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The CFPB Takes Mortgage Complaints Seriously

A Realtor friend of mine recently asked me about the Consumer Financial Protection Bureau: “Do they really do anything when somebody submits a complaint about their mortgage company? Can I tell clients that it’s not a waste of time to complain to the CFPB?”

Here’s what I said: The CFPB puts out numbers and reports on its complaint resolution activities — the latest annual report came out March 31 — detailing complaint volume, the names of the companies that are the subjects of complaints and the current status of each case.

I have only one direct, personal experience with a complaint to the CFPB, so my frame of reference is limited. But the result was stunning.

A little over a year ago, the son of a 91-year-old widow living in Lake Havasu City, Ariz., contacted me in a panic. His mom was about to be foreclosed upon — the date for the auction was set just weeks away, her entire life was tied up emotionally in that house and she was deathly afraid of being evicted. Her son wasn’t sure “how long she’ll last” if the foreclosure took away her home, he told me.

“The whole thing is so unjust,” he said in a phone conversation. “There’s no reason why this should be happening.”
Years earlier, his father and mother had taken out an FHA-insured reverse mortgage. When they refinanced the original loan in 2007, the loan broker handling their application persuaded them that only the husband needed to sign the documents.

After all, the broker said, they were married and they shared everything. In fact, however, having the husband’s signature alone on the mortgage documents — he was older than her — would generate higher fees for the broker, but that was not disclosed.

Within two weeks, the CFPB case worker had brokered a deal whereby the original lender on the reverse mortgage agreed to repurchase the loan.”

When the husband died a few years later, the mortgage servicer contacted the widow to inform her that she now needed to buy the house and pay off the loan balance or face foreclosure.

The reason: Under controversial FHA rules for reverse mortgages, when only one spouse’s signature is on the loan documents, the other spouse’s death triggers a potential payoff event: Either the surviving spouse comes up with the necessary cash or the servicer can foreclose on behalf of the owner of the loan. AARP, the seniors lobby, has sued HUD over surviving spouse problems with reverse mortgages and is still fighting the agency in court.

Enter the CFPB. I suggested filing a complaint with the new agency, among other strategies, including contacting the Arizona attorney general’s office and the owner of the loan, Fannie Mae.

The son did just that, using the CFPB’s online 24/7 complaint window. He told me he didn’t expect much. After all, this was another federal bureaucracy, right?

What happened next blew him — and me — away.

Almost immediately, he was contacted by a CFPB case worker who asked for additional details on the mortgage documents, copies of communications with the servicer and the like. He got instructions on how to access a secure Web portal where he could find out what the mortgage company had to say about his complaint, and where he could file his own responses.

Long story short: Within two weeks, the CFPB case worker had brokered a deal whereby the original lender on the reverse mortgage — it happened to be Bank of America — agreed to repurchase the loan from Fannie Mae. Bank of America then instructed the servicer to cancel the foreclosure, leaving the widow in her home, where she continues to live today and just turned 93.

Clearly the CFPB can’t produce outcomes like this all the time, but I think it gives you an idea what’s possible for homeowners with grievances.

In its annual report for 2013, the bureau says that it has logged in 310,000 total consumer complaints since mid-2011, and that the volume is exploding — up 80 percent last year alone.

Nearly 2 out of 5 complaints (37 percent) come from homeowners. The total was 60,000 in 2013. Another 15 percent concern inaccuracies in credit reports of the type that often lead to loan rejections and higher interest rates and fees.

An astounding 85 percent of the mortgage complaints involve loan servicers, running the gamut from messed-up escrow accounts, botched transfers of accounts, payment amount disputes, short-sale foulups, loan modifications and foreclosures.

Eight percent involve issues with mortgage applications and 4 percent closings and real estate settlements.

What about performance? According to the CFPB, in 66 percent of all cases filed, consumers appear to be at least somewhat satisfied — they do not dispute the end result. In 23 percent of the cases, the consumer walked away unhappy about the response of the company. In 1 out of every 14 complaints, companies agreed to provide monetary relief or refunds. In another 1 out of every 9, they give nonmonetary relief — they fixed the problem that caused the complaint without actually handing over cash.

So if you take the CFPB’s data at face value, 2 out of 3 people who file complaints get some sort of satisfaction — they at least don’t go away unhappy. That doesn’t mean they’re ecstatic about the results. It doesn’t mean that their mortgage company folded and gave them everything they asked for.

But it does suggest that it may well be worth homeowners’ time to file a complaint if they think they have a good case. To do so, they can go to or phone or fax or mail in their complaints. What’s to lose? It’s free.

Realtors and their clients might find themselves surprised at the results. Just as I was.