Mortgage borrowers by the hundreds are lining up to vent their anger and tell their tales of woe on a federally run consumer complaint website — and the banks and mortgage companies who are the targets of their criticisms are steamed about it.
Welcome to the roiling controversy over the Consumer Financial Protection Bureau’s consumer complaint hotline. Since 2012, the bureau has encouraged consumers to send in complaints when they encounter problems dealing with lenders, credit bureaus, credit-card companies, debt collectors and other financial players.
The bureau logs each complaint by category in a massive, publicly viewable database and gives the company that is the subject of a complaint time to respond via a nonpublic online portal connecting it with the consumer through a bureau intermediary. In the past three years, according to the bureau, it has received and worked on more than 627,000 complaints. They range from alleged harassment by debt-collection attorneys, to foreclosures, student-loan defaults and poor treatment of customers by loan servicers. Roughly 28 percent of all complaints filed to date have been about mortgage issues — the largest single category. What’s been missing, though, has been any real detail about the troubling circumstances that triggered the complaint in the first place — expressed in the customer’s own words.
Starting in late June, that all changed. The bureau began posting what it calls “narratives” that name the bank or company involved and go into sometimes excruciating detail. Allegations get pretty serious — charges of lending fraud, violations of federal regulations and illegal overcharges. Some are heart-felt, such as one from a Virginia home buyer whose closing was repeatedly delayed by the bank: “Who compensates us for the loss of income for the days taken off from work (to attend closings)? For the movers that have been scheduled? For the pre-move-in renovations that cannot now be done because the contractors are fully scheduled for the rest of the summer?” (To see the narratives, go here.)
The first batch of 7,700-plus narratives was posted June 25, including hundreds of mortgage complaints. The consumer’s name and address — other than state of residence — are redacted, as are all details the bureau or the consumer considers private. Lenders are not permitted to post their own narratives, but instead must use one of several stock responses, such as “company can’t verify or dispute the facts in the complaint” or “company believes it acted appropriately as authorized by contract or law.” Lenders can also decline to participate in the narratives process by saying “Company chooses not to provide a public response.”
One common thread running through the first batch of narratives is that mortgage customers get incensed when they contact the lender or loan servicer about a perceived problem and are then ignored or bounced around for extended periods in customer service hell — repeatedly directed to the wrong office or person, or sent to incompetent and unsympathetic staff. One Texas homeowner disputing an allegedly late payment said that when she finally got to a supervisor at the bank, that person “screamed at me.”
Disagreements over escrow accounts also are commonplace, such as the California borrower whose monthly escrow contribution allegedly was increased to $1,300 a month from $860 without explanation. Or the Connecticut owner whose escrow was allegedly overcharged by $300 a month because of a servicing company error. “I can understand a small increase due to insurance or taxes,” the owner wrote, “but because of an error somewhere I’m now unable to afford my mortgage.”
Lenders acknowledge that there are sometimes problems in handling customer disputes, but they bitterly resent the way the bureau is posting narratives. David Stevens, president and CEO of the Mortgage Bankers Association, told me the bureau’s approach is deeply flawed because it is one-sided: It uses “unsubstantiated and unverified” information that can be submitted by anyone, and the bureau does not “validate the authenticity of the complaint or the individuals making the complaint.”
But like it or not, the bureau’s publication of complaints apparently will be around for the foreseeable future. It’s also producing tangible benefits for at least some mortgage borrowers. In a video posted on the complaint site, Washington, D.C., homebuyer “Navid” — no last name was given — describes how his complaint to the CFPB got him a $12,750 refund check, and a formal letter of apology, from his lender in less than a week.