EquityScout.com :: Real Estate Investment Blog

SATURDAY, MARCH 17, 2007

I’ve been a USAA member for seventeen years, since I was a junior at West Point (USAA is the financial institution dedicated to serving our Armed Forces). Great service. Always. That’s why I’ve stuck with them for all these years on an almost no-bid basis, and have done a number of mortgages there.

Until now.

I’m in the middle of a 1031 exchange – selling a property and putting the proceeds into a tax deferred account to invest in another property. I’ve done the sell part, now I need to buy something.

I put offers in on three small multi-family properties this week and needed pre-approvals to submit along with the contract. So I called USAA. The fee to fax me three pre-approvals: $150 bucks. $50 bucks per property, which would be refunded only on those contracts that closed and were financed via USAA.

No way.

I called PHH mortgage. They took my info and faxed me the three pre-approvals for free. And fast. I’ll do the loans with them.

Strikes me as peculiar that USAA would chase off a customer w/ great credit and a seventeen year track record. I wrote them a letter of complaint; I’ll let you know if I get a response.

Tags: mortgage,

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(9)

posted by: Chris Smith

Comments

Chris Lengquist

March 17, 2007

11:12 PM

The great thing about capitalism in America is you can take your business elsewhere! The system works again! And someone in the top offices of USAA sits around trying to figure out how to get a higher capture rate on prospective clients. Amazing, really.

Christopher Smith

March 17, 2007

11:53 PM

Agreed, Chris. Ironic part is that I really like USAA, so I hope they take a look at these fees. A lot of military veterans are real estate investors (moving posts every few years will do that to you) so a more investor-friendly policy would make sense.

Jonathan Greene

March 23, 2007

10:52 PM

Great blog. I use USAA for all of my insurance needs, but I've also had trouble with their mortgage lending division in the past. These fees are not a good idea.

Linda Davis

March 30, 2007

09:37 PM

I've been a member of USAA for 35 years and a Realtor for 30. The problem with USAA mortgages is that PHH does not offer the same level of service that we all know and love with USAA.

Christopher Smith

March 30, 2007

11:49 PM

Thanks for your comment, Linda, and this at first was what I suspected was afoot - but as it turns out this wasn't a PHH issue. I think the nature of their exclusive long-term relationship has changed. The representative that I spoke to was a USAA representative, not PHH. And the policies he was quoting were USAA policies. USAA's customer service remains top notch; I love them so much I went back for a firm quote even after my bad pre-approval experience (and that, unfortunately didn't turn out any better - see my March 27th post). The problem is their customer service; it's their policies - they're not investor-friendly.

Chris Sandoval

April 11, 2007

09:58 AM

Hello – this is Chris Sandoval with USAA. In addition to seeing your recent posts about USAA, we also received your letter detailing some pretty frustrating experiences you’ve had with USAA. I wanted to get in touch with you and your readers, and your blog seemed like the quickest way.

It looks like you have two main concerns stemming from your recent interaction with USAA:

- A $50 fee to receive a mortgage pre-approval.
- A $350 application fee for a mortgage pricing quote.

Regarding your first concern, we do collect a deposit to provide a true credit-approved pre-approval if you choose to do so over the phone – we do not collect this deposit when members seek a pre-approval on usaa.com (which most of our members choose to do). This deposit is applied toward a member’s cost when they close their loan with USAA.

Regardless of whether or not you used our online pre-approval process, you would not incur a $150 charge for three pre-approvals. When we pre-approve a member, we approve the member’s credit in general. If I understand your situation correctly, you requested pre-approval for three properties by contacting us on the phone. This process should have incurred only one $50 deposit - again, the pre-approval process does not incur this deposit at usaa.com. I apologize if we did not accurately convey that to you at the time.

In response to your second concern, members do not have to submit an application or a $350 fee simply to obtain a pricing quote. When members choose to apply for a mortgage with us (not when they ask for a quote), we do collect a $350 good faith deposit that is credited toward their costs at closing. This sort of deposit is common in the industry and is sometimes known as an appraisal fee or underwriting fee. Again, I apologize if we provided you with inaccurate information.

I hope this information helps clarify some of the confusion caused by your latest correspondence with USAA. If you have any further questions, please don’t hesitate to contact me. Just log into usaa.com and use our secure message feature: click "Contact Us" and then click "Email Us." Start your message with "Attention Chris Sandoval, eCommerce" and paste in the URL of this blog post. I’m more than happy to help with any other questions you may have.

While we failed to win your recent mortgage, we value your business and the opportunity to serve all your financial needs.

Chris Smith

April 12, 2007

10:45 AM

Thanks for writing, Chris. I posted your response here.

Nathan Marra

September 17, 2007

10:45 AM

I agree that it is not USAA but PHH that is the problem. I would suggest that USAA finds another Mortgage Broker. PHH has hassled me and took me for $350. I am currently contesting it.

Peter Poremski

October 03, 2007

02:52 PM

I am a long time USAA member, over 40 years. USAA has always offered superior service through all three of their service sectors, Banking, Insurance and Investment Services. I am very happy with them.

I do have a problem with USAA using outside service providers. I bought a Variable Annuity from USAA only to have it sold to Ameritas. USAA needs to assure quality control of their outside service providers.