house on wheelsValued at more than $10 trillion, the U.S. mortgage market is enormous. And it has garnered its fair share of consumer complaints, logging more than 200,000 since the CFPB launched its Consumer Complaint Database in 2011. That makes it one of the most complained about topics, second only to debt collection. More than one in four complaints the CFPB receives have to do with mortgages.
Let’s take a look at the top mortgage complaints.

Squeaky Wheel #1: Problems arise when consumers are unable to pay.

Well, that makes sense. Consumers who are unable to pay are stressed out about their mortgage, and are thus prone to complaining about it. Right? 
Maybe. But consider this: more than half of all mortgage complaints have to do with inability to repay the loan. You’ll notice that most of these particular complaints stem from issues originating with the financial institution, not necessarily the consumer. The main complaints consumers have on this topic include the following.

  • Being required to fill out the same documentation over and over again. This repetition and lack of efficiency prolongs the loss mitigation review process and frustrates already-stressed consumers.
  • A lack of responsiveness from their single point of contact. It’s true that the staff member in charge of a particular account likely has a large workload, and is concerned with many consumers in difficult circumstances. But to the consumer, their troubled mortgage is often their overriding concern. When they have a hard time getting a response from their single point of contact, they are left feeling even more frustrated and stressed.
  • Confusion surrounding foreclosure notice discrepancies. Consumers complained that they receive conflicting foreclosure notifications while undergoing loss-mitigation assistance review. The conflicting notifications are not only confusing, but they also complicate and drag out the resolution process.
  • Problems with modification applications. Some individuals complained about the denial of their modification applications, while others stated that the terms of the modification offered to them were unaffordable. A modification should be a reasonable resolution, not an additional source of problems.

As you can see, a volatile mix of conditions make this situation prone to complaints.

Squeaky Wheel #2: Consumers are confused about loan transfers.

Consumers become frustrated when they are not properly informed about their loan being transferred to another servicer. Especially if they are also not informed when payments they made around the time of the transfer don’t get applied to their account. Consumers stated that issues involving their escrow accounts often surfaced after the transfer, and there was no clear explanation given for the resulting increase in their monthly payment.
Loan transfers that happen during the process of loss-mitigation review are extra vulnerable, with consumers frequently complaining that important documentation was not provided to their new servicer.
To avoid giving your consumers these headaches, make sure to

  • properly inform consumers when transferring the loan to another servicer;
  • properly inform consumers when a transfer causes a payment to not be applied to their account;
  • deal with escrow account issues before the transfer;
  • give clear explanations for any increase to a consumer’s loan payment; and
  • ensure all relevant documentation gets included as part of the loan transfer.

Squeaky Wheel #3: Servicers could improve their communication skills.

Consumers mentioned that their attempts to communicate with their servicers were often met with difficulty. That difficulty then resulted in confusing and contradictory material. Individuals who wanted to find out their reinstatement amounts, charges and fees, or interest rate increases, reported receiving ambiguous or wrong information.
Not surprisingly, consumers described this as frustrating and stated it led to delays in obtaining resolutions.

Mortgage Regulation Preparedness

When it comes to regulatory scrutiny, you can be sure that the squeaky wheel will get the grease. To stay ahead of regulatory agencies, take a look at your mortgage servicing operations and see how they measure up. Pay special attention to the procedures surrounding individuals who are unable to pay their loans, processes regarding loan transfers, and servicer communication skills.
Remember, prevention is the best problem-resolution strategy!
To read the CFPB’s report and examine the complaints in more detail, see their April 2016 Monthly Complaint Report.