Virginia CUs fight back; muster forces to file complaints against insurance company's solicitations of CUs' mortgage borrowers

<p>RICHMOND, Va. – CALL FCU got more than it bargained for when it ran a home equity loan promotion to a targeted segment of its membership in mid-January. For the $180 million CU, it all started witb one member who received a first mortgage from the credit union in January. Shortly after the member was approved for the loan, he began to receive solicitations in the mail from a Xenia-Ohio-based company, Nationwide Mortgage Protection Insurance, Inc. that used the credit union’s name to promote the company’s service of converting the member’s loan to a bi-weekly loan payment schedule. The problem was – CALL FCU had never heard of Nationwide Mortgage Protection Insurance nor had it ever endorsed the company’s product. When the member came to the credit union and told them he wanted to take advantage of the offer, CALL FCU had to be the one to tell the member the bad news – the credit union was not making the offer. Soon afterwards, CALL FCU began to hear from other members who received similar solicitations from Nationwide Mortgage Protection Insurance. Angry and puzzled over what Nationwide Mortgage was doing, CALL FCU Manager of Lending Teresa Houtz contacted the Clerk of the Circuit Court. What she was told was a rude awakening: once a deed and lien are recorded, the information becomes public information that vendors and companies can use for mass mailings. Houtz made it clear that, “We don’t have a problem with Nationwide Mortgage Protection Insurance using our members’ names that it obtains through public information for the purposes of their solicitation. What we have a problem with is them using our name on their mailings that implies to our members that we endorse their product.” Houtz said even though the mailers include small print that explains that the credit union is not affiliated with the soliciting company, she said the print is so small – in some cases it’s written in gray type – that the statement is difficult to read. On one mailer a member received from Nationwide Mortgage, CALL FCU’s name was in bold letters. What’s more, she said, the envelope the solicitation is mailed in does not include Nationwide Mortgage’s name in the return address – it only shows the address. The enclosed return envelope does show the company’s name, but nowhere does the correspondence include Nationwide Mortgage’s phone number, “So there’s no way a member can call if they want to tell the company to stop sending them the mailers,” said Houtz. Houtz said CALL FCU’s attorney sent a letter to Nationwide Mortgage Protection Insurance’s attorney asking them to desist in the practice. She said the credit union received a “curt” letter back from the company’s attorney that informed the credit union that what Nationwide Mortgage was doing was legal. Houtz then talked with Bruce Jolly, an attorney with the Washington, D.C. law firm Shook, Hardy & Bacon LLP that consults with credit unions. “He explained that what Nationwide Mortgage is doing is not illegal, but it may be immoral,” said Gonzalez. Houtz also contacted the Virginia Bureau of Insurance which confirmed what Jolly had said. However, she said the Bureau of Insurance staffer told her to encourage members who have received the mailings from Nationwide Mortgage Protection to file individual complaint letters with the bureau, and that the bureau would consider Nationwide Mortgage’s actions as “harassment” if the bureau receives a number of complaint letters. “CALL FCU itself contacting the bureau and complaining about what’s happening won’t initiate any type of investigation, but if enough individual members complain, then we’ll have a strong case,” said Gonzalez. CALL FCU is in the process of printing up forms members can use to file complaints with the state Bureau of Insurance over Nationwide Mortgage Protection’s solicitations. Meanwhile, Kristen Tatlock, director of research and information, Virginia Credit Union League said the league has heard from at least two other credit unions – Fort Belvoir FCU, Woodbridge, Va. and Library of Congress FCU, Washington, D.C. – whose members have also received similar solitications from Nationwide Mortgage Protection. -</p> <p>[email protected]</p>