What are the biggest complaints against mortgage firms?

What Mortgage Complaints are Made Most Often? You Might be Surprised

 

What Mortgage Complaints are Made Most Often?

 You Might be Surprised

 

     According to a recent report released regarding Mortgage Industry Consumer Complaints, what was the single complaint most often heard regarding the Mortgage Industry?

     A.  The Mortgage Application/Processing of a loan
     B.  Interest Rates and Fees charged on a loan
     C.  Underwriting requirements
     D.  Payment issues with their loan servicer
     E.  Loan Modifications

     I think you will be surprised by the answer ...  it's D.  

     62% of the total complaints on file with the Consumer Protection Bureau (CFPB) regarding the Mortgage Industry stem from this one portion of loan service.  That means that the largest number of complaints came from Homeowners after they had already successfully closed on their Mortgage. 

    The remaining percentage of complaints typically surrounded:

• Where to send Mortgage Payments 
• Escrow shortages or overages
• Loan Modification questions and requests
• Late Payments
• The difficulty of Mortgage Application
• Signing the Agreement

     The perception of current Mortgage Industry problems is typically quite different though. The media ... and our politicians ... continue to portray the entire Industry as one mired in the same issues found prior to the housing crisis.  The reality is quite different. 

     That is not to say that the Origination side of the Mortgage business is perfect, or that Underwriting is seemless or without flaws.  Problems still exist in those areas and they provide fuel for many more posts and discussions.

    But great strides have already been made to address the ills that existed ... and changes/new rules and regulations have been put into place that will prevent them (and others) from occurring again.  Even more changes are slated for the upcoming new year. 

     Fact is though, Mortgage Originators have to a great extent successfully made the changes demanded of them.  The proof of that is reflected in the number and types of complaints currently received by the Consumer Protection Bureau regarding Mortgage services.

     But consider this:  Loan Servicing (the term used for handling of Mortgage payments, escrow accounts, modifications, etc.) ... and the #1 complaint heard from consumers ... is handled primarily by the largest Banks.  This most likely means that loan servicing is not likely to change anytime soon, especially if insuring loans becomes less GSE's like Fannie Mae/Freddie Mac ... and more private money (Banks, corporations, insurance companies). 

      Why?  These large Banks have far more lobbying power and can influence decision-makers much more effectively than the smaller Mortgage Bank or Mortgage Broker Associations can. 

     As a result, the need to "change" the industry to eliminate of what is considered the "problems of the past" is still being placed largely on the Mortgage Origination side of the Industry.  But I ask ... 

     Is that really where the focus should be?  Does that truly serve the best interests of the Consumer or Home Buyer as they exist today? And does that really address the complaints and issues most Consumers currently have?
 
     As we near January 10th, 2014 and the implementation of the new QM Rules, only time will tell if any of the changes demanded make an impact or improve the actual Mortgage problems that surface most often today ... or if they just create another set of issues for Mortgage Originators and their clients to face ... 

   


    
     *  Hoping to Buy or Refinance a home within a Lincoln-Way Community, Will County, or elsewhere in Chicagoland?  Contact me.  I'll put my 36 years of Mortgage experience and expertise hard to work on your behalf.     I can be easily found at the following:
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