POLITICS

New Hampshire Banking Department has no teeth
Little protection provided to consumers

The state of New Hampshire Banking Department has an awesome responsibility. It is charged with the general supervision of all state chartered financial institutions, including commercial banks, fiduciary trust companies, savings banks, merchant banks and credit unions.

The department also regulates mortgage bankers and brokers, small loan companies, mortgage servicing companies, debt adjusters, motor vehicle sales finance companies and retail sellers of motor vehicles. And it does all this with a staff of about 24 people.

Couple this lack of resources with regulations that have virtually no teeth in them and you have a situation in which New Hampshire consumers often come out on the short end of lending deals gone bad.

In a Nov. 10 article printed in New Hampshire Business Digest, writer Bob Sanders points out the lack of protection consumers have, particularly in dealing with companies and individuals who take advantage of homeowners struggling to keep their homes as mortgage rates rise.

Noting that the number of foreclosures this year may be double what they were in 2005, Sanders wrote that complaints against mortgage companies are rising as well. Through Oct. 10, the state Banking Department had recorded 99 consumer complaints, 21 more than were filed in all of 2005.

And what has been done about those complaints? Not nearly enough, Sanders suggested.

"While the nature of those complaints were redacted by the Banking Department before being reviewed for this article, it is clear that very few resulted in any kind of enforcement action," he wrote.

In fact, Sanders' research showed that in the last two years, the department has issued only about 57 enforcement actions, and only a handful were based on consumer complaints.

This is particularly troubling because the only place consumers can go with complaints about mortgage issues is this agency. It seems the state's Consumer Protection Act -- a law that allows those who feel they have been wronged to bring their complaints to the state Attorney General's office directly -- excludes issues dealing with mortgage lenders.

The Banking Department's own Web site indicates just how little it can or will do in response to consumer complaints against any of the institutions it oversees.

The department will only deal with consumer complaints made in writing on its particular form and then it simply forwards a copy of that complaint to an officer of the financial institution named in it.

"We request that the financial institution provide a written response within 30 days," the statement on the Web site reads. "If a financial institution does not respond within 30 days, we send a reminder letter." But here's the kicker:

"Financial institutions generally comply within this time frame, but our laws do not require the institution to respond to a consumer complaint within a specific time," the department indicates.

So a complaint can languish in the bureaucracy while the consumer's home is foreclosed on, his car is repossessed or his life's savings are taken from him.

And even if the institution does respond, the Banking Department makes it quite clear that any kind of enforcement is the last thing on its mind.

"We act as an intermediary to help resolve problems between customers and financial institutions named in complaints," the Web site explains. "We attempt to assist with reconciliation, settlement or compromise."

While we are the "Live Free or Die" state and all of us must certainly check out who we deal with before entrusting them with our money, there is a role for the state to play in protecting its citizens who are at a low point in their financial lives from unscrupulous companies and individuals.

It is quite clear that the state Banking Department is not fulfilling that role and that state law or the department's own internal rules need to be changed so citizens who are most vulnerable to have some sort of recourse against those who take advantage of them.

ON THE WEB
New Hampshire Banking Department Web site: www.nh.gov/banking.

Shir Haberman is the managing editor for news at the Portsmouth Herald. He can be reached at shaberman@seacoastonline.com