The Saga of a HELOC

Last year I decided that it was finally time to fix some of the big stuff around the house: the garage roof was leaking, the swimming pool needed retiling, and we’d been operating with no air conditioning upstairs for nearly ten years, and the Smaller Animal—that’s the one with the heart condition, who’s not nearly so “smaller” any more—is prone to overheating.  Of course, things like that require quite a bit of money, but the good news was that we’d been paying off our mortgage for 13 years, so we’d reached the point where the mortgage insurance had dropped off, plus the value of our house was shooting up.  And my credit score had bounced back from all those youthful credit card indiscretions.  All in all, a good time to leverage our equity and get some cash for repairs.

We looked first at refinancing, but we didn’t relish the process and paperwork for getting a whole new mortgage.  I looked at the whole second mortgage thing, but then I found something even better: a HELOC.  That’s a home equity line of credit: meaning, you only borrow the money when you actually need it to pay for something, the equity of the house serves as the collateral, and most are interest-only for the first 10 years or so, then you start paying it off.  In 10 years, we’ll be nearly done paying off the primary mortgage, so it’ll be less onerous to take on another payment.  And, if we get a windfall, we can always pay off the HELOC early.  It’s a pretty good deal, and many financial sites out there recommend it as the way to go.

So I started looking into banks that offered such a thing, and I found a credit union that I liked.  Now, this story is about how the universe hates me, not about how I chose a terrible bank, so I’m not going to name the exact institution.  Besides, as much as this bank fucked up, a lot of it wasn’t their fault, and they also had a number of very helpful employees along the way, so I’m not going to throw them under the bus.  I’ll just say that it happens to be a credit union based in New Jersey.  Which, in this day and age of doing everything online, I figured wouldn’t matter that much.

But of course people in New Jersey tend to work New Jersey hours, and I don’t even work “regular” hours here in sunny Southern California.  I often work late into the night, so I get up late.  My work is fine with that, and if I need to take a break to handle something that simply has to happen during business hours, they’re very understanding.  And, for West Coast businesses, my roughly 4 hours of overlap with what’s considered a normal workday is plenty.

But of course New Jersy is 3 hours behind us, so that 4 hours becomes about an hour, and it’s the first hour of my day, when I’m still waking up and feeling a bit groggy and out-of-sorts.  So it’s not ideal.  But, I figured, as long as I can handle the majority of it via email, I should be good.

And my initial contact, who was the lending equivalent of a salesperson, seemed to get that.  Oh, she kept sending me messages like “when’s a good time to call?” and so forth, but I just ignored that and kept on asking my questions and asking for info via email.  It took me several months to make up my mind, because that’s just the sort of person I am (i.e. I have to analyze every possible choice from every possible angle), but she was patient and never told me to fuck off, and eventually my CFP took a look at the rates and the conditions and said, wow, that’s a pretty good rate, you should jump on that.  So I did.

Now, as it happened, this was right around the holidays at the end of last year.  I returned my completed application on 12/12/23, and was transitioned to a loan processor on 12/21.  By the time Jaunary 2nd rolled around, I was getting emails from a different processor because the first guy had gone on vacation.  On 1/5, I got an email from a third processor, but the very next day the second guy was back.  And of course the first guy eventually came back (that was on 1/16) and tried to take back over, but there was already a good deal of confusion by that point.

See, one of the conditions for the loan was that I had to open a savings account with the bank, with a minimum initial deposit of $5.  And I would get a better rate if I had payments automatically deducted from that account.  Which seemed simple enough: just open an online account.  I’ve done it many times, at many different banks.  Piece of cake, I thought.  Except it wasn’t.

My first attempt failed.  My second attempt failed.  The crew of rotating loan processors advised me to go online and set up a video appointment with the technical support department ... which also failed.  I ended up making 8 attempts on 5 different browsers on 3 different operating systems on 4 different devices (including laptops, desktops, and phones) before I was finally able to get through the account opening process.  I never was able to successfully schedule a tech support appointment, and none of the “advice” from the processors ever worked: it was just trying over and over again until something finally clicked.  All I got from the processors were repeated instructions to do the same things I was already doing that weren’t working, and stern admonitions like this one:

PLEASE NOTE:
Opening a membership account is a member requirement on this process.

To which I responded, yeah, I know that.  That’s what I’m trying to do.  And what eventually worked was Microsoft Edge on a Windows machine, which is ... just, no.  There’s no way I was going to borrow The Mother‘s laptop and use Edge every time I had to do anything with the bank.  At this point, my whole impression of the bank’s technical capabilities was plummeting.  But I had two bigger problems.

