Kinda disappointed with USAA

User Forum Topic
Submitted by AK on March 18, 2010 - 11:42am

I entered escrow early last month and went with USAA as my lender, based on 18 years as a happy customer. I knew I was dealing with a call center environment but they had great rates, no junk fees, and I was confident they wouldn't try to screw me at the last minute. A few days later I got a giant FedEx envelope full of paperwork, which I somehow managed to read and sign and send back to them.

A couple of weeks passed with no word other than "your application is being processed." After numerous requests I got a "whoops, we need your 2009 W-2" message, which I supplied promptly. More time passed with no word other than "everything is on schedule." Finally my agent's transaction coordinator called to ask about the loan docs and got an "OMG you want to close when?!?!?" response.

Several rounds of facepalming later, everything seemed to be on track. Then last night I get a call from the lender ... it seems they needed account statements showing that the down payment funds in my brokerage account had been liquidated from cash to cash. (More facepalming.) I'd already transferred the required funds to my bank on my own initiative, but I'd missed the cut-off date for the monthly statement and I'd need to get some sort of account verification letter.

This is where things get weird ... This morning I drove down to the local branch of The Very Big Impersonal Bailed-Out Bank ... the one that tried to pull a fast one when I applied for a loan last year. Much to my surprise I was helped promptly by a "Personal Banker," who called up the appropriate department and ordered a verification letter. I fully expected to be told to wait 10-14 days or pay through the nose for rush charges. Instead he told me he'd fax a copy tomorrow for no extra charge.

I'm astonished. That's all I can say :)

Submitted by Noob on March 18, 2010 - 12:36pm.

I have been a USAA customer for 29 years. They do such a great job in their insurance unit and in the Fedral Savings Bank unit. However, I have had similar luck with their Mortgage unit. About 3 years ago I tried to refinance a mortagage and had a bad expeience. I finally gave up on them. In my complaits to them regarding the situation, I learned that they outsource the mortagage business and label it as their own. Apparently, their high level of customer service has not yet been transfered to their outsource partner 3 years later.....

Submitted by LAAFTERHOURS on March 18, 2010 - 12:39pm.

Im also a usaa member of about 15 years. I considered going with them or a credit union but after seeing a lot of positive feedback on HLS on this board, I went with HLS. I have to give him some props - was the best experience I could have imagined and this was the second time going through a purchase on a home. The first time was a trainwreck, worse than your description above.

USAA service level has always been high and very thorough so thats a little suprising to hear but well noted. Hope everything runs smoothly from here on out.

Submitted by LAAFTERHOURS on March 18, 2010 - 12:40pm.

Noob wrote:
I have been a USAA customer for 29 years. They do such a great job in their insurance unit and in the Fedral Savings Bank unit. However, I have had similar luck with their Mortgage unit. About 3 years ago I tried to refinance a mortagage and had a bad expeience. I finally gave up on them. In my complaits to them regarding the situation, I learned that they outsource the mortagage business and label it as their own. Apparently, their high level of customer service has not yet been transfered to their outsource partner 3 years later.....

They also outsource bike insurance so i hear.

Submitted by garysears on March 18, 2010 - 12:43pm.

Not good to hear. I have a USAA approval and was pretty sure I'd go with them just based on my history with the insurance part of the company.

Submitted by AK on March 18, 2010 - 12:50pm.

I think USAA recently INsourced loan origination and underwriting so some of these problems may reflect the usual struggles of building up a new department with new people.

I'd still consider USAA for my next home loan ... but I'll consider alternatives as well.

Submitted by burghMan on March 18, 2010 - 1:27pm.

I had a very similar experience with USAA Mortgage - twice!

Back in 2001 or so, they barely complted my mortgage on time. Could never get through to them, and then suddenly received lots of last-minute requests from the "underwriter." Almost didn't close on time. I remember making many angry frustrated calls -- into an answering machine!

I was foolish enough to give them another chance in 2004. Same issues. I gave up on them about a week into to process and went with another lender. I sent USAA a letter explaining my frustration, asking for my $250 application fee back. Never got any response.

Their insurance and banking are great, but their mortgage department is as bad as any. (Mortgage is outsourced to some company called PHH.)

IMO, USAA is very foolish to allow this one segment of their business tarnish their strong brand.

Submitted by n00b13 on March 18, 2010 - 5:18pm.

I've been (and continue to be) a satisfied USAA customer of 12+ years for just about everything, but I steered clear of their mortgage services at the recommendation of other members... It's a bummer they don't do to well in that category. Sorry to hear about your troubles. :(

Submitted by HLS on March 18, 2010 - 11:18pm.

AK..
You started your loan early last month and it's still not done ?
You are 5-6 weeks in and still being asked for conditions ??

The person who took your app should have warned you about a paper trail when transfering funds and other issues up front. Don't be surprised if they continue to ask for more documentation. You should have received an update before a couple of weeks had passed.

If you had locked your loan, someone should have been on top of your closing date all the way through the process.

I cannot imagine that their rate was that great but hopefully you loan will close and fund on time.
Still sounds like crappy service.

