Latest CFPB Report Reveals Consumers’ Steady Focus on Mortgage Issues

Earlier this month, the Consumer Financial Protection Bureau (CFPB) issued its monthly complaint snapshot report, which highlights consumer complaints about the mortgage servicing industry. The CFPB publishes these reports on a monthly basis, providing information about complaint volume and listing complaints by industry and state. Through January 1, 2017, the CFPB reports that it handled approximately 1,080,700 complaints.

The most recent report highlights trends that have continued from prior reports. Through December 2016, debt collection comprises the highest number of complaints received through the CFPB online complaint portal. In December 2016, of the 23,000 complaints handled, 7,196 focused on debt collection. Credit reporting accounted for 3,827 complaints, while 3,762 complaints addressed the mortgage industry.

The February report delved further into mortgage-related complaints. Since July 2011, the CFPB handled over 260,000 mortgage complaints, which makes mortgages the second most-complained about product and represents nearly a quarter of all complaints. Digging deeper into the data, the most commonly reported issues by consumers by percentage are:

  • Problems when consumers are unable to pay (loan modifications, collections, foreclosure) at 49%
  • Making payments (loan servicing, payments, escrow accounts) at 33%
  • Applying for loans at 9%
  • Settlement process and costs at 5%
  • Credit offers and underwriting at 3%

The CFPB also reports that it collects “unstructured data” from consumers and companies during the complaint process, which includes information found in the consumer’s complaint narrative, documents provided by the companies in responses, and consumer documentation. Based on this unstructured data, the CFPB found that consumers’ complaints about payment issues included servicers failing to timely apply their payments, issues with bill pay services, discrepancies with escrow accounts, and failure to provide explanations of escrow shortages. Force-placed insurance remained an issue, with consumers reporting that servicers fail to acknowledge their proof of insurance. Other consumers reported inadequate protection when servicers failed to timely pay insurance premiums from escrow accounts. The CFPB previously addressed force-placed insurance requirements in 2013 through its Mortgage Servicing Rules under the Real Estate Settlement Procedures Act. Numerous issues remained, however, resulting in the CFPB issuing final rules in August 2016 to address force-placed insurance notifications.

The CFPB monthly snapshot reports provide a unique tool to understand the focus of consumer complaints. Using the information can help your company structure procedures to better enhance consumer experience. Understanding that issues related to payment and escrow are in the forefront of consumers’ minds, particular attention should be paid to the ease of payment processes, escrow analysis, and communications surrounding insurance coverage. A review of internal complaint logs for such issues will assist a company in evaluating its programs, policies and procedures.

Ulmer’s Consumer & Commercial Litigation Practice provides litigation and compliance services to a national base of financial services industry clients. Attorneys in the group have decades of experience litigating and resolving a broad range of consumer financial issues. Additionally, attorneys in the group provide in-depth financial compliance counseling for financial services clients. From drafting strong compliance policies and procedures to developing training programs and compliance management systems, Ulmer’s consumer finance attorneys leverage extensive litigation experience to engineer compliance programs that reduce risk and help avoid costly litigation.