Northwest Farm Credit Services

Review: On February 8, 2013 we paid off our mortgage farm loan. The principal amount of the loan was $49,765.95. In addition to the principal, we were forced to pay a "pre-payment fee" of $4,709.06. Tyson Steel was our loan agent employed by Farm Credit Services.When I inquired about this fee, they referred me to the original contract first page section labeled "prepayment fee". It is a vague paragraph outlining how the fee is determined. They included work examples of a pre-payment fee calculated on the last page of the contract.As we approached the date we were able to pay off this loan, we asked several times what the fee would be. They told us it changed daily. We asked why, but were never given an answer. Tyson told us he didn't really understand it; it was form on a computer program they used to give us an estimate. We worked the example provided us and came up with a much lower fee number. They told us this was due to the "present value factor". We were never given a sufficient answer on how this was determined.We were charged an exorbitant fee to pay off our loan early. The contract examples used a payoff principal of $500,000 and the fee was calculated to be $5,000. Using the same logic, our principal was only 10%, thus our fee should only have been 10% of the example's fee =$500.We were mislead by a vague contract, and taken advantage of because we wanted to be debt free and pay our loan off early.Desired Settlement: Refund the $4709.06 pre-payment fee and reduce it to that represented by the contract at $500.

Business

Response:

April 18,2013

Revdex.com

152 S Jefferson Street; Suite 200

Spokane, WA 99201

RE: Case ID 9495589

Resolution Moderator: [redacted]

To Whom It May Concern:

When originating real estate mortgages, Northwest Farm Credit Services uses match funding. This means that when we write a loan to a customer, we also take out a corresponding fixed rate debt with our funding bank for like terms. If the loan is repaid early, we still owe on our fixed rate debt to the bank that was borrowed to match fund the borrower’s loan. We also lose some of the interest income on which the initial interest rate and fees were determined. When we repay the debt to our funding bank early, we are charged breakage fees which we pass on to our customer to avoid taking a loss on the loan.

Based on our matched funding, we include a prepayment fee as a provision of the loan agreement signed by the borrower at closing that states if the loan is paid off prior to maturity, a fee will be charged. Prepayment fees vary for each loan and are dependent on the difference between the initial funding rate on the loan and the current matched funding cost for the remaining fixed rate term. The size of the prepayment fee is a result of several factors including the change in market interest rates, the remaining term of the loan, and the amount of the prepayment. In general, prepayment fees are higher when there is a larger market rate decline from the date of origination to the date of prepayment and there is a longer remaining loan term from the date of prepayment to the maturity date.

The Note and Loan Agreement for each borrower includes an explanation of the prepayment fee and an example of how it is calculated. Each prepayment fee is different based on the factors listed above. The prepayment fee is calculated the day of the prepayment and charged in accordance with the terms outlined in the Note and Loan Agreement.

I have included with this letter a copy of the information included in the Note and Loan Agreement in regards to the prepayment fee as well as the Exhibit A that is attached to the Note and Loan Agreement showing an example of a prepayment fee calculation. If you have any additional questions, please feel free to contact me at my office at ###-###-####.

Sincerely,

Regional Vice President - SW Idaho & E. Oregon [redacted]

Consumer

Response:

[To assist us in bringing this matter to a close, you must give us a reason why you are rejecting the response. If no reason is received your complaint will be closed Administratively Resolved]

I have reviewed the response made by the business in reference to complaint ID 9495589, and have determined that this does not resolve my complaint. For your reference, details of the offer I reviewed appear below.

Please note the last section of the last page of the contract attached to Mr. [redacted]'s letter. That section specifies the pre-payment fee worked example of $5000. That is the pre-payment fee for a principal of $500,000. Any reasonable person would deduct that ten percent of the principle paid would yield ten percent of the penalty demonstrated ($500). In my case, however, they wish to charge me $4709.06 for $49,765.95 principal. That amounts to ten times the fee demonstrated in the contract!

