How Do Mortgage Lenders Get Away With It?

From my Atlantic advice column, What's Your Problem?:

Q: I am very good about paying my mortgage, but for the first time in five years, I let a payment slip by mistake. The bank quickly demanded $165 in late fees. When I called the bank, the person I spoke with wouldn't budge on the late fee and told me that there would be an additional $18 fee to pay by check. This is one of the biggest banks in the country, and it could afford to cut me slack this one time. I'm a good customer, so why are they punishing me? And why does processing a check cost the bank $18?

R.E., Atlanta, Ga.

Dear R.E.,

They are punishing you precisely because you are a good customer, and because--unlike the bank--you are not too big to fail. You are, in fact, the perfect size to fail. Moreover, your excellent payment record suggests that you will pony up whatever they tell you to pony up. You have three choices in this situation: go on a public campaign of shaming, understanding that banks are incapable of embarrassment; withhold the payment, and watch your credit score go into the toilet; or pay the fee with equanimity, secure in the knowledge that God loathes bankers. As for that $18: the first 52 cents goes to the actual cost of processing the check; $5.70 covers shipping and handling; $2.90 pays the universal connectivity charge; $4.27 goes toward exotic dancers; $1.25 is for a new pole for the exotic dancers; 75 cents pays for chlamydia-detection kits; 40 cents is for baggage fees; and $2.21 goes into an escrow fund that will be devoted to recruiting unqualified borrowers as soon as the government for gets what happened the last time lenders recruited unqualified borrowers.
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Jeffrey Goldberg is a national correspondent for The Atlantic and a recipient of the National Magazine Award for Reporting. He is the author of Prisoners: A Story of Friendship and Terror. More

Before joining The Atlantic in 2007, Goldberg was a Middle East correspondent, and the Washington correspondent, for The New Yorker. He was previouslly a correspondent for The New York Times Magazine and New York magazine. He has also written for the Jewish Daily Forward and was a columnist for The Jerusalem Post.

Goldberg's book Prisoners was hailed as one of the best books of 2006 by the Los Angeles Times, The New York Times, The Washington Post, Slate, The Progressive, Washingtonian magazine, and Playboy. He received the 2003 National Magazine Award for Reporting for his coverage of Islamic terrorism and the 2005 Anti-Defamation League Daniel Pearl Prize. He is also the winner of the International Consortium of Investigative Journalists prize for best international investigative journalist; the Overseas Press Club award for best human-rights reporting; and the Abraham Cahan Prize in Journalism.

In 2001, Goldberg was appointed the Syrkin Fellow in Letters of the Jerusalem Foundation, and in 2002 he became a public-policy scholar at the Woodrow Wilson International Center for Scholars in Washington, D.C.

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