Got a problem with the bank or company holding the mortgage on your house? Don't count on Arizona's Banking Department to help you out.
Alan and Barbara Woodruff found that out the hard way. They bought an $89,000 home in Phoenix four years ago and assumed the mortgage, but soon found they couldn't get the mortgage company to credit them with payments they were making. Sometimes their $930 monthly payment checks were cashed; sometimes they weren't; sometimes the checks were returned with a note saying the company didn't know who the Woodruffs were. Within a few months, the mortgage company declared them in default. They quickly complained to the Banking Department, which is supposed to regulate the industry. The Woodruffs dutifully filled out the form the department has prepared for consumer complaints.
They got a nice letter back from Howard Warner, an agency bank examiner, who said the evidence suggested the blame for the foul-up fell on Commonwealth Mortgage, which had bought the home loan from First Security. Warner explained neither of these companies was licensed by the state "and, therefore, beyond our jurisdiction."
The dispute kept escalating. Last September, the couple stopped making payments on the house. They lost it earlier this year in a foreclosure sale. By then, things were such a mess that the Woodruffs rejected a last-minute settlement offer by the mortgage company. "They had lied to us for years," says Mrs. Woodruff. "We just didn't think we could trust them." But the real surprise was when the couple suddenly learned that, oops, Commonwealth was regulated by the state all along and the Banking Department could have stepped in.
Sort of.
Hank Rivoir, named earlier this year as the state banking superintendent, says his agency could have approached the company and inquired about the problem. An inquiry from the state regulatory agency might have gotten someone's attention at the mortgage company.
But Rivoir offers little comfort. "To the extent that your difficulties in resolving your problems were aggravated by the apparent error made by this office in advising you incorrectly that Commonwealth was not licensed by this department, I apologize," Rivoir wrote to the couple last month. "At the time you were given that information, our records were still kept by hand, and companies whose names had been changed (such as Commonwealth) were sometimes difficult to track. That appears to be what happened in your case."
But Rivoir washes his hands of any responsibility. "That error did not cause the problems you encountered."
"She is correct that there was an error at one time with her account," Rivoir tells New Times. "And she is probably correct that people did not go way out of their way to try to fix it for her."
So the problem could have been resolved--and the couple might still have their home--if the Banking Department had stepped in earlier?
"I doubt that very much," Rivoir says, claiming lack of power.
"You have to understand that we are not a court of law," he says. "If somebody files a complaint with us, we take it to the company to try to work it out. If the company says `You're wrong' or `We just don't buy it' or `We're not going to do anything as far as that individual complaint is concerned,' that's as far as we can go."
The alternative for the aggrieved customer? Hire a lawyer and sue, he says.
That explanation stuns Representative Karen Mills, who heads the House Banking and Insurance Committee. "If the Banking Department is going to treat the consumer this way, we might as well get rid of it," she says.
Mills says one of the purposes of state regulation is to protect consumers from fraud or just plain incompetence without having to force them to go to court and sue every time something goes wrong. She points to the state Insurance Department as an example of how a regulatory agency should work.
Insurance director Susan Gallinger says a similar type of complaint from a customer would initially be handled the same way as the Banking Department: Get the information from the consumer, write to the insurance company and await a response. But any similarities end there.
"If their explanation isn't consistent with the [insurance] contract or the statutes, then we would schedule a hearing," Gallinger says. Sometimes that threat is enough to bring the insurance company into line. Other times a full-blown--and public--hearing is necessary. A hearing officer makes a recommendation, with Gallinger allowed to take whatever action appears appropriate, including requiring the company to comply with the policy, mandating a reimbursement to the customer or imposing a civil fine on the company.
In comparison, the Banking Department's only power to resolve consumer complaints is the voluntary compliance of the folks they're supposed to be regulating. In other words, it's little more than a Better Business Bureau.
"That's your characterization," Rivoir sniffs.
