKalmes 6 years ago from Chicago, Illinois

Thanx Ralph, I opened a Chase account in the city of Chicago just so I would have easy access to my money without the ridiculous $3 usury fee to get at my own money, but I kept my credit union, which is up north in the burbs and not very comvenient but much more personal and personnable. I really enjoy working with my BCU people and they have been very helpful with interest rate reductions of late. This is a great article for anyone who likes money and wants to keep more of their own.


braudboy profile image

braudboy 6 years ago from Long Beach, MS

Deeds...I have now seen it all. I actually found something I agree with you about. I am not sure if I agree for the same reasons, but credit unions can be a great alternative to big banks. Where I live in south Mississippi on the MS Gulf Coast, Keesler Fed C.U. is a big player and a great source for auto loans, checking, credit cards, and other banking needs.


FCEtier profile image

FCEtier 6 years ago from Cold Mountain

I've been a member of a CU in NOLA for over ten years. Great service and VERY competitive interest rate on my credit card!


Coolmon2009 profile image

Coolmon2009 6 years ago from Texas, USA

I have had accounts in both banks and credit unions. I have found most banks(not all) will "nickel and dime" you to death. Credit unions tend to be a little better about that. I enjoyed reading your article.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

Some of the biggest credit unions with some of the best deals have opened up membership to everybody. This infuriates bankers, who must compete with them while also paying taxes that the nonprofit credit unions do not owe. Consumers should rejoice.


C.J. Wright 6 years ago

Great Article Ralph. I've had bad experiences with Capital Scum and CuntryWide. In fact with countrywide it was a similar issue regarding insurance. I'm a member of two credit unions. I've also had good experiences with smaller banks. The difference in customer service is HUGE! I've been trying to avoid big business at every opportunity.


Springboard profile image

Springboard 4 years ago from Wisconsin

Credit unions are more attractive than ever before. I've been with mine for many, many years and I wouldn't consider banking any other way. I want to be in total control of my money, and in many ways, a credit union allows me to do that. More often than not my experience with banks is not as a customer. I feel more like a pawn.


Ralph Deeds profile image

Ralph Deeds 4 years ago Author

Thanks for the comment. USAA is also an alternative worth looking into. Also Vanguard.

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working