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CFPB Provides Details on Mortgage Complaints Received

Nearly 20,000 complaints received during past 11 months

June 19, 2012

By staff

Nearly 20,000 mortgage complaints have been submitted by borrowers and loan applicants to the Consumer Financial Protection Bureau during the last six months. Most common are complaints from delinquent borrowers.

The consumer response operations were launched at the CFPB in July 2011, and it began handling mortgage complaints on Dec. 1, 2011. Complaints are submitted online and offline by telephone, postal mail, e-mail and fax.

All complaints are screened based on whether they fall within the CFPB's primary enforcement authority, if they are complete and whether they are duplicates of prior submissions by the same consumers. Complaints are forwarded on to the subject companies, which contact the customers as needed then report back to the regulator and consumers about the actions to be taken. Disputed responses are investigated.

From July 21, 2011, through June 1 of this year, the CFPB says it received around 45,630 complaints -- including 19,250 mortgage complaints.

Companies have so far responded to 13,930 of the mortgage complaints, while roughly 7 percent were referred to other regulators, 6 percent are pending and 2 percent were incomplete.

Nearly a quarter of the company responses sent to consumers have been disputed.

In the 600 complaints where companies reported relief, the median payout was approximately $410.

The most common mortgage complaints are from distressed borrowers seeking to find foreclosure alternatives. This includes complaints about loan modifications, collections and foreclosures.

"For example, 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 stated.

Borrowers become frustrated when they have to re-submit documents -- sometimes more than once -- because the modification process takes so long. They also want to know whether they will qualify for the modification if they make the trial payments on time.

Other common complaints tied mortgage servicing include making payments and escrow accounts.

On the origination side, complaints are commonly made about loan applications, loan originators and mortgage brokers.

The CFPB highlighted the case of a 77-year-old Army veteran who disputed that he still owed a balance on his mortgage. The complaint process led to a determination by his servicer that his loan was actually paid in full in 2007 -- before the current servicer took over the loan. The CFPB's involvement resulted in a $30,000 refund check to the borrower.

Another complaint from a Virginia attorney who reportedly received the runaround on his modification resulted in a $12,000 principal reduction and $8,000 cash payment -- though he "is still waiting for the paperwork to be signed

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