FEDERAL INVESTIGATORS are looking into con- matic increase in your credit-card interest that can
troversial real estate closings after being hit with also wash away credit-card reward points.
numerous complaints. What they are finding For more information, contact the credit-card
regionally could disturb home buyers nationwide. companies and other business-account holders or
In one case, regulators broke up an alleged kick- banks you deal with to see how the universal default
back scheme involving real estate brokers, home rulecouldaffectyoufinancially.
builders and title insurance and escrow executives. The
plot involved a shell corporation set up by real estate “Texters” rack up debt and surprise
agents who bought a partial interest in a local title Text messaging, or “texting,” is a fond pastime for
insurance and escrow agency at a below-market price cell phone users, particularly younger folks who
and illegally shared profits from higher closing fees. have grown up with e-mail and computer instant
A group of builders created a separate corpora- messaging. Instead of calling, short text messages are
tion that allegedly worked the same way. The real exchanged as a quick way to keep in touch. Young
estate agents and the builders sent their clients’ title users may send dozens of these a day.
and settlement work to the agencies in which they But unlike e-mail quips, which are essentially
had interests. Those businesses then recycled higher- free, these text jokes and sweet nothings
priced portions of the title and settlement fees to can add up to a lot of somethings when
individual agents and builders, based on the amount the bill arrives. Industry insiders
ofbusinesstheyreferred. acknowledge the “addiction” of the
Here are some ways to avoid such schemes. practice. Depending upon the amount of
■ Make sure all settlement costs are disclosed. usage, this can raise a user’s bill by up to
The Department of Housing and Urban Develop- several hundred dollars a month.
ment (HUD) requires that such costs be disclosed Some phone companies
at least one business day before the home buyer offerrelativelyinexpensivepack-closes escrow. ages for texting. For example,
■ Beware of low-ball settlement fees that may be for an extra $10 Sprint cus-boosted at the close of escrow. tomers can send and receive
■ Watch out for up-charges and markups. Lend- unlimited messages a month.
ers and agents are prohibited from charging more Industry experts, however,
for appraisals, credit reports and other services say that carriers sometimes
unless they can justify higher fees for individual ser- fail to draw customers’ atten-vices before the sale is completed. tion to these cost-saving deals.
The only way to avoid being ripped off in settle- Instead, customers find them-ment swindles is to ask for guaranteed closing fees selves paying about 10 cents to
up front in writing. If you are unsure what they send a message and from 2
mean, have the statement examined and explained cents to 10 cents to receive one.
by a real estate attorney. Or, check out the HUD Web Young users and their par-site at
www.hud.gov. ents should explore cost-effective packages and track their
Late fees: ouch! messaging activity during the
Credit-card late fees are dreaded by most of us billing cycle by reviewing ac-as a costly waste of money. Unfortunately, many of counts online. C
us are not aware of the dollar cost and the implica- David Horowitz is a
tion of paying a late fee unless we read the fine print leading consumer advocate.
on the back of the statement. His“ fightback.com”
Statistics show that about 60 percent of credit- commentaries are heard
card users will pay late penalties this year, and the daily on the Jones Radio
situation could get worse. It’s controversial, but the Network. For stations
law allows almost any late payment to trigger inter- and times, check the
est hikes and additional fees on other loans, not just radio page at
the account that is paid late.
I TRADED in my leased
car early because the dealership was promoting no
cost or penalties for early
lease termination. Three
weeks later, the finance
company sent an invoice
for various items. I immediately challenged it and
the dealer, claiming
deceptive sales tactics.
“No additional charges”
to me meant no money
owed; they simply traded
vehicles. I refused to pay,
and now the account is
Ed, Baltimore, MD
AMY CAN TRELL
ED, what were those “vari-
ous items” on the invoice?
If the charges pertained to
termination fees, you were
right to Fight Back! But
if they were for things like
excess mileage, damage
or fees for exceeding
or violating any
other condition of
the original lease
afraid you don’t
have a case.
These are not
penalties for early
They are charges com-
monly levied at the
end of a lease and are
itemized in a standard
Your decision to
refuse to pay the bill left
you wide open for the
collection action. Al-
though you believed “no
no money owed, I don’t
agree with your interpreta-
tion. If you check the lan-
guage on both agreements,
I’m sure you’ll find these
deal terms. Always read
the fine print.
For example, a single late payment can raise
auto insurance rates as much as 50 percent. Interest
on other credit cards can also surge, and credit rat- Do you have a question for David?
ings can suffer. Even if a late payment on a credit Just log on to
www.fightback.com and “Ask David.” He will personally respond
card is waived, it might push a button for an auto- to your problem if you follow the instructions printed on his Web site. (Costco
members receive a discount off the normal fee.) Questions and answers of the
greatest interest to Costco members will be used in this column with the permis-
sion of the contributor, and will be posted on