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Dear Dr. Don,
I live in western New York and have a variable-rate
home equity line of credit. The index rate is
the prime rate as published in the Wall Street
Journal on the first day of publication after
the 10th of each month.
I am confounded by the fact that my monthly billing statement for this line of credit loan
is not reflecting the most current prime rate. In fact, it is several adjustments behind. In February (billing
date of Feb. 11, 2008), I was charged an annual percentage rate of 7.5 percent even though my research would
indicate that the published prime rate in the Wall Street Journal was 6 percent.
In my March statement (dated March 11, 2008), the bank generously adjusted my rate to 7.25
percent, which is still three Fed rate adjustments behind schedule. I can understand some lag in the latest
rate being reflected in my monthly payment calculation, but I seriously believe the bank is milking this
situation.
Last November, I questioned the bank about the lag and was told they would get caught up and
credit me for any overages in the finance charges. I did see a rate adjustment on my next statement, but no
credit that I could determine.
What recourse do I, the consumer, have in this regard? I realize I can take my business elsewhere,
but there are closing costs and fees associated with redoing a mortgage and home equity loan. Am I wrong to be
angry? Am I misunderstanding the "cycle time" required by bank for making such adjustments?
I see no excuse for the extent of delays in this situation. To me, the bank is violating a
written contract. Do I have recourse through New York's Banking Commission, Consumer Affairs Office or some
other agency?
-- Stewing Sam
Dear Sam,
Reviewing your loan documents is the first step in determining if the bank is living up to the terms of your
loan. As you describe it, you would expect at most a one-month lag in changing interest rates.
You can keep track of the Wall Street Journal prime rate on Bankrate using its
Rate Watch feature.
Talk to your bank again about this issue before taking up arms. The bank needs to explain
how it is performing to contract and if it is not, the steps it will take to get back in compliance with
your loan agreement.
If none of this works, and you're
convinced you're in the right, it's time to take
it to the banking regulators. My favorite first
stop, for national banks, is the Office of the
Comptroller of the Currency, or OCC. The OCC's
Consumer
Complaints and Assistance Web page will tell
you if the OCC is where you should file your complaint.
If the OCC is not the correct resource, the Web page lists other banking regulators, including
the Federal Reserve Board.
You shouldn't have to refinance to make this right. Write back and let me know how it turned out.
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