Got a beef with your mortgage lender? Is your bank unresponsive when you complain that your escrow account is fouled up and making your monthly payments needlessly high?
Did your loan officer bait-and-switch you into a more costly home loan than you were originally promised? Or worse yet: Did your home loan servicer ignore you when you told him you’ve had an unexpected drop in income and needed a modification to avoid missing payments?
If any of these situations sound familiar, here’s a heads-up about the newest and least-publicized source of federal help: the Consumer Financial Protection Bureau’s home mortgage complaint and dispute resolution hotline. Never heard of it? That’s not surprising since it only went live Dec. 1 and the CFPB hasn’t said much about it, preferring to ease into the potential snake pit of mortgage issues that American consumers have with their lenders rather than get overwhelmed.
The complaint hotline is accessible online at the CFPB’s website, by toll-free phone as well as by regular mail and fax.
The bureau was created by last year’s Dodd-Frank financial reform legislation and is supposed to look out for your interests in banking, financial products, home loans and all other forms of consumer credit. Its mortgage complaint service is an extension of the agency’s existing hotline for credit card-related disputes and inquiries, which began July 21.
So far, according to the bureau, the card hotline has handled 5,074 complaints. Of this total, it referred 84 percent directly to the credit card issuers — mainly big banks — for resolution. Some complaints came with incomplete information or were referred to other agencies for action. Approximately 74 percent of all the complaints were subsequently reported back from banks as resolved, and 71 percent of total resolutions were not disputed by the consumers who lodged the original complaints. Just under 13 percent of all credit card complainants reported that they were not satisfied with the card issuer’s actions.
The credit card complaint service is likely to provide a template for the agency’s approach to mortgage problems, which are expected to be more voluminous. When a borrower submits a formal complaint to the bureau, complete with account numbers and other key identifiers, the information will be sent immediately to the lender or mortgage servicer named in the complaint using a secure web portal.
The lender must then review the information, contact the customer if needed, and determine what action to take to resolve the matter. Next, the lender is supposed to report its action — if any — to the bureau, which sends it on to the borrower for review. Throughout the process, according to the CFPB, borrowers “can log onto the (agency’s) secure ‘consumer portal’ or call the toll-free number to receive updates, provide additional information, and review responses” from the lender.
If the dispute focuses on what is primarily a matter of state regulation or is beyond the purview of the CFPB, the dispute may be referred to other agencies. Similarly, if the dispute points to fraud or identity theft, the bureau is likely to refer it to either a federal or a state law enforcement authority. For the time being, the CFPB is referring all complaints involving small banks or their subsidiaries that have less than $10 billion in assets to other agencies. In the mortgage field, however, the vast majority of loan originations and servicing is controlled by the top 10 largest banks or their subsidiaries, which means that a high percentage of the complaints received will likely be handled by the CFPB.
How is this going to work in practice? Though consumer groups are optimistic, and the CFPB says it’s staffed up and ready to go, some mortgage industry leaders worry that the agency could be taking on more than it can realistically handle, and raising borrower expectations that can’t be met.
David Stevens, president and CEO of the Mortgage Bankers Association, said in an interview that while he has found the CFPB to be “fairly thoughtful” in its approach to lending and disclosure issues to date, he is “concerned that they are moving too quickly too soon.” If they are not properly equipped to handle large volumes of emails and calls, the service could be “an investigatory black hole” where complaints are filed but not addressed quickly or adequately, and it could be “a net negative” for borrowers who have genuine problems, he said.
Since the agency is expected to report on the initial months’ results sometime early in 2012, Stevens and consumers should have answers fairly soon. Meanwhile, if you’ve got a legitimate complaint, give the hotline a shot.
Kenneth Harney is a syndicated real estate columnist.