Virtually nobody gets special treatment just because you are a previous customer.
Guidelines are tougher than ever for everybody.

Submitted by AK on March 19, 2010 - 6:51am.

Yes, I'd call it crappy service too :)

I went with USAA in part because many/most other VA lenders pile on a bunch of non-allowable seller-paid junk fees ... and of course asking for seller concessions will consign your offer to the shredders these days. But VA non-allowables are a subject for another rant :)

If you know of any other VA programs without a bunch of non-allowables please let the world know. Thanks HLS.

Submitted by HLS on March 19, 2010 - 8:42am.

VA (and FHA) is more problematic, and extra fees.
I assume that you are doing nothing down.
Usually, without fees, the rate is slightly higher. You end up paying one way or the other.

You deserve the benefit of zero down for serving the country. Thanks for your service.

Too bad they make it so complicated.
I hope that it closes on time without more headaches for you... HLS

Submitted by AK on March 19, 2010 - 10:05am.

Thanks for the advice HLS.

Actually I made a down payment because these days any 0% offer gets round filed ... and VA is much cheaper than conventional with PMI. But I hear the cries of anguish from younger veterans of modest means, who find themselves locked out of the market. And they're the ones who truly sacrificed ... the closest I came to harm's way was crossing busy streets while doing the Panamanian Pub Crawl.

I think most buyers will be better off with no fees and a slightly higher rate. In my case USAA gave me the same rate as a local lender without the junk fees ... of course that's just one data point. Unfortunately there's a persistent belief that VA loans always come with $3000 or more in seller-paid non-allowables.

Submitted by David J on March 19, 2010 - 10:46am.

AK wrote:
Yes, I'd call it crappy service too :)

I went with USAA in part because many/most other VA lenders pile on a bunch of non-allowable seller-paid junk fees ... and of course asking for seller concessions will consign your offer to the shredders these days. But VA non-allowables are a subject for another rant :)

If you know of any other VA programs without a bunch of non-allowables please let the world know. Thanks HLS.

I just started a VA purchase loan with USAA three days ago. We'll see how it goes. I think USAA recently switched their mortgage division to in-house as it seem they've become more competitive in terms of rates and fees. I also called navy federal and spoke with a VA mortgage broker. Navy Federal was upfront about the fees and rate but usaa beat them in both depts. I couldn't nail down the mortgage broker on fees and he was not willing to provide me with a GFE until I essentially had committed to using him. I know on top of the 1% origination fee he also wanted to charge me a $900 processing fee and another $900 transaction fee, and a few other fees for a few hundred each before even getting to discount points for the loan. I maybe should have talked to other mortgage brokers but usaa seemed to have a decent enough deal.

For me VA seemed like a no-brainer as I do not have to pay the funding fee, my loan is for over 417k and I want to finance as much as they'll let me.

Submitted by HLS on March 19, 2010 - 11:25am.

For those that qualify, VA may be the best way to go. On ANY loan, to get the lowest rate, there are usually fees.

You can take a higher rate and think that you aren't paying any fees, BUT YOU ARE. If you keep the loan for more than 3-5 years, that no cost loan will end up costing you a lot more.

Any DECENT mortgage broker will tell you up front here is your cost to use me, and any commission from the lender will offset that charge, NOT go into their pocket.
It's not a complicated discussion, even if your loan is complicated.

Today's 30YR fixed conventional pricing for loans below $417K for a perfect borrower is 4.875% with no added points, no origination fee, no transaction fee or any other garbage loan fees. At that rate the lender will pay the loan costs.

10% down is OK on a purchase, same rate with mortg insurance added, IF one qualifies.

I don't know how this compares to VA rates today.
ALL rates move a bit every day. .HLS

Submitted by AK on March 30, 2010 - 10:27am.

Update on my situation: The order of the universe has been restored.

USAA funded on schedule (barely) and covered about $500 in non-allowables that were charged by the escrow company (e.g. "loan tie-in fee," the "key grip" of closing costs). I still say their communication could be better (serious C4I problems) but at least I have keys.

OTOH, The Very Big Impersonal Bank failed to come through, miserably. The "personal banker" basically told me to shove off when I called him the next morning, and the funds verification letter came four days after closing. Good thing I didn't need it.

Submitted by sdrealtor on March 30, 2010 - 10:58am.

The VBIB sounds like BOA

Submitted by AK on March 30, 2010 - 1:36pm.

sdrealtor wrote:
The VBIB sounds like BOA

Ding ding ding ding! :)

Submitted by eknock007 on May 14, 2010 - 6:33pm.