Review: My wife and I were approached with a restructuring option, while I was recovering from neuropathy, in a nursing home facility. Their employee, [redacted], met with us at the facility, but brought no paperwork about our case. He told us we would negotiate back and forth with their company, during the restructuring process. He also said there would be a $500 appraisal fee and that during the time we were in restructuring, we would not have to pay our mortgage payments. He also said that these mortgage payments and the appraisal, would be put on the BACK of the contract, regardless of the outcome of the restructuring. We asked him to please put that in writing and he said he would send us something in writing stating this, as soon as he got back to the office. A few days later, my wife called him and requested the information again, telling him we have a fax machine on 24/7 if that would be easier. He said he would get the paperwork right over to us, but went on vacation. When we called the company, we were told he no longer worked there and had left with no notice, accepting a job in Virginia. My wife and I then talked to [redacted] and her supervisor, [redacted]. They told us it was unfortunate that [redacted] has 'miscommunicated' the information, but there was no back and forth negotiation, our restructuring was denied and we now owed approximately $5,000 in back mortgage payments, due immediately. They said we could appeal the restructuring, but since I had been in the hospital and was not working (being the only one on the mortgage) and our land values had decreased, we would not qualify. This is why we had been turned down, but we had told [redacted] and other employees before we started the restructuring process that I had been in the hospital since August 2012, I was not able to work and that we had the land appraised at just over $200,000 a few weeks earlier. Although my wife is working, they did not want to consider her income, since she was not on the mortgage. During a telephone conversation with [redacted], my wife said that if they would not consider her income and not move our payment back, as promised, my wife thought a third party might need to get involved, such as the Attorney General's office. At that time, [redacted] said she could no longer speak to us. If we were contacting our attorneys, she could not communicate with us any further. My wife tried to explain (I was in the room with her as she was on the phone) what the Attorney General's office did. My wife then asked if she could speak to [redacted], since [redacted] didn't seem to understand what my wife was talking about. [redacted] said [redacted] was in a meeting and there was no one else she could discuss this with. Then [redacted] put my wife on speaker phone, without telling her. My wife said [redacted]'s voice got very 'tinny' and she asked her, did you just put me on speaker phone? [redacted] admitted that she had and my wife told her that she should be notified if she was put on speaker phone and could she ask, who else was in the room? [redacted] said he was there (not in the meeting apparently) and that we were being difficult and NO ONE wanted to talk to us, anymore. There was no one in the company, who wanted to speak with us and we should not call back. My wife looked at me, we shrugged, and she called the Moses Lake office. She talked to a woman there, who said she would forward the information to [redacted]'s supervisor, [redacted]. Mr. [redacted] called my wife that evening and asked her to go over everything that had happened. He apologized about the 'miscommunication' and told her that he would be sending out a settlement letter, stating that the mortgage would remain the same, but the disputed payments and appraisal fee, would be put on the back of the contract. He gave my wife his cell phone number and email and said a letter would be sent shortly. My wife asked him to email us a summary of what they had discussed on the phone, so we would have something for our records. [redacted] said he would, but did not. My wife called him back a few days later and requested the information, again. Still no email, but we did receive the letter. It was not what they had discussed, but another restructuring letter, saying the appraisal fee had been $1,400 and there were other (non-specified) legal fees and that we would be defaulting on our existing mortgage. The conditions included my wife having her credit reviewed and qualifying for the restructuring. We had told [redacted], [redacted] and [redacted] that we would be going into bankruptcy, due to my medical bills, from the beginning of the process. The bankruptcy would not include our home or the farmland surrounding it. Now, there solution was to do another restructuring (with me still not working and the land still at the same value) but by running a credit check on my wife? This seemed an obvious attempt to disqualify us and close the case. We did not sign the letter and my wife called to ask [redacted] why this letter was different than what they had discussed. He said we had to sign the letter, it was exactly what they had discussed and if we didn't they would start default procedures. When she asked him about specific items in the letter, he admitted he had not even read the letter. My wife asked him if he would like to read it and call her back to discuss it, but [redacted] refused. My wife emailed him stating that she would like him to read the letter and discuss it with her. We received a letter a few days later, from [redacted] stating that we owed the $5,207.43 for the missed payments, plus $257.21 for late fees, $2,959 for attorneys' fees and $830.47 for title work, for a total delinquency of $9,254.11. We paid our July payment on time and also sent in our August payment on time, but received a letter from [redacted] yesterday (8/7/13) stating that Northwest Farm Credit Services would not be acDesired Settlement: I want Northwest Farm Credit Services to do what they have promised to do, twice. Put the four months of mortgage payments, along with the $500 appraisal fee on the back of our mortgage. I want any additional fees dropped and for them to accept our mortgage payments, so we don't fall any further behind, while this matter is being reviewed.

