What Mortgage Lenders and Servicers Should Know: CFPB Issues Monthly Complaint Report

The CFPB issued its Monthly Complaint Report today. 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 2014.  In its third month, the Report continues to indicate that the three products yielding the highest volume of complaints were debt collection, mortgage and credit reporting.  It should come as no surprise then that in its first three monthly reports, debt collection, credit reporting and mortgage have been the CFPB’s featured product spot light.  

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, delays with review of their loan modification applications, frequent changes in their point of contact, and servicers proceeding forward with foreclosure while modification applications remain under review;
• Consumers also complained about problems they incurred during the transition from one servicer to another including payments increasing unexpectedly, unexplained fees charged by the prior servicer, and issues with the successor servicer honoring modifications made by prior servicers;
• Misapplication of payments was also a common complaint.  Consumer complained about payments simply being misapplied, as well as issues with the timely disbursement of escrow amounts for taxes and insurance premiums;
• Consumers also expressed frustration with the communications with their servicer.  The Report notes that consumers were frustrated with having to resubmit paper work in the loan origination, modification and foreclosure stages; and
• Consumers also complained about lengthy approval processes for loans.

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 the implementation of TRID and the continuing emphasis on Regulation X’s mortgage servicing rules.