A Slamming Nightmare – Caught Between Bright House and Verizon

July 20, 2011

By Terry Smiljanich:

Ever been the victim of “slamming?” That’s when someone switches your telephone company without your permission. The FCC has rules protecting the consumer from such practices, including the inability of the slammer to charge you for its unauthorized telephone services. But one consumer recently found out that these protections aren’t enough to prevent you from suffering adverse consequences, including the temporary loss of your telephone services and endless bureaucratic nonsense.

Jan Brown, a resident of Tampa, Florida, recently received a marketing flyer from Bright House touting its bundled (telephone, internet, television) services. She was currently receiving telephone services from Verizon. She called Bright House simply to make inquiries about its offer, and a Bright House representative described its services and prices. In the process of the discussion, the representative took down the telephone number of Mrs. Brown, who said she would think about the offer and call them back.

End of the story? No. A few days later, people trying to call Brown received endless busy signals, and her telephone services were completely shut down. At first Verizon offered simple solutions such as rebooting battery backups, etc., but eventually told her that Verizon had received an order from Bright House to have all telephone numbers in the household ported directly to Bright House. Brown had never given permission for this to be done, but Verizon had simply agreed to the request by Bright House.

Bright House apologized for the problem, telling her that a sales representative had made a mistake. Unfortunately, said Bright House, according to FCC rules it could take up to 30 days for Verizon to get the service back.

So, free telephone service for the interim? Not quite. Bright House stated that since a “third party authorization” had not been completed by the Brown family, the telephone numbers could not be brought on line. But wasn’t that the point? The Browns had specifically not authorized the Bright House service and didn’t want it, so why should they “authorize” it? Sorry, said Bright House, it’s Verizon’s problem now since they had informed Verizon that the Bright House service was being cancelled. Talk to Verizon.

You can imagine the rest of the story – endless telephone conversations back and forth, waiting for uninformed supervisors to enter the picture and promise a resolution, etc. etc. In order to accomplish a “third party authorization” to get the numbers ported back to Verizon, the Browns had to go through an automated process (you know – press one if . . ., press 2 if . . .). It took several attempts, and several more telephone calls to get the whole thing straightened out.

In the process, the Browns were without telephone services for 8 days. They still have to deal with Verizon regarding a credit for the time their services were completely out, plus the fact that during this time they had to make considerable use of their cell phones to get everything straightened out, resulting in higher bills to AT&T.

Obviously something is wrong with the whole process.

  • How can a simple demand from a Bright House sales representative cause Verizon to immediately start porting all calls to the new company?
  • How can Bright House demand that a victim of its slamming “authorize” the unauthorized services while waiting for the problem to get resolved?
  • Why can’t two technologically advanced companies like Bright House and Verizon not just pick up the telephone between themselves and work out the problem in an instant?

The lesson here to all consumers is to be very careful when inquiring of a telephone company about switching services. Don’t give out your telephone number, and be sure to insist at the end of the call that you have NOT made a decision and that your telephone services will remain with your current company. It shouldn’t be necessary to state the obvious, but in light of the above story, it can be all too easy to find yourself caught between clueless supervisors and automated machines.

Does Bundling TV, Phone and Internet Make Sense?

January 22, 2010

old fashioned TVBy Terry Smiljanich:

As we’ve all grown more dependent upon our ever-expanding telecommunication services, we’ve become fertile targets for the companies selling these services.  They’re constantly competing for our business and  trying to entice us with attractive offers to switch to them.

So, when it comes to phone, internet and cable TV service how do you get the best deal?  Does it make sense to bundle your services as the big telecom companies want us to do? And if so, which ones are the best?

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Up in the Air; Mixed Reviews on Airline A La Carte Fees

June 1, 2012

By Darrin Clouse :

The old saying : “The only constant is change” has held up for centuries and is applicable to many of our daily routines. I doubt that François de la Rochefoucauld was pondering the airline industry when he came up with his famous perception of our world, but it certainly applies to recent adjustments.

Many of us remember when smoking was allowed during flights, and you could even get away with calling the flight attendant “stewardess.”  But the changes we’re experiencing these days are more related to cost, and many consumers feel they are now paying for services that they received for free in the past.

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Bank of America Picks Up Defense Tab for Ex-Countrywide CEO Charged with Fraud

June 4, 2009

One of the biggest companies responsible for the nation’s mortgage meltdown is finally being held accountable by federal regulators.  The Securities and Exchange Commission has charged Countrywide’s high profile former CEO Angelo Mozilo with civil fraud.

Countrywide was bought by Bank of America last year for $2.5 Billion.  Now, comes word that BofA is picking up Mozilo’s legal tab for his defense. BofA told Reuters News Service Mozilo is covered under an indemnity clause that was in place from his days as chief of Countrywide.

Also charged were two other company executives, former Chief Operating Officer David Sambol and ex-Chief Financial Officer Eric Sieracki.

