CFPB turns microscope on mortgage industry practices

Latest complaint database snapshot details consumer issues with industry

After being relatively spared in the first two snapshot reports of the Consumer Financial Protection Bureau’s consumer complaint database, the mortgage industry is the focus of the CFPB’s third snapshot report, and the results aren’t terribly positive.

According to the CFPB’s report, consumers have complained more about the mortgage industry than any other financial product.

The CFPB report shows that as of Sept. 1, consumers have filed 192,499 complaints about mortgage-related companies, making up more than 27% of the 702,892 total complaints the CFPB has received.

Debt collection ranks second, with 178,906 complaints, while credit reporting ranks third with 111,097 complaints.

According to the CFPB report, some of the most frequent consumer complaints about mortgages are problems with preventing foreclosure, a lack of information being provided to them when loans are transferred, and trouble making payments.

“Despite strong protections that have been put in place to protect homeowners, this month’s complaint report shows consumers are still having problems when dealing with their mortgages,” said CFPB Director Richard Cordray. “The Bureau will continue to work to make sure that consumers are being treated fairly on their mortgage issues.”

More than 80% of the consumer complaints receive by the CFPB deal with mortgage servicing, placing servicers directly the CFPB’s crosshairs.

The CFPB report showed that more than 50% of mortgage complaints are about problems consumers face when they are unable to make payments.

Consumers complain of delays and a lack of information when applying for a loan modification. In particular, the CFPB report showed that consumers complain about delays and ambiguity in the review of their modification applications.

Other consumers complained that they were not considered for all available loss mitigation options, were incorrectly denied a modification, or that the terms of the approved modification were unfavorable.

Additionally, consumers complain that servicers often move forward with foreclosure proceedings while the consumer’s modification application is still under review. 

Consumers also reported experiencing “confusion and frustration” about where to make payments when loans are transferred. When the loan transfers occur, consumers complain that payments often increase unexpectedly. Consumers also say that they do not feel properly informed about their loans being transferred in the first place.

According to the CFPB report, 30% of the mortgage complaints are about consumers trying to make payments. The CFPB report showed that consumers complain about companies not accepting payments less than the full balance owed, or having payments misapplied once they are received. Consumers also claim that companies did not apply payments in the way the consumer instructed.

Additionally, consumers consistently describe trouble communicating with their servicer. Complaints where consumers say that they sent documents to their servicer but companies report never having received them are common.

Consumers say that attempts to follow up on these issues typically result in the company requesting that the consumer re-send the documents or forms in question. This is common in both mortgage origination complaints as well as throughout the loss mitigation and foreclosure processes.

Only 8% of the consumer complaints about mortgages deal with applying for a loan, while 4% deal with signing the mortgage, and 2% are about receiving a credit offer.

The CFPB report also broke down the mortgage complaints it receives by state.

According to the CFPB report, Nebraska (50%), Rhode Island (47%), and Alabama (46%) experienced the greatest percentage increase in mortgage complaints from June – August 2014 to June – August 2015.

West Virginia (-54%), Wyoming (-38%), and North Dakota (-33%) experienced the greatest percentage decrease in mortgage complaints from June – August 2014 to June – August 2015.

Of the five most populated states, Texas (20%) experienced the greatest percentage increase and Florida (-2%) experienced greatest percentage decrease in mortgage complaints from June – August 2014 to June – August 2015.

The CFPB report showed that Wells Fargo (WFC), Bank of America (BAC), and Ocwen (OCN) were the three companies about which the CFPB has received the most mortgage-related complaints. Between April and June 2015, the three companies averaged around 430 complaints per month.

Click here to read the entire CFPB report.

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