July 28, 2001
Customer Service Department
P.O. Box 1093
Northridge CA 91328-1093
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
9. RIGHT TO PREPAY: The undersigned has the right to prepay all
or any part of the outstanding principal at any time without prepayment
- 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:
- I was not informed
of any charges being incurred at the time I requested the payoff
- My loan contract
clearly states I may payoff the loan without incurring any other
- 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.
- 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.
Department of Justice, Public Inquiry Unit
David Robbins, Federal Reserve Bank of SF
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
"(6) The beneficiary may make a charge not
to exceed sixty dollars ($60) for furnishing each required statement."
Oh well. Live and learn.