Mortgage

CFPB data shows Americans were terrified about their finances as pandemic raged

Bureau received record-high number of consumer complaints in March, April

Despite the efforts of the government over the last few months, there are still a great number of people confused about their financial relief options in the wake of the pandemic.

Things have likely gotten at least a little better in the last few weeks as Fannie Mae, Freddie Mac, and the government itself have taken a more proactive stance on addressing issues involving people’s mortgages and other financial services.

But, new data from the Consumer Financial Protection Bureau shows just how scared and absolutely befuddled people were about their finances as the pandemic raged across the U.S.

The CFPB revealed Friday that it received the highest number of complaints it’s ever received in both March and April.

In March, the bureau received approximately 36,700 complaints from consumers about financial services providers. In April, the bureau received 42,500 complaints. Both of those were higher than any single month in the history of the CFPB.

For comparison, the bureau received an average of 29,000 complaints per month in 2019.

According to the bureau, complaints rose in nearly all financial sectors as the pandemic spread, with complaints about debt collection, payday loans and student loans actually decreasing during the crisis.

On the other hand, complaints about credit reporting rose by 29%, complaints about title loans rose by 20%, complaints about credit cards rose by 15%, and complaints about mortgages rose by 10%.

But all of those trailed complaints about prepaid cards, which rose by 84% during the pandemic.

According to the bureau, one of the reasons for the extreme increase in complaints about prepaid cards is that many people receive their unemployment benefits via prepaid card, which makes sense given how unemployment skyrocketed over the last few months.

The bureau stated that many people complained about the wait times to speak to someone at the company in question. “Some consumers are reporting hold times of several hours,” the CFPB said in its report. “For those who are pursuing payment options, some described no methods other than phone to access potential options.”

One of the chief complaints in the mortgage category had to do with forbearance and its various rules and requirements.

“Consumers raised concerns whether they will have to pay lump sum payments at the completion of forbearance periods,” the CFPB said.

“Many of these consumers reported that companies offering forbearance periods informed them that there would be a balloon payment equal to the entire amount placed in forbearance,” the CFPB continued. “Some consumers report that the 90-day forbearance period offered is insufficient and they will not be in a position to submit a lump sum payment in 90 days.”

Given the complaints, it’s possible that those customers contacted their servicer before the CARES Act provisions (which grant a forbearance of as many as 12 months on government-backed loans) were put into place.

But the complaints highlight how a lack of communication and standard procedures across the mortgage industry led to a sizable number of borrowers being provided with incorrect information about forbearance.

Whether that’s continuing to happen or not is a question that will soon be answered.

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