Mills says she intends to look at the issue next session. "I don't see that the consumer has any avenue of complaint with the Banking Department," she says. "There is really no redress."
Rivoir is decidedly unenthusiastic about having any real power over the banks and the mortgage companies in consumer disputes. He sidesteps inquiries about what powers he thinks the agency should have.
"I don't think I can answer that particular policy question," he says. "We don't have a procedure for having a hearing where people present evidence, where somebody makes a factual and legal determination. That's what the courts are for."
And what about those cases too small to make it economically feasible for a consumer to get a lawyer?
"Well, you know, I'm just not sure how to answer your question."
All this provides little comfort to the Woodruffs. After being evicted, they did manage to purchase another home, assuming a mortgage after explaining their bad credit history to the seller.
"The bottom line is, if you don't have megabucks to hire an attorney to sue these corporations, where are you supposed to go?" complains Mrs. Woodruff. "You turn to the government agencies that are supposed to regulate these corporations. Don't we deserve a government that does its job right?"
The couple's problems are not at an end. Even after the foreclosure, Mrs. Woodruff has continued to make a pest of herself, calling and writing various state and federal government offices in an effort to have what she sees as "justice." When officials of the Banking Department stopped returning her calls, she began dialing the office of Governor Rose Mofford.
"I don't think there was anything we could particularly do," says Mofford press aide Vada Manager. He says Mrs. Woodruff's calls became abusive "and then they graduated to the governor's home." So the Department of Public Safety, which is charged with protecting the governor, sent officer Van Jackson to the Woodruff home with two Phoenix police officers. She wasn't there. Her husband says the message was clear: Tell your wife to stop making calls or she'll get arrested. They saw it as a threat from the government.
"We explained to them that their methods were reaching the point of being illegal," counters DPS spokesman Allan Schmidt. "And that was that."
Schmidt says the matter of what actually transpired at the Woodruff home is now closed, even though the officer sent there was the same one later accused of making anonymous threatening telephone calls to perennial Mecham gadfly Leon Woodward. The officer subsequently quit.
"It's pure--and, I suppose, somewhat unfortunate--coincidence that it was Van [Jackson] who was sent to the house," Schmidt says.
CHURCH AND STATE When Bill Jamieson fired both barrels at the Republican legislative leadership, lots of folks thought he was slitting his own throat.
After all, Jamieson is serving only temporarily as director of the state Department of Economic Security, brought on earlier this year when former director Eddie Brown quit. Jamieson came from--and is going back to--his own firm which makes big bucks lobbying for special-interest groups before the legislature. And it isn't exactly politic to offend the folks you may need in the future.
Jamieson, in a public letter to Governor Rose Mofford, charged the Republican-controlled legislature had purposely underfunded DES just so some lawmakers could openly whip the agency for failing to do its job properly. He accused GOP leaders of having a "cavalier approach to decision-making." That broadside led to speculation that Jamieson, who served as DES director under Bruce Babbitt, had decided to stay on and wasn't going back to the consulting firm of Jamieson and Gutierrez.
But Jamieson actually has much higher plans, for a much higher boss.
For the last three years Jamieson has been in training to become a deacon of the Episcopal Church. If Jamieson succeeds--he will know this fall--it will be the culmination of a long-term goal for the 45-year-old who started as an altar boy.
He has been actively involved with the church since the early Seventies and began seminary training in 1980. Jamieson has been a teacher in the church since completing those courses. He also has used his lobbying talents in aiding the bishop with his work in behalf of welfare benefits, funding for mental-health care and supporting a paid state holiday for Martin Luther King Jr.
If Jamieson does become a deacon, he hopes to spend more time working on church-related causes. And that means less time working for paying clients, including the City of Phoenix, the Phoenix Suns and the Collier family in its swap of Florida Everglades land for the Phoenix Indian School property. "A deacon takes the concerns of the church into the world and the concerns of the world into the church," Jamieson explains. Sounds like a perfect fit for a lobbyist.
