Washington Mutual Complaint

July 28, 2001

Washington Mutual Customer Service Department
P.O. Box 1093
Northridge CA 91328-1093

Subject: Loan Number 0804352466

Dear Customer Service Department,
Thank you for your letter dated July 17, 2001 regarding the $60 payoff fee. However, I reject your reasoning. Please refute the following facts and circumstances regarding my loan:

• I believe we all agree that my loan contract states clearly and unambiguously that the loan can be repaid without "charge". In fact the exact language is
  
  9. RIGHT TO PREPAY: The undersigned has the right to prepay all or any part of the outstanding principal at any time without prepayment charge
  
  
• When I called on 6/19/01 to inquire as to how I might pay off my loan, I was asked if I had requested a payoff amount. I replied that I hadn't because of the $60 fee that I felt was an unauthorized penalty on early satisfaction of the debt. The woman said she would get a payoff amount for me and returned within not more than a minute or two with the amount in hand. She did not inform me of any charges involved for this information. I went to a nearby branch and paid off the loan that day. If indeed it only took 2 minutes to determine the payoff amount, then at $60 this would equate to an $1800 per hour charge. I can hire a lawyer for 1/6th of this.
  
  
• I am assuming that if I paid the loan over the full term, then in the last month of the 30th year I would simply get a final bill from you with the final amount owed. I assume, although I may be incorrect in this, that there would be no "payoff" fee at that point. If this is true, then having to pay a prepay fee would amount, in my mind, to a penalty for early payment compared to mere completion of the loan term.
  
  
• Nowhere, that I can find, in my loan documents does it give any fee schedule for items such as this. What prevents the bank from charging $1000 or $10,000 as a prepayment "fee"? The ability to charge such fees outside of any stipulation in the loan contract seems open to abuse.

It is now more than one month hence, and I have still not received any full accounting of this transaction, so I do not know if a $60 fee has been tacked on or not.

My case rests on the following four points:

1. I was not informed of any charges being incurred at the time I requested the payoff amount.
2. My loan contract clearly states I may payoff the loan without incurring any other "charges".
3. I believe the tacking on of other fees for early payoff is different from a loan terminating normally and is therefore a de facto penalty.
4. I think it is possibly illegal to tack on these fees not specified in any way in the loan agreement, as they are subject to abuse. Even if I had agreed to "reasonable fees", who is to decide what is reasonable? I don't think $1800 an hour is reasonable.

If you have billed me $60 I ask that it be refunded immediately. If you have not billed me, I thank you in advance.

Regards,
Marc Auerbach

cc: California Department of Justice, Public Inquiry Unit
David Robbins, Federal Reserve Bank of SF

Postscript

I received a letter from WAMU dated September 25, 2001 stating that this fee was authorized under California Civil Code Section 2943. I checked it out, and they are correct.

"(6) The beneficiary may make a charge not to exceed sixty dollars ($60) for furnishing each required statement."

Oh well. Live and learn.