Corporate Expansion--Growing Pains Go to Customers

Business or banking mergers or takeovers are often power plays with big egos involved. So it’s puzzling when there seems to be a lack of determination in the new, bigger firm to retain the loyalties of old customers.

Sometimes, these loyalties are blown at the outset by some change that seems not well considered, or simply by an obvious inability to handle the increased flow of business.

The customer, of course, is aware of what is happening at individual outlets, and little things can send him or her off to another place. With the grocery mergers, a deterioration of the produce section or a rise in seafood prices may be enough to do it.

But with your mortgage, you can’t change easily. You are stuck with the new arrangement, and usually all you can do is hope they get their ducks in a row as soon as possible.

That’s been the case for me in recent weeks. My mortgage for 17 years has been with Glendale Federal, the bank that won popular attention with a series of humorous ads favorably contrasting its service with its big competitors, Bank of America and Wells Fargo.

I empathized with these ads and liked the service at Glendale Fed.

But then it was merged with California Fed, or submerged in it is a better term, since it is losing its name and Cal Fed keeps its.

The mortgage-paying experience has been a rocky one for some since September, when 244,000 Glendale Fed mortgagees were informed in a letter that beginning Oct. 1, we should send our monthly payment to First Nationwide Mortgage Corp., a wholly owned subsidiary of Cal Fed.

An envelope was enclosed, along with a bill that did not break out principal and interest, and the payments were to be sent to Illinois, instead of nearby Walnut.

I sent mine in a few days earlier than normal, just in case they had trouble breaking in their system.

But I never imagined how much trouble. The late charge date passed, and even several days later, my check had not cleared.

When I called Glendale Fed, the woman who answered blithely remarked, “Me, too. My check hasn’t cleared either.” And when I contacted a customer service rep at First Nationwide, she exclaimed, “You’re not the only one!” She said there was a backlog of 8,000 payments that might not be posted until Oct. 25, nine days after the late charge date.

But, she added, no late charge would be levied, and no more interest would accrue than normal.

Still, I contacted the chief spokeswoman for Cal Fed, Janis Tarter.

From the outset, Tarter was not at all defensive. In fact, she said, the backlog was 30,000, not 8,000.

When my check cleared, Oct. 21, I felt relieved. But then a November bill came that showed no payment for October and billed me for double in November.

The November payment, I noticed, was to be sent to Pasadena, not out-of-state. There was no reference to something Tarter had mentioned--that First Nationwide had a national billing center at Frederick, Md., and that with the merger, it was now working within 6,000 customers of its 1 million capacity.

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This time, when I called First Nationwide, the service rep said my October payment had been recorded, they would send me a second, corrected bill for November, and she gave me the exact principal and interest.

But 10 days passed, and no second bill arrived. And now, a service rep, a different person, said she could not confirm a second bill had been sent out.

Tarter then gave a fuller explanation, and it shows Cal Fed and First Nationwide had considerable difficulty adjusting to the larger customer base. They obviously should have prepared better.

The Illinois reception point for the October bills, she disclosed, was only “a lockbox, an external vendor who receives the payments, and opens and posts them to people’s accounts for us.”

But this lockbox had been overwhelmed, and “on two different occasions . . . it rerouted some of those payments to another lockbox location . . . back to California.

“While those payments were between the two places, we sent out our November statements,” she said. Cal Fed executives “may not have known some of those payments were in transit. Certainly, if we had known, we wouldn’t have mailed the November statements [in that form].”

Also, she declared, while First Nationwide could generate a second, corrected bill, “the representative you talked to about it hadn’t made that request on the computer system.

“So she may have thought it would come to you automatically,” and someone in customer service had talked to the customer rep and corrected that impression.

Tarter emphasized that steps have now been taken to resolve the merger-generated overload.

“October was a one-time situation,” she asserted. “Now that all the Glendale Federal borrowers are on our system and will be receiving our normal billing statements, [including principal and interest breakouts], they’ll be directed to send their payments to a lockbox in their region.

“It doesn’t have to go to Illinois or the center in Maryland. It gets applied at the lockbox.”

Meanwhile, Tarter said, First Nationwide Chief Executive Walter C. Klein, Jr. has announced that for sending out bills and keeping records, the national center is being expanded.

The expansion will provide a comfortable cushion to digest Glendale Fed borrowers, she said.

“We’re confident now that our mortgage loan processes are working properly, and we sincerely regret any confusion or inconvenience this caused,” Tarter concluded. “We hope this was an isolated incident.”

Sounds good. I hope it is not too optimistic. If it could have been done a month earlier, it would have been even better--and in this era of consolidation that’s something more financial service companies ought to consider.

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Ken Reich can be contacted with your accounts of true consumer adventure at (213) 237-7060, or by e-mail at ken.reich@latimes.com