(8/9/2012) - A year after the Consumer Financial Protection Bureau (CFPB)
set up shop to lookout for financial consumers, consumers appear to be just
getting started complaining about mortgages.
They complain when they can't make their mortgages and they complain when
they can make their payments. They complain about loan modifications and
refinancing and they complain about loan servicing, escrow accounts,
mortgage originators and mortgage brokers.
It would be easier to discuss mortgage issues that don't lead them to
complain, but complain they should.
A home loan is the largest financial stake many consumers have in their
future and businesses that serve them ought to get it right - regulatory
overhauls of the mortgage and other finance industries demand as much.
Mortgage complaints (43 percent) topped the list of 55,300 consumer
complaints the Consumer Financial Protection Bureau (CFPB) collected over
the past year, followed by complaints about credit cards (34
percent), bank accounts and related services (15 percent), student loans (4
percent) and consumer loans (2 percent). Two percent of the complaints came
from "other" financial services, according to the "Second Semi-Annual Report of the Consumer Financial
Protection Bureau."
Mortgage muddle
Empowered by the Dodd-Frank Wall Street Reform and Consumer Protection
Act (Dodd-Frank Act) and officially opened a year ago, CFPB collected the tens of
thousands of complaints between July 21, 2011 and June 30, 2012, as part
of it's ongoing challenge to rein in abusive practices in the consumer
finance industry.
The report says complaints indicates problems most often arise when
consumers are unable to make a payment and seek loan modifications or face
foreclosure.
"The complaints indicate that consumer confusion persists around the
process and requirements for obtaining loan modifications and refinancing,
especially regarding document submission timeframes, payment trial periods,
allocation of payments, treatment of income in eligibility calculations, and
credit bureau reporting during the evaluation
period," the report says.
Consumers are particularly befuddled by the request to quickly submit a
ream of loan modification documents that remain valid for a short period of
time, only to be asked to submit the documents again - sometimes more than
once - after the servicer or lender drops the ball and loses documents or
drags out the process and then asks the borrower for another round of
documents.
"This seems to contribute to consumer fatigue and frustration with these
processes. Other common types of mortgage complaints address issues related
to making payments, such as issues related to loan servicing, payments, or
escrow accounts," the report says.
For example, consumers wonder if making timely trial modification
payments will guarantee them and permanent modification. They also struggle
when applying for a loan and dealing with the originator or the mortgage broker, among the most common complaints.
Mortgage consumers who share stories with the CFPB expressed additional
challenges and concerns related to obtaining mortgages, including:
Mortgage horror stories
• Inability to qualify for a mortgage loan modification, or if they
qualify they are unable to obtain a viable modification that sufficiently
lowers their payments.
• Inability to refinance their loans even though they report having
high credit scores.
• Lack of clarity about credit scoring and the scores that creditors
use versus the scores consumers are given by credit bureaus, making it
difficult for consumers to understand this key measure of their
creditworthiness.
Consumer complaints are part of the direct public feedback approach CFPB
takes to understand challenges consumers face and to address those
challenges in the form of new regulations, enforcement efforts and programs
that improve the consumer experience.
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