Business

Response:

Re: [redacted], AG [redacted]plaint #[redacted], Revdex.com ID #[redacted]

Gentlemen:

Northwest Farm Credit Services, FLCA (“Northwest FCS”) has received the above referenced [redacted]plaints, as [redacted]pleted by Mr. [redacted] and forwarded by each of your organizations. We will not debate in an open forum the accurateness of Mr. [redacted]’s statements. Suffice it to say, Northwest FCS does not agree with Mr. [redacted]’s version of the facts and events leading up to this point.

Mr. [redacted] has what is [redacted]monly called “borrower rights”, as provided by the Agricultural Credit Act of 1987 (“ACA”). Mr. [redacted] was provided these borrower rights by delivery of a distressed loan letter, issued in full [redacted]pliance with Farm Credit Administration regulations at 12 CFR 617.7410. The letter was dated March 14, 2013. Mr. [redacted] applied to restructure his loan on April 27, 2013. After full consideration of the application and the financial information available to Northwest FCS, the application for restructuring was denied on June 5, 2013.

Mr. [redacted] had the right to appeal this decision to a credit review [redacted]mittee (“CRC”). The CRC has three members, one of whom is a member of our board of directors and two credit officers that were not involved in the credit decision. Mr. [redacted] chose not to request a review of the denial decision, for reasons known only to him.

While we are willing to meet directly with Mr. [redacted] and his spouse to seek a resolution, it is important to note that we have offered to meet on more than one occasion and each time Mr. [redacted] or his wife have cancelled such meetings. We will not address any of the issues in this public forum. We are also not interested in any type of mediation as we have fully [redacted]plied with the borrower rights provisions of the ACA and federal regulations in trying to resolve this delinquent loan.

If you need to correspond with someone in this office, please direct that correspondence to me.

Regards,

Northwest Farm Credit Services, FLCA

[redacted]. [redacted]

Assistant General Counsel

Direct phone: ###-###-####

Email: [redacted]

Consumer

Response:

[To assist us in bringing this matter to a close, you must give us a reason why you are rejecting the response. If no reason is received your complaint will be closed Administratively Resolved]

I have reviewed the response made by the business in reference to complaint ID [redacted], and have determined that this does not resolve my complaint. For your reference, details of the offer I reviewed appear below.

First of all, I do not accept the NWFCS response that they will not discuss this complaint, in a public forum. My complaint was not that I was denied restructuring. My complaint was that NWFCS employees misrepresented the restructuring process, were unprepared at the meeting we did attend, refused to provide us with written documentation we requested at the meeting, were rude and belligerent on the phone, promised to send us a settlement letter moving the missed mortgage payments to the back of the contract (and again nothing in writing to verify the phone conversation) and then we received a letter that was entirely different than what was stated during that telephone conversation.

When asked why the letter was not what was discussed on the telephone, the employee ([redacted]) admitted he had not read the letter, did not plan to read the letter, but was sure it was exactly what was discussed on the telephone.

