Mortgage problems No. 1 complaint at federal consumer agency

Mortgage problems are the top source of complaints to the Consumer Financial Protection Bureau, according to a report released Tuesday by the U.S. PIRG Education Fund. The report also found that Bank of America was the most complained about company in 45 states and Washington, D.C. for mortgage problems.

“Before the CFPB was created, victims of mortgage errors like misapplied payments and incorrect late fees were at the mercy of the banks,” said Mike Litt, consumer program advocate for the U.S. PIRG Education Fund.

The bureau, which turns four next week, is also improving its consumer resources, Litt said. Last month it began publishing detailed consumer stories in its public complaint database.

The bureau began accepting complaints in July 2011 and now accepts complaints for 11 financial product categories. It began accepting complaints on mortgages in December 2011.

Here are some key findings from the report, “Mortgages and Mortgage Complaints: The CFPB’s Consumer Complaint Database Gets Real Results for Victims of Mortgage Problems.”

The bureau has published 138,086 complaints about mortgages, the most complaints received about any financial product from December 2011 until March 2015.

Mortgages remain the top source of complaints to the bureau even though annual mortgage complaint volumes declined slightly in 2014 and the volume of the bureau’s 10 other product categories continued to grow.

In early 2015, debt collection complaints became the No. 1 complaint published in the bureau’s database on a monthly basis. Mortgage complaints, however, remain at No. 2 on a monthly basis and are still the No. 1 complaint overall, making up 38 percent of all complaints.

Most of the mortgage complaints, 85 percent, fall into two issue categories: (1) Problems when consumers are unable to pay, such as collection, loan modification, and foreclosure, make up 55 percent of the total, and (2) problems making payments, such as loan servicing, payments, and escrow account, make up 30 percent. The other four issue categories total 15 percent.

Bank of America received the most complaints in 45 states and Washington, DC. Wells Fargo was complained about the most in five states.

Congress established the bureau as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. It was given authority to write and enforce regulations on Wall Street and other financial institutions.

On mortgage regulations, the bureau has taken enforcement actions against more than 40 companies, halting illegal activities and securing more than $2.9 billion in relief and refunds for mortgage consumers.

“When the CFPB ordered Ocwen, the largest nonbank mortgage servicer in the country, to provide $2 billion in relief to customers for misconduct like charging unauthorized fees and failing to apply payments towards mortgages, it sent a message to the whole industry to clean up its act,” said Litt.

In March 2015, the CFPB started allowing consumers to publicly sharing the details of their complaints in its database. The first 7,700 narratives were published on June 25.

“Imagine getting approved for a loan modification that you need to avoid a foreclosure, only to risk losing your home because you’ve been given less than two weeks to turn in paperwork instead of the four weeks you were originally told you would have,” he said.

That happened to a veteran from Virginia, who received relief after submitting his complaint to the bureau.

Litt said consumers need a strong bureau that reins in reckless mortgage companies who ignore the rules.

Copyright 2015, Rita R. Robison, Consumer Specialist