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Financial Regulation News | Mortgage Regulations
Bank and mortgage regulators, regulations and regulatory actions. Coverage of regulatory legislation and testimony.

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CFPB Issues Mortgage Report Card

Complaints discussed in annual report

Sept. 20, 2012

By Mortgage Daily staff


A majority of complaints against financial services companies are related to real estate finance, according to a new government report. Many of the mortgage complaints were filed by distressed borrowers. The chief of the federal regulator that oversees financial services providers discussed the findings before Congress.

From July 21, 2011, through June 30, 2012, the Consumer Financial Protection Bureau fielded 55,300 complaints about consumer financial products.

Forty-three percent of all the regulator's complaints were about mortgage products -- a bigger share than any other product category.

The findings were included in the Semi-Annual Report of the Consumer Financial Protection Bureau. The report was discussed Wednesday by CFPB Director Richard Cordray before the House Committee on Financial Services.

A majority -- 54 percent -- of the 23,800 mortgage complaints filed were about problems that happened when the borrowers were unable to pay. These included issues related to the loan modification process -- which is particularly frustrating for consumers since the documents they submit often expire before a servicer responds to a modification application.

Foreclosures are also the subject of consumer filings.

"Consumers who have filed these complaints generally appear to be driven
by a desire to seek agreement with their companies on foreclosure alternatives," the report stated.

A quarter of the home-loan complaints were about making payments. Servicer administration issues related to escrow accounts and payment posting are among issues raised in complaints.

Eight percent of mortgage complaints were about applying for the loan, the CFPB reported.
Complaints were made about mortgage loan applications, loan originators and mortgage brokers.

sketch of Richard Cordray
sketch of Richard Cordray
by Stephen McConnell

The report indicated that 4 percent of mortgage category complaints related to signing an agreement, and 2 percent were about receiving a credit offer.

The remaining 7 percent were categorized as "other."

With the vast majority of complaints -- two-thirds -- lenders said that the consumer complaints were closed with an explanation.

Another 16 percent were still under review by the companies, 9 percent were closed with monetary relief and 5 percent were closed with non-monetary relief. In addition, companies provided an administrative response for 4 percent of the complaints, and just 1 percent were closed without any explanation from the lender.

In 42 percent of the cases, the consumer did not dispute the company's response, while the company's response was disputed 19 percent of the time. Consumers have yet to review 39 percent of the responses.

"Through our regulatory tools, we have proposed smarter rules that will help fix the broken mortgage market with common-sense solutions," Cordray said in prepared testimony. "We are writing rules that simplify mortgage disclosure forms and rules that make sure consumers do not receive mortgages that they do not understand or cannot afford. Our rules will also bring greater transparency and accountability to mortgage servicing.

"And our careful process is that before we propose a rule, a team of attorneys, economists and market experts evaluates its potential impacts, burdens and benefits for consumers, providers and the market."

The bureau, which had just 58 employees as of Dec. 31, 2010, has seen its staffing grow to 889 as of June 30, 2012. Women account for 49 percent of CFPB employees, and minorities make up a third of headcount.


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