As for changing meeting dates or canceling meetings, we changed a date, NWFCS employees changed the date, and then my wife called the morning of the meeting to make sure we were going to discuss our concerns about the 'miscommunications' (their word) that occurred, when we spoke to their employee, [redacted]. When NWFCS employee [redacted] learned that we did not want to do another restructuring and wanted to focus on the procedural issues of the original restructuring, he got upset, yelled at my wife and told her NO ONE AT THE COMPANY wanted to talk to her anymore.

When NWFCS employee, [redacted] called to discuss the behavior of the other NWFCS employees, and to find out what our situation was with the restructuring procedure, he reassured us that he would take care of the situation, move the four missed payments to the back of the contract and send us a settlement letter that would state that we would not be restructuring, we would continue with our regular monthly payments and we would make these future payments on time. We agreed and asked for an email, outlining the discussion. We got no email. Instead we received a letter stating that we could try restructuring again...nothing about the problems with employees and the agreement to move the four missed payments to the back of the contract.

We also have asked several times for a copy of the appraisal that we were told by [redacted] would be $500 and added to the back of the contract, as well. In the letter mentioned above, the appraisal was said to be $1,400 and still no copy.

After our last phone conversation with [redacted] (when he admitted to not reading his own letter) we received a letter from an attorney/collection agency, stating that almost $3,000 had been added to our disputed amount (as well as the late fees [redacted] had said would be removed) and that our new total was going to be almost $10,000 with the next month's mortgage payment included.

The day after we sent our complaint to the Revdex.com, we received another letter from the collection agency, stating that we were NOT to contact NWFCS at any point in the future. However, NWFCS continues to send us correspondence that we are not supposed to respond to, including notification that they would not accept our 'partial payment' (albeit the August mortgage payment) and were going to cash our check, hold on to it for two weeks, and then issue us a return check. They accepted our July payment and applied it to our account, but now they are refusing to accept current payments, will not discuss our case (since we cannot contact them) and now their legal representative says we should meet to seek a resolution?

Every time we have met with NWFCS employees, talked to them on the telephone and tried to discuss this situation we have asked for some kind of written documentation. All we've tried to do is get them to honor what we were told by their employee [redacted] and later [redacted]. Their choice to not discuss this situation in a public forum is very disappointing and follows the same pattern as not giving us the written verification we have requested in the past.

Please let us know if you'd like copies of all the correspondence we've received from NWFCS and the Collection agency. We will be happy to fax anything to the Revdex.com that they require.

Regards,

Business

Response:

Dear [redacted]:

Thank you for forwarding Mr. [redacted]’s additional concerns regarding this case While we share in his frustration at a lack of resolution, we continue to differ significantly in our view of the facts and events of this case. This difference cannot be resolved through a public forum debate via email. Our attorney [redacted] remains ready and willing to meet in person with the [redacted]s to find a resolution for their delinquent loan. He can be reached at ###-###-####.

Regards,

SVP-Marketing

Northwest Farm Credit Services

Consumer

Response:

[To assist us in bringing this matter to a close, you must give us a reason why you are rejecting the response. If no reason is received your complaint will be closed Administratively Resolved]

I have reviewed the response made by the business in reference to complaint ID [redacted], and have determined that this does not resolve my complaint. For your reference, details of the offer I reviewed appear below.

I find it extremely disappointing, but unfortunately very characteristic of Northwest Farm Credit Services that they will not address our concerns, in this public forum. NWFCS has repeatedly given us information, in person and on the phone, which later they will not back up with any documentation. My wife and I have requested, on numerous occasions and from various employees, written documentation to back up their verbal agreements. Another chance to 'meet in person' would just be another opportunity for NWFCS to tell us one thing, but not deliver on those promises, when we request verification in writing.

I am still asking NWFCS to honor their original agreement, which was to move our mortgage payments and $500 appraisal fee (which we still have not received a copy of to date) to the back of our mortgage. We were told repeatedly (in person and on the phone) that this would occur, but have never received any written documentation that they plan to honor their agreement. I would not recommend NWFCS to anyone and encourage them to improve their customer relations policies and train their employees to follow through with written documentation.

Regards,