The CFPB issued its monthly report of consumer complaints this week for the month of March 2016. The report is a high level snapshot of trends in consumer complaints and provides a summary of the volume of complaints by product category, by company and by state. Additionally, each month it highlights a product type and a geographic area. This month’s report highlights mortgage product complaints and provides helpful insight to mortgage lenders and servicers regarding complaints which appear to be of import to the CFPB.
Each month, the Report breaks down complaint volume by product looking at a three month average and comparing the same to 2015. For the tenth consecutive month, the Report indicates that the three products yielding the highest volume of complaints were debt collection, mortgage and credit reporting. The Report reflects that mortgage complaints showed a month over month percentage increase of 13% in March, 2016. In its press release, Cordray states that “[t]oday’s report shows that consumers are still running into too many dead ends and obstacles in resolving issues with their mortgage servicer. The Bureau will continue to press to make sure that people can get the right information and the timely help they need.”
Mortgage lenders and servicers should pay close attention to this month’s report as it highlights what are likely to be points of emphasis with regulators in upcoming examinations – particularly, servicing transitions and effective loss mitigation programs.
- Over half of the consumers submitting mortgage complaints in the past month complain about problems that occur when they are unable to make their payments, particularly with loan modifications and foreclosures. Consumers complained about difficulties in the loss mitigation processes and particularly, that the loan mitigation review process is prolonged by repeated requests to submit the same documentation and a lack of responsiveness from their single point of contact.
- Consumers also complained they received conflicting and confusing foreclosure notifications while undergoing a loss mitigation assistance review. Consumers also complained about problems they incurred during the transition from one servicer to another including not being properly information of the transfer and payments made to either the prior or current servicer around the time of transfer not being properly credited. Consumers also noted that issues often arose with their escrow accounts around the time of transfer.
- A number of consumers also complained about payments not being accepted or not being applied as intended, particularly during loss mitigation.
While all of these complaints have to be viewed from an objective stand point, they do suggest that mortgage lenders and servicers need to focus on their compliance management systems and processes for upcoming examinations, particularly with respect to loss mitigation and mortgage servicing transitions.