Here’s a full account of the fraud charges from the Associated Press:

By MARCY GORDON -The Associated Press

WASHINGTON: Federal regulators on Thursday charged Angelo Mozilo, the former chief executive of mortgage lender Countrywide Financial Corp., and two other company executives with civil fraud.

The Securities and Exchange Commission’s civil lawsuit, filed in federal district court in Los Angeles, also accuses Mozilo of illegal insider trading.

Countrywide was a major player in the subprime mortgage market, the collapse of which in 2007 touched off the financial crisis that has gripped the U.S. and global economies.

Mozilo, 70, is the most high-profile individual to face formal charges from the federal government in the aftermath of the crisis.

Mozilo has denied any wrongdoing. His attorney did not immediately return an e-mail message for comment Thursday afternoon.

Civil fraud charges also were filed against Countrywide’s former chief operating officer David Sambol, 49, and ex-chief financial officer Eric Sieracki, 52.

The trio “deliberately misled” Countrywide shareholders, SEC enforcement director Robert Khuzami said at a news conference at agency headquarters. While they painted a picture of robust performance, the real Countrywide was “buckling under the weight” of soured mortgage loans, he added.

Khuzami said Mozilo reaped nearly $140 million in illicit profits from his stock sales.

It was the first major case led by Khuzami, who joined the agency in March. SEC Chairman Mary Schapiro brought him in at a time when the agency was being assailed by lawmakers over its failure to detect the massive pyramid scheme run by fallen money manager Bernard Madoff despite red flags raised to its staff by outsiders over the course of a decade.

Sambol’s attorney Walter Brown said his client will fight the charges.

“The SEC wrongly asserts that Countrywide’s disclosures to its investors regarding its lending criteria should have been more extensive, and that Mr. Sambol is somehow responsible for insufficient disclosure,” said Brown. “Making groundless allegations and losing in court will not help the SEC restore its reputation. I am confident that Mr. Sambol will be vindicated completely.”

An e-mail message to Sieracki’s attorney, Shirli Fabbri Weiss, was not immediately returned.

The SEC and federal prosecutors have undertaken wide-ranging investigations of companies across the financial services industry, touching on mortgage lenders, the Wall Street investment banks that bundled home mortgages into securities sold to investors, and other market players.

The SEC’s scrutiny of Mozilo’s stock sales began in the fall of 2007 with an informal inquiry.

The filing of the agency’s lawsuit is a striking turn for Mozilo, the man who 40 years ago co-founded what grew into the nation’s largest mortgage lender. He moved the company in 1969 from New York to the housing hotbed of suburban Los Angeles, guiding Countrywide through numerous boom-and-bust housing cycles.

After the mortgage crisis hit, Calabasas, Calif.-based Countrywide was forced to cut thousands of jobs and saw its shares plummet. Its downward spiral ended in it being bought by titan Bank of America Corp. in July 2008 for about $2.5 billion. Countrywide itself is the target of multiple lawsuits related to the mortgage meltdown.

A criminal probe into Countrywide’s lending practices continues in Los Angeles. A person familiar with the matter who requested anonymity because of the ongoing probe said no charges were imminent.

Mozilo’s influence stretched from the California real estate market through the corridors of power in Washington.

The Democrats were roiled a year ago by revelations that Sens. Christopher Dodd, D-Conn., the chairman of the Senate Banking Committee, and Kent Conrad, D-N.D., head of the Budget Committee, got mortgages at favorable rates through a VIP program dispensed by Countrywide for so-called “friends of Angelo.”

Dodd insisted that the controversy over the two loans he received did not compromise his ability to lead Congress’ efforts to address the effects of the subprime mortgage meltdown.

Mozilo sold about $130 million in Countrywide stock in the first half of 2007 through a prearranged 10b5-1 trading plan. These plans, popular among corporate executives, allow a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of significant nonpublic information.

North Carolina’s state treasurer, who asked the SEC in 2007 to investigate Mozilo’s stock sales, raised questions about changes made to Mozilo’s plan in the months before the company’s stock plunged, which allowed Mozilo to significantly increase his sales of Countrywide shares.

Mozilo had sold company shares through prior arrangements since 2004; the pace of his sales began to quicken in October 2006 when he put a new plan into effect. Mozilo has said that he did so to reduce his stake in Countrywide and diversify his personal investments in an orderly fashion before his retirement, which was slated for December 2009.

Lenders Inability to “Produce the Note” Leads to Shady New Practice

May 4, 2009

foreclosure signMortgage lenders who were sloppy with important paperwork in the hey-day of the housing boom are now turning to questionable practices to clean up their mess so they can foreclose on homeowners.  It all stems from the lenders inability to “produce the note” when they try to take someone’s home.

To get around the break-down in paperwork, these companies hire people to be “fake” Vice Presidents to sign documents from one company to another, so a foreclosure can proceed.  The St. Petersburg Times exposed the practice in an investigative report, in which they interview CWN founder Chris Hoyer.

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Homeowner Bailout: Do You Qualify?