First of all, the loan processor was threatening to close my application, because it’s only good for a certain number of days.  I kept pointing out to him that none of the problems I was having were my fault, so it was kind of on them to extend the loan.  Which didn’t fly.  So I had to CC my salesperson and get her to step in, which she did and the deadline was extended.

But the biggest problem was, they wouldn’t open the account without putting in the $5.  Which is fairly unusual: the normal way online banks do it is, you open the account, then you have 30 days (or whatever) to make the initial deposit, or it just gets closed automatically.  But this wouldn’t even let me finish the account opening process without the 5 bucks.  Fine, I said; how do I add that?  There was exactly one option: I had to go through a bunch of hoops, give them all the same info I’d already given in the loan application, including yet another picture of my driver’s license, and then I had to send them a selfie (WTF??), and then I just needed to enter the login and password for my main bank account.

And that’s where I shut it down.  I’m not giving out my frigging password to my primary bank account.  I just met you! no way I trust you enough to give you the most sensitive password I own (and especially not over Edge ... sheesh).  So I emailed them back and said, nunh-unh, try again.  So my salesperson stepped in (again) and got the something-something department to open the account manually, waiving the $5 minimum, so then I had routing and account numbers to add to my main bank, so I could transfer the $5 that way.

As you probably know, the way these online accounts verify each other is to make little deposits called “trial deposits”: there’s two or three of them, they’re less than a dollar each, and then they withdraw them back at the end.  You verify the bank by entering the amount of the trial depsoits, which proves you have access to the target bank account.  And, now that the account was officially open, I could use the credit union’s mobile app, so I did have access to the target account.  So may main bank did the trial deposits, but, when I went to verify them, they had cancelled the account.  So I had to call them, and they said the transfers were rejected from the credit union side.  So I passed that along, at which point my salesperson proved to be the hero yet again: she instructed the loan processor to mark the application complete (despite the fact that my account was in a bit of a limbo state, not having received the minimum intial deposit), then she tried to call me to explain what I needed to do, which of course took a few days before we could connect, and in the meantime I started receiving insistent emails from a closing agent.  And I understand that she was just trying to do her job and close things out in a timely manner, but at that point I still didn’t understand how I was going to get a measly $5 into this new account, much less how I was going to be able to get a regular monthly payment into it, so I wasn’t quite ready to sign a bunch of leagl docs yet.  We’re up to February by this point.

Over the phone, my salesperson told me that the reason the trial deposits were rejected was because they weren’t the minimum $5 initial deposit.  I’m not sure this entirely made sense, since I could see the trial deposits in the phone app, so it seemed like they weren’t really rejected, but whatever.  My salesperson advised me to write myself a paper check for the $5 and use the mobile app to deposit it.  Which seemed a bit ... circuitous, but I just wanted to get the whole thing wrapped up, so I just did that.  And my loan closed on 2/22.  Now, this particular HELOC had a condition that I needed to pull out at least $25,000 on closing (that’s what they call the “initial draw”), and that I had to not pay any of that back for the first year.  This was another discount to my interest rate, and my CFP approved it, and I needed nearly that much to cover the upstairs A/C and the garage roof, which were the two things we planned to do immediately anyway.  So that was fine, and the initial $25k was deposited to my fresh, new credit union account on 2/27.  Story over, right?

Nope.

Because I didn’t realize that “do you want us to FedEx you a check or just deposit the initial draw into your savings account?” was a trick question.  In hindsight, if I’d only taken the check ...  But I thought to myself that the online banking troubles were surely over by now, and it would be easy to get the money moved electronically from the credit union back to my main bank, or in the worst case to my other online bank (I use that one because it has a higher interest rate on savings).  How young and foolish I was then.

First I set up both my main bank and my high-interest account bank as targets for transfers in the credit union.  This worked perfectly ... except that, apparently, while doing electronic transfers into the credit union account was fine, doing transfers out of it was not possible.  Like, it just wouldn’t show the external accounts as an option to tranfer to, only to transfer from.  So I figured I’d just add the credit union as an account for tranfser in my high-interest account.  Which also worked perfectly, except for the fact that they have a $2,000/day limit, and a $10,000/month limit.  Shit.  At this point the HVAC repariman and the roofer were botgh scheduled, so I started transferring $2k per day, and then set about trying to figure out how to get to the rest.

