In an unusually strident move to cut costs, a top New York thrift is barring customers from making monthly mortgage payments in branches.
Green Point Bank is requiring borrowers to make their payments either by mail or through automatic deductions from savings or checking accounts.
The policy, which has startled observers, flies in the face of thrift industry tradition. For decades, thrifts have prided themselves on delivering highly personal service to homeowners. Indeed, no major mortgage lender is known to have adopted a similar measure.
"That's exactly the reverse of what we do," said R. Frederick Taylor, president of the mortgage arm of Huntington Bancshares. "We like customers to come into our branches to conduct all types of transactions."
Still, some observers say the practice may well spread, as lenders across the country grapple with ever narrower profit margins.
"We're very motivated from a cost perspective and a service perspective" said Bernadette Arias, an executive vice president at the $13.6 billion- asset Green Point.
She said about 25,000 of the thrift's 75,000 mortgage customers made payments each month in branches, and that the transactions cost $2 to $3 each to process. Mailed payments, by contrast, cost the company about 45 cents per transaction, Ms. Arias said.
What's more, she said, the policy frees up tellers to help customers more quickly on other transactions. This is especially true between the 11th and the 15th of each month, when many mortgage customers used to pay in person at branches to avoid late fees, Ms. Arias said.
Green Point, one of the biggest mortgage lenders in the Northeast, began to test the ban earlier this year and now has it in place at all 74 branches.
"I haven't run across anyone who is doing this with their own mortgage loans," said Keith Gumbinger, vice president at HSH Associates, a Butler, N.J., mortgage research firm. "It seems like that would be a good way to alienate customers."
Stephen Brobeck, executive director of the Consumer Federation of America, added: "To retroactively limit the method of payment can create both consumer inconvenience and irritation.
"We would hope they would restore the policy" of allowing customers to pay in branches, he said.
The change did meet resistance from some borrowers, Ms. Arias said. But the number of complaints was small enough to be handled "on a case-by-case basis."
Some observers called the Green Point policy a sign of the times.
"There has been a long tradition, especially among thrifts, for people to be able to come in and make mortgage payments in person," said Edward Furash, chairman of Furash & Co., Washington, D.C.. "It's another of the hallowed traditions that the economies of running a bank no longer make feasible."
The ability to pay in person may make a difference to customers choosing a mortgage lender, said Les Dinkin, managing principal at NBW Consulting Group, Westport, Conn.
But some customers won't care at all, Mr. Dinkin said. "If the only relationship is a mortgage, it won't be a big deal."