November 19, 2008

After shifting gears and deciding that buying toxic assets wasn’t such a good idea after all, the federal government announced two new bailout plans that finally focus on homeowners. Are you a homeowner who could find some financial relief from these new plans? Maybe, but there are a lot of unanswered questions.

The Federal Housing Finance Agency (FHFA), conservator of Fannie Mae and Freddie Mac, unveiled a new relief plan on November 11th that can help homeowners in trouble on their mortgages.  It offers a program to make their loans more affordable and keep them out of foreclosure. Three days later the FDIC announced its own similar bailout program.

Who Qualifies?

The FHFA plan applies to mortgages held by Fannie and Freddie, and to certain other mortgages held by a list of banks who are part of the “Hope Now” housing consortium. A “streamlined loan modification program” designed to put “seriously delinquent” homeowners into more affordable loans will be put into place by December 15.

These highest risk borrowers will qualify if:

1. they are three or more payments behind on their mortgages;

2. they currently occupy their homes;

3. they have not filed for bankruptcy;

4. their unpaid principals are more than 90% of the current value of their homes

5. they certify that their current situation is a result of  hardship or change in financial circumstances.

If homeowners meet these criteria, they can work with their mortgage service providers to reduce their monthly payments so that they do not exceed 38% of their gross household income. These reductions can come about through a combination of reduced mortgage interest rates, extended loan periods, or deferred payments on some of their principal.

The FDIC announced a similar program of loan modifications for loans delinquent 60 or more days. Loans under this program can be modified to reach a 31% monthly income level. The loan-to-value calculations are, however, a bit more complicated under the FDIC plans.

Incentives for Loan Servicers

Both programs contain benefits for mortgage service providers who participate in the loan modification program. The FHFA will pay them $800 for every successfully modified loan, and the FDIC will pay $1,000. This is to encourage as many servicers as possible to participate in the program and not force homeowners into foreclosure.  Providing a fee for modifications is an incentive for servicers, because, in the past, they usually got higher fees for doing a foreclosure.

Why two plans, and do you qualify? The two plans attempt to reach as many affected mortgages as possible. Fannie and Freddie own or guarantee almost 60% of all single family mortgages, but they only represent 20% of the serious delinquencies. The participating members of Hope Now hold many mortgages internally and can likewise engage in loan modification programs.

Many mortgages, however, were bundled and sold as mortgage backed securities to investors.  That creates an extra hurdle for homeowners seeking loan modifications for those underlying mortgages, because the homeowner can’t negotiate directly with the entity that owns the loan. These “Private label securities” make up less than 20% of the mortgages, but 60% of the serious delinquencies.

The FDIC program is designed to lure as many non-Freddie and and non-Fannie mortgages into participation as possible by offering an FDIC guarantee of 50% of any modified loans that re-default after modification. In other words, if a borrower and lender participate in the FDIC loan modification program, and the borrower later defaults on the newly modified loan, the FDIC (i.e., taxpayers) will guarantee 50% of the loss to the affected lender.

The FDIC estimates that these potential guarantees will cost $24.4 billion based on past experience, but will help avoid almost 1.5 million foreclosures. Since foreclosures drive down the housing market everywhere, it is hoped the program will help stabilize the market.

But holders of these mortgaged backed securities may tell the lenders: “Wait a minute! You can’t change my investment that way without my permission.” In fact, a group of investors has done exactly that in connection with a group of mortgages that were going to be modified under a settlement between Countrywide Financial and 15 state attorneys generals. Investors holding such securities may not just sit back and allow their investments to be “modified” without their say-so.

So if you are seriously delinquent on your mortgage, the first question is whether your mortgage even qualifies under these programs. If it is a loan Fannie or Freddie either guarantees or owns, the mortgage will qualify. If the mortgage is held by one of the participants in Hope Now and not securitized, the mortgage will qualify. If, however, your mortgage is non-Freddie or non-Fannie AND has been securitized, you may be out of luck.

How can you find out if your mortgage qualifies? You’ll have to demand that your mortgage service provider reveal to you whether your loan comes under either the FHFA or FDIC program. If it does and you otherwise qualify, there may be relief for you under the new programs. As far as initiating the necessary procedures, these will have to be worked out by the agencies between now and December 15.

For homeowners whose mortgages do not qualify, the only real help can come from Congress. It will take legislation to force securitized mortgages into these programs. If you are in this category, write or email Congress and demand action. You didn’t ask that your mortgage be sliced up and sold as a security, so why should you suffer as a result?

Also, foreclosure moratoriums, like the temporary one announced by Fannie and Freddie last week for the holidays. have become necessary. Most servicers, while working on loan modifications, proceed with foreclosures anyway, and the foreclosure might nullify your modification attempts. We have heard horror stories of homeowners who were on the verge of a successful loan modification only to discover that their homes have been sold out from under them through foreclosure. One homeowner even found out her personal belongings had been trashed by Freddie Mac, because the foreclosure had overtaken her loan modification efforts which were on the verge of success!

When more details on the two new programs become available, Consumer Warning Network will post details to inform affected homeowners.