16 March 2013

Zombie direct debits

Back in 1919, not many people could afford to buy a car. Loans to do so were often hard to obtain. So General Motors set up the General Motors Acceptance Corporation (GMAC) as a financial services subsidiary. GMAC would provide you with a loan you could use to buy a GM car.

By the 1990s, GMAC pretty much had the car financing thing down pat, and decided that the real estate market was easy money. So they set up GMAC Mortgage, which would handle the servicing of mortgage loans, as well as GMAC Real Estate. My mortgage was serviced by GMAC.

Unfortunately for GMAC, it turned out that a lot of mortgages were ‘subprime’, a technical term meaning that they were unlikely ever to be paid back because the people who had taken out the loan couldn’t possibly afford it. The banks who had sold the mortgages had mostly been smart enough to offload them on someone else pretty sharpish, but the companies who had to chase homeowners for their mortgage payments—like GMAC—got stuck in the crossfire.

So last year, GMAC Mortgage went bust. Early this year I got a letter telling me that the right to service my mortgage account had been acquired by a company called green tree. Sure enough, on March 1st I got my first mortgage bill from green tree.

There was just one problem: GMAC were still direct-debiting mortgage payments from my checking account. Or at least, someone was still direct-debiting. GMAC Mortgage no longer exists, but oddly that doesn’t seem to have stopped the line item deductions showing up on my bank statements.

I consulted green tree. They told me (today by letter) that they had received a forwarded payment backdated to February 7th, but nothing since then. So someone has a month’s worth of mortgage payments taken from my account, and I don’t know who.

I’ve called my bank, and requested an investigation, a refund claim for the two payments deducted since February 7th, and a stop payment order.

Of course, in the mean time I still have to pay the mortgage. So it’s a really good thing I have savings that can easily cover the situation until it’s resolved.

I generally don’t allow anyone to direct debit my account. The mortgage company was literally the only exception; I figured that it was really unlikely that a bank would vanish, and that if I couldn’t trust the financial institutions responsible for my mortgage, I was in so much trouble that mere direct debit issues would be of little consequence.

Hey, it seemed reasonable at the time. Lesson learned.

So I guess my message here is two-fold: First, always make sure you have enough money to cover 6-12 months of necessary expenditure in an instant access savings account. And second, don’t allow anyone direct debit access, not even for your mortgage.

Update 2013-03-26:

Wells Fargo investigated one direct debit, agreed with me that it was bogus, and got the money refunded. They’re now investigating the other one.

But amazingly, I got a letter saying it’s from GMAC’s processing center, warning me that transfers from my account are failing because of a ‘stop payment’ order. Well, no shit. That’ll be because the money you were taking wasn’t reaching my mortgage processor after almost a month, won’t it?

© mathew 2017