I tried to set up the credit union account again at my main bank.  It was rejected before I even got past the first page.  I called them; they told me that the credit union account didn’t allow ACH transfers (which I pointed out was patently false, due to the several currently ongoing transfers to the high-interest account), and then they told me that I’d have to talk to their external accounts department (who of course had gone for the day), and then eventually they told me that I had to stop asking them about it or else my account might get flagged for fraud.  (Personally, I’m convinced that they’re just pissed off that they never got their 67¢ from the trial deposits back.  I offered to cover it for them, but they didn’t buy it.)

So I called the credit union (during my one hour overlap) who suggested that I use “shared branching.” This is a system whereby credit unions all over the country have reciprocal arrangement where you can go to a credit union near you, even though it’s not the same institution, and use it as a branch.  Excellent.  There’s exactly one shared branch in my city, so I went there, only to discover that they had a $1k/day limit.  Well, $1k/day in cash and $1k/day in check form.  So they advised me to try another shared branch, which was an entirely different credit union, but it was 20 minutes away.  I figured, while I’m here, just give me a check for a thousand and a thousand in cash.  I didn’t really want the cash, of course—who wants be carrying around a thousand dollars in cash these days?—but I really wanted to make sure the HVAC guy (who was coming first) would be covered.  But the check they printed for me didn’t have my name correct, because I’m a “Jr,” which is the bane of my existence, and apparently my name was not correct on the credit union account, and the check was automatically printed out based on my account name, so it was made out to my dad.  I pointed out that my main bank was super-picky about the name being correct on checks deposited via the mobile app, so they’d need to cancel it and write a new one.  Except they couldn’t cancel it, because it was a cashier’s check or a certified check or whatever, so they had to redeposit it.  And then they couldn’t write another check because they could only do $1k per day in check form, and they’d already done that.  So now I was up to only 11 thousand, out of the original 25.

So I called the shared branch in the next town over to verify that they would not have any limits; they confimed that, while there was a daily limit on cash, there was no limit on the amount they could give me a check for.  Excellent.  So I drove there.  And their machines were down.  So I had to come back on a different day, which I did.  And they said my account had been flagged for fraud and I had to call the original credit union.  So I did (during my one hour overlap), and they said they’d have to talk to the fraud department, who of course had gone for the day.  So I waited for them to call back and tell me that the fraud hold was lifted, which took a few days, and then I drove to the 20-minutes-away shared branch for a third time, and they told me that the account had been flagged for fraud again.  They theorized that trying to get a single check for roughly $14k was just automatically triggering some fraud threshhold and suggested that I call the source bank.  They’re in New Jersey, I pointed out.  Oh, well, then, they’ll be closed now, they responded.  Yes, I know, I said.

So I called the HELOC credit union again—and, let me tell you, even the most understanding workplace in the world was starting to look askance at me by this point when I said I had some business to attend to, yet again—and asked how I could get my hands on this frigging money that they’d so generously lent me but were making it very hard to get at it even though I was already paying interest on it.  They could do a wire transfer, they suggested, but that would cost money.  Hell, no, I said (honestly, a wire transfer is cheap enough that it probably would have been worth it just to end the torture, but it was starting to be the principle of the thing).  They could mail me a check, they suggested: it’ll only take 7 – 10 business days.  Hey, what about that FedEx option? I asked.  Can’t I still get that?  Well, they said, they could request special dispensation to get the check expedited, but no guarantees.  Fine; I’ll take it (what choice do I have at this point?).  And it was expedited, and it arrived promptly, and I depoisted a check for nearly $14k to my main account on 4/4.  That’s about 38 days post-closing, and countless hours of my time.  Just to actually receive the money I’d already paid a month’s interest on.

We had to postpone the roofer.  But the HVAC fellow came in and did a great job, and luckily he was happy to take that $1,000 in cash off my hands.  And hopefully the roofer will be able to come in a week or so.  And then we can start looking for a pool renovater.  And maybe someone to install an on-demand hot water heater.

So that’s the whole story.  I’m sure you felt like it was a lot to read, but imagine how I feel: I had to live it.  The Mother says I obviously racked up some karmic debt, and whatever I did must’ve been pretty bad, and, who knows? maybe she’s right.  I’d like to think I’m just so lucky in life in general that the universe likes to make sure I don’t get too comfortable.  After all, complaining about how hard it was to get 25 thousand dollars so I could (in part) retile my southern California swimming pool is sort of the definition of “first-world problem.” Still, I thought you might enjoy this comedy of errors, so at least, perhaps, my misery has brought you some joy.  Enjoy the schadenfreude.