CFPB Monthly Report Spotlights Mortgage Products

The CFPB has issued its monthly complaint report and is shining its spotlight on mortgage products.  The Monthly Complaint Report provides a high level snap shot of trends in consumer complaints, using a three month rolling average of complaints.  Each month, the report focuses on a category of consumer financial products.  Here are the highlights of the most recent report:

 IN GENERAL

·       Student loans showed the greatest increase in complaints comparing October -December 2015 with October-December 2016, showing a 109% increase.  In February 2016, the CFPB updated its student loan intake form to accept complaints about federal student loan servicing.  The CFPB attributes a portion of this increase to the increased scope of complaints accepted.

·       Complaints about prepaid products showed the greatest decrease in complaint volume comparing October-December 2015 with October-December 2016, showing a 59% decrease in complaint volume.

·       Debt collection, credit reporting and mortgage remain the most complained about products for December 2016.  Together, the three complaint categorizes comprise 65% of all complaints submitted.  Of note, both credit reporting and mortgage complaints were down a bit, each showed a 5% decrease in complaints from the prior month.  Meanwhile, debt collection complaints increased 7% over the prior month. 

PRODUCT SPOTLIGHT: MORTGAGE

·       49% of the complaints submitted regarding mortgage products concerned problems when consumers were unable to pay. This category includes loan modification, collection and foreclosure issues.  The Report notes that within this category, consumers complained about their efforts to obtain loss mitigation and specifically, that servicers were slow to respond, made repeated requests for documents that had already been submitted and provided denial reasons that were ambiguous.

·       33% of the complaints submitted concerned payment issues.  Consumers complained their mortgage servicers “lost their timely payments” and reported the accounts as delinquent to consumer reporting agencies.  Consumers also complained about bill pay services not correctly crediting payments.

·       The report also indicates that consumers reported issues involving escrow accounts.  Two issues were identified specifically:  the handling of shortages in the accounts and the use of escrow for paying insurance premiums.  As to the former, consumers complained that funds paid towards escrow shortages were not properly applied leading to increased monthly payments.  Consumers also complained of no explanations being provided for escrow shortages.  As to the latter, consumers reported servicers failing to submit timely payments to insurers.

·       Finally, the report indicates consumers reported mortgage loan processing delays that resulted in expiration of rate lock agreements.  Consumers attributed the delays to inaccurate documents requirements, lack of communication from lenders and inexperienced loan officers.