So far I have had a horrible experience with my loan application through USAA. I was pre-approved for a VA loan and started shopping for a house. Found one made, made offer, did a purchase contract and opened escrow, and then applied for the the real loan. Everything looked good up until that point. First the bad: The communication with the USAA rep assigned to my loan has been aweful. You have to litteraly leave 10 messages before she calls back. They never update the website that you are given to keep track of the loan process. The Rep herself said not to use because it is not updated regularly. And I have had to refax several documents because "I never sent them." Now the ugly: after opening escrow and given a closing date, I was under the impression everything was going well. Even my realtor had issues getting loan status' from USAA. But eventually she too was told that the loan was moving forward. Remember there is very little communication coming from USAA. Come to find out 5 days before closing that they are not approving my loan because they are not including my quarterly bonuses into my DTI calculation. These are quarterly bonuses that I have been getting for the last 3 years. They asked for them when I initially applied. My frustration is that they could have told me then that my bonuses were not going to be used to compute my DTI. They allow me make an offer, sign a purchase agreement and then tell me 30 days later that the purchase price is too high for my DTI. If my bonuses were "disqualified" then I could have either not proceeded with the purchase or I could have used another bank. But again because of their lack of communication concerning the process, I am on the verge of losing the house. Now I am hoping that after paying off most of my other debt that my DTI will come down to within the income guidelines. I will know on Monday if this thing goes through or not. Either way I will be closing all of my accounts with USAA and going somewhere else for my banking needs. I use to love USAA but this experience has really changed my perception about them.

Submitted by spacemonkey on August 14, 2010 - 5:49am.

I find it hard to believe that all of you are just now discovering the nicks in USAA's self proclaimed armor. Not only are flaws present in each of the service departments (call centers and the like) but disappointments exist in the basic services as well. Out sourced boat, motorcycle insurance (now Progressive w/ separate billing), loans, etc. It's even difficult for military members on orders to get renters or homeowners insurance in several states--only after letters direct to president will they change the tune. It seems that over the last several years USAA has opened their company up to many riskier members in order to grow the company. You even hear USAA ads on Rock radio stations--not exactly the kind of membership that makes a company stronger although I'm a rocker. Overall I'm dissatisfied w/ the new USAA (prices, service) and if it weren't for online banking, I'd be way gone. Other banks are catching up in that department. Good luck!

Submitted by cdkmom on June 21, 2011 - 11:18am.

My husband and I contacted USAA last summer in hopes of combining our mortgage/home equity loan. The USAA agent informed us that we would not be able to do this since we did not meet the 80/20 investment ratio; so, we refinanced only the mortgage at a lower rate.

Now, two other financial institutions have told us that we could have received a Veteran's loan, allowing us to combine the loans due to its 90/10 ratio. My husband also has a VA disability, so the VA Funding Fee would be waived. USAA failed to inform us of the VA option last summer and it has cost us hundreds of dollars a month.

When we contacted USAA a few weeks ago, the agents admitted that a mistake had been made last year and they admitted that only half of their mortgage agents were trained in handling VA loans. This is outrageous since most USAA clients are veterans and VA eligible!

Because we have been USAA members for more than 25 years, we decided to give USAA one more opportunity to make this right, and we began the refinance option with VA. Of course, as I expected, the housing market has further declined since last summer. Our home appraised $50K less in one year.

This is a huge lesson -- do your homework about VA loans or any loan/interest rates/et because financial institutions, such as USAA, are not the experts they claim to be. I am extremely disappointed in USAA and do not trust them to handle my finances.

Submitted by briansd1 on June 21, 2011 - 12:51pm.

I'm not surprised.

In any big organization, each area is separate and the incentives for salespeople have nothing to do with relationship.

Put yourself in the position of a mortgage adviser who's paid commission. Your job is to work based on your incentives.

What do you care if the customer has been with the bank 20 or 30 years?

Submitted by DataAgent on June 21, 2011 - 4:54pm.

cdkmom...
Is your existing mortgage a VA loan? If not, I'm not sure you can refi a non-VA loan into a VA loan. The VA program was designed to help GIs buy homes with low down payments. The VA refi process is a whole different animal.

Submitted by AK on June 22, 2011 - 9:16am.

Si se puede.

DataAgent wrote:
cdkmom...
Is your existing mortgage a VA loan? If not, I'm not sure you can refi a non-VA loan into a VA loan. The VA program was designed to help GIs buy homes with low down payments. The VA refi process is a whole different animal.

Submitted by niceones on July 14, 2011 - 11:14am.

As a Centurion I have seen some changes at USAA.
Everyone needs to download the annual report, look at the boardmembers, look at the officers, look at what they earn and look at where they have come from.
With the exception of auto insurance, USAA is a FOR PROFIT CORPORATION. It is in existance to make money for it's stockholders, and you ain't one of 'em. To remain viable USAA must compete. You can and should expect the same corporate treatment as with any other competing company.
Cut throat.

Submitted by AK on September 14, 2011 - 11:55am.

I must be a masochist because I just refi'd with USAA, and I'm seriously thinking about doing it again as soon as the dust settles.

I seriously question the abilities of some of USAA's employees or contractors ... for example, the initial GFE vastly overestimated closing costs. But I think the errors resulted from incompetence or carelessness rather than malice or deception.

Submitted by vpelletier on November 7, 2014 - 3:56pm.

I'm currently in the process of obtaining a mortgage with USAA. I've had some problems, but their customer service has responded to these problems and my mortgage appears to be on track. USAA Customer service is excellent.

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