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"Junk Fees" versus Compiled Fees

Okay – I got that comment to my other post about $15 for your current lender to fax a one page payoff to your new lender. It does, indeed, sound exorbitant. But let’s look at it from a personal perspective. Let’s say you have 800 clients you manage. Let’s call you an Account Specialist.

Let’s say of those 800 clients you have about 10 minutes of work each month to perform as a standard part of your job. That will require roughly 34 hours per week. Now let’s throw in that maybe 10 percent of them caused a variation in the amount of time required costing an extra 10 minutes. That’s another 3.4 hours bringing you to 37.4 hours.

Now because of government regulations on how people are paid for the jobs they do and the hours they work you must clock out at exactly 8 hours every day.

Finally, for this scenario, let’s say that you have 8 clients leave and 10 new clients come onboard every month. Let’s say for a leaving client you have to spend 30 minutes “in the system” verifying all “i’s” have been dotted and “t’s” have been crossed because, once again, you’re in one of the most over-regulated industries in the nation. And let’s say that for every new client it takes about 1 hour to “get them into the system” and make sure every entry is compliant.

We didn’t even mention that as the Account Specialist you have a supervisor, a QC and Compliance director, and a few other checks and balances type support staff.

Now, let’s get to the “junk fee” part of the $15 for one page fax fee.

You’re in the middle of inputting a new client when a request comes in to verify a payoff. You put it “Next Order of Business” because you know someone is trying to send your company a sizable check. So as soon as you finish what you were doing, instead of moving on to the next 14 daily items you have to complete you “pull up the account” which is not a feat of magic but takes some time to verify names, addresses and account numbers. You print the payoff which now must be signed by the Account Manager and the Quality Control Officer because it’s going to be “guaranteed good” through a specific date.

Once you have the necessary signatures then you can fax that one page to the person who requested it.

And you want all that done for free?

I hope you don’t think I’m being rude because I’m really not. I do, however, tire of hearing about “junk fees”. Yes, there are real junk fees. We don’t charge any. Someone earns a living from every penny we collect. And, at first glance, $15 does sound a bit much for faxing “just one page”. If all it took to fax that one page was just to hit one of those “EASY” buttons like they sell at Staples I would agree. Please understand that in this particular case there is much more to it than just magically having a piece of authorized paper appear in the fax machine headed to your requested destination.

Now then. There has been a lot of discussion about letting lenders and brokers compile fees into just on big lump. This would allow for “hiding” of “junk fees”. The reason is because so many people are complaining about “junk fees” that are not junk at all. Talking heads with no education or experience in the industry like Clark Howard have no concept of what happens behind the scenes. So the public listens to someone who has no experience or education and follows their lead. Then some ridiculous legislation comes into play that is created by another person or group who has no education or experience and then is voted on by a larger group of people who are equally non-educated and inexperienced. So you end up paying one big fee instead of 10 small ones.

Sound better?

Thanks,
Ken