Monday, July 8, 2013

How Bank Mizrahi mislaid my mortgage money

I just read a funny story in the Financial Times about a man who tried paying in a fake check sent to him by a charity and was amazed to find that the money cleared:

Well this reminded me of how my bank nearly lost my mortgage money in 2008. I took out a 350,000 Shekel mortgage which at current prices is 60,000 pounds or about 95,000 dollars (the same amount the man had in his fake check).
The contract I had with the seller had the money enter his account in two installments, the first installment 100,000 shekels was paid in fairly early and the second, for 250,000 shekels was due to be the last payment on the flat.  The seller's lawyer faxed the bank name (" Bank HaPoalim" meaning The Workers' Bank), account number and branch to my bank ("Mizrahi" meaning Eastern) and they were supposed to pay the money in on a certain date.  Except the money never arrived. The bank insisted that they had paid it in, so we did the obvious thing and compared the account details. It emerged that my bank had misread the branch number and paid it in to the wrong branch. So my bank contacted Bank Hapoalim and  they investigated and it turned out there was someone with the same account number in the other branch and that the money had gone into their account!
At this point stress levels started to rise. 250,000 shekels, ostensibly my money, had gone into the account of an unknown third party.  The bank clerk blamed the seller's lawyer arguing that his writing was unclear. The lawyer blamed the clerk for not checking and said his writing was clear. I could see my appartment purchase going up in smoke and being stuck in the courts for years.
I paid a visit to Bank Mizrahi, to try and keep the pressure on them to do something. The clerk told me he was the one who entered the details, and that the matter was now making its way up the bank's hierarchy and had reached the hands of a "very senior regional manager" (as he put it). I had a mental image of the bank as a vast pyramid of (mostly) men with my mortgage issue slowly being handed up the pyramid and causing amusement somewhere higher up the pyramid's chain.  Apparenly the regional manager had called Bank Hapoalim's regional manager and had been told that they could not legally remove money from someone's account without their permission. The lucky owner of the account containing my 250,000 shekels was in the USA, presumably spending his new found winnings, and Bank HaPoalim would do their best to trace him, however, as was apparent from the discussion, Bank HaPoalim didn't consider it to be their problem.
I managed to stay calm for a week; I was fairly confident that it if it went to court I would get a good hearing but I was very worried. After a week, the bank called to say that HaPoalim had located the account owner and that he had agreed to let the bank remove the money and so my money made its way to the correct destination.


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