September 20, 2014

Bank of America Refuses to Accept Legal Tender Cash for Mortgage Payment

There is more to this story than first appears, but in a general sense, this is one of those reasons that I want Elizabeth Warren to absolutely destroy the idiots that run the nation’s banks.  Banking is such a vital industry that exists to serve the main economic producers and yet it has become a parody of itself.  I love banks.  I love stories like the Tootle-Lemon bank.  I use banks.  I invest in banks.

However, given the horrific mismanagement we’ve seen in the past five to ten years, were I in a legislature, I’d be tempted to reinstate the ban on interstate banking and break up most of the large institutions on a scale not seen since Standard Oil’s monopoly was shattered.  No good has come of the existence of these monstrosities.  They are too big to be managed.  I also want Glass-Steagall brought back and a total, non-negotiable ban on investment banking and commercial banking under the same entity.  This served America well for almost 70 years before it was repealed and we didn’t have these kinds of problems.

Going further, investment banks need to return to private partnership structures and be prohibited from seeking public capital.  The reason is simple: The partners need to be on the hook in the event the institution fails.  It’s moral hazard.  I say that as someone who has a significant portion of my personal retirement assets in bank stocks purchased at bargains during the crisis.  At some point, the good of society must prevail and these fools are failing at their primary responsibility.  

One of my friends who worked in the banking industry wrote this excellent email to me explaining what is likely going on here:

I don’t know all the details but if he was over 3 months late the bank will not accept any form of payment period. The account would have been sent to pre foreclosure as per federal law and without working an arrangement with the loss mitigation and foreclosure department payment will not stop the action. He would have the option to work with those groups and bring the account fully current including and bank and legal fees that were now associated with the account. Or if he qualified he could work out a payment arrangement that would allow the bank to put a hold on the foreclosure action, not stop it completely but hold it for a series of month to show good faith payments. If this was to happen he still would not be allowed to pay in the bank but payment would be sent to those departments for processing and holding. 

Just some insight from my days working this crap.

My hunch is that it probably what is happening.  If it is not, and the bank just refused to accept legal tender, I think their charter should be pulled.  Banks will not change until they are forced to change.  The current system is too lucrative for them.  

  • Paul Sowden

    While I don’t disagree with the broader points you are making about the current regulation of the banking sector in the United States I think this video and the sensationalist headline should be taken with a grain of salt. It appears the poster, Robert Somerton, has been delinquent on his mortgage repayments and has been battling with foreclosure on an underwater home.

    • http://www.joshuakennon.com/ Joshua Kennon

      Excellent points.

  • http://www.facebook.com/people/David-Tolman/559470245 David Tolman

    I currently work as a teller, and while I think it’s silly that this particular branch won’t accept the cash and get the guy out the door, I can understand the management’s hesitancy to be less than usually accommodating. It feels reasonable to say that obstinate customers relegate themselves to more restricted patience levels from the bank’s staff. The delinquency of his account may (not necessarily, but I don’t know details) have raised the branch’s suspicion about money laundering or fraud. Perhaps that branch deals with fraudulent transactions more than others in the region. Maybe management recently met and decided to try to close accounts that were so-far delinquent, and his antics were simply the last straw. Or any other host of things. I guess I’m just trying to say that I agree with Paul: the circumstances here seem to be confined. I’m pretty sure other BofA branches will still take cash as payment :P

    • http://www.joshuakennon.com/ Joshua Kennon

      Good to know!

  • http://www.facebook.com/people/David-Tolman/559470245 David Tolman

    Oh, and related to nothing, it seems like just the other day your blog passed 1 million page visits. You’re coming up on 1.3 now! Congrats on picking up steam :)

  • Gilvus

    I also have a chunk of my net worth in big banks. Should I be scared if Glass-Steagall (or a derivative thereof) is implemented? Let’s say JPM is fragmented into separate companies. Would all the current shareholders receive shares of these new companies, would their equity simply evaporate, or is it somewhere in between?

    • http://www.joshuakennon.com/ Joshua Kennon

      If a company is broken up, you would get either shares or cash, depending on the details, for your equity. Going back in time, the Standard Oil breakup made Rockefeller far richer than he was before because each of those businesses was free to expand, compete, and grow. The same for the AT&T breakup.

      • Gilvus

        So realistically speaking, a banking break-up may be better for the shareholders on a long enough time horizon. Woohoo!

        Thanks for the reply.

  • http://www.facebook.com/people/Robert-Somerton/100002395428738 Robert Somerton

    Joshua, You’ll never guess what a manager (we’d never seen or met before) at the same branch did on Feb 17th, when we returned to Bank of America.

    • http://www.joshuakennon.com/ Joshua Kennon

      No clue. Do tell?

      • http://www.facebook.com/people/Robert-Somerton/100002395428738 Robert Somerton

        How does Citizens Arrest for “Trespassing” strike you?

  • http://www.facebook.com/soniarodriguezaz Sonia Rodriguez

    I have personally dealt with a Bank of America branch not accepting my cash to pay our home mortgage. In fact, they wouldn’t even tell me that if I deposited my money into our checking account, if I’d be able to make the payment from online! I kept asking why? since my checking was with them AND my mortgage was with them, what was I supposed to use to make the payment??? CASH had to come in play here somehow? I finally was able to get a call back from the bank representative I had called several times over the span of 7 days, by which time I now owed a late fee. (How convenient) SO I paid my mortgage and my late fee (oct 2012), November 10, 2012 I deposited my cash into our checking account and scheduled payment for the following day November 11, 2012 (since they may have to have someone actually authorize that it indeed was US verified cash) TODAY! DEC 31, 2012, I get a letter drafted Dec 17, 2012 that I am two months behind in payments and owe the amount due plus fees, and no matter which way I want to pay for it, phone, web, mail, or counter, “there may be a fee associated with this payment option.” MR PRESIDENT, This smells like a RAT!

    • Robert Somerton

      Sonia,

      Bank of America has no interest in cash USD because they know it’s worthless, they also have absolutely NO interest in your monthly mortgage payment. The one thing BofA would like to see happen is that you fall too far behind to ever catch up again so that they can begin foreclosure proceedings against you, collect the default insurance & sell your home out from under you… like they tried to do with us.

      https://www.facebook.com/RobAnaVsBofA

      http://www.youtube.com/user/rpsomerton?feature=mhee

  • Josh

    Elizabeth Warren is a moron. F’n lib.