Roughly nine years after the start of the U.S. housing crisis, complaints about mortgage companies top the list of grievances North Carolina consumers are filing with a federal regulator.
Nationwide, problems with mortgage lenders and servicers have been the No. 1 type of customer complaint against banks and other lenders reported to the Consumer Financial Protection Bureau since the regulator began collecting them in 2011. So far this year, North Carolina consumers have complained about mortgage issues more than any other problem.
The CFPB, created in the aftermath of the financial crisis, publishes on its website consumer complaints about a wide variety of products and services, from credit cards and checking accounts to payday loans and debt collection.
This summer, despite objections from banks, it began publishing detailed descriptions – in borrowers’ own words – about their complaints, providing an additional window into their frustrations with lenders.
In those narratives, scrubbed by the CFPB of borrowers’ names, consumers complain about a variety of issues: Companies losing paperwork for mortgage modifications. Mortgage payments being incorrectly recorded. Mortgage servicers agreeing to modify a mortgage even as they move forward with foreclosure.
Here’s a sampling of what North Carolina mortgage borrowers have complained about in their narratives:
▪ In June, a customer accused Wells Fargo of erroneously sending mortgage payments to the company that originated the mortgage, instead of to the correct department at Wells Fargo. The customer claimed the error resulted in blemishes on the customer’s credit report.
Wells Fargo spokesman Josh Dunn said the San Francisco-based lender values customer feedback, takes it seriously and works with each customer to try to find solutions that meet the customer’s needs and individual circumstances.
▪ In May, a consumer said Bank of America did not process a request for a short sale quickly enough, resulting in the buyer walking away from the deal. In a short sale, a home is sold for less than what a borrower still owes on the mortgage as a way to avoid foreclosure.
Bank of America spokesman Dan Frahm said that to protect customer privacy, the bank does not comment on specific clients. He said satisfactory resolution of complaints is the company’s priority and that the lender is making it easier for customers to bank with it and is intensely focused on further improvement.
▪ Also in May, a North Carolina borrower claimed BB&T Corp. “improperly” denied repeated requests for a modification without “providing any tangible evidence or explanation as to why.”
David White, spokesman for the Winston-Salem-based lender, said the company does not comment on specific clients but that it strives to resolve customer concerns “promptly and completely.” He said BB&T has a complaint resolution process designed to support its goal of being reliable, responsive, empathetic and competent.
Consumer advocates say the CFPB’s mortgage complaints are troubling because many of them represent familiar problems, such as the inability to get mortgage modifications, that borrowers have faced from mortgage companies since the housing market collapsed.
The advocates say the complaints reflect inadequate staffing by mortgage companies to handle the large volume of distressed borrowers that persist as the U.S. economy recovers.
‘Just a nightmare’
Frances Thompson is among the North Carolina consumers who have filed a mortgage-related complaint with the CFPB.
Thompson, who lives about 10 miles north of Winston-Salem, said she became frustrated with Atlanta-based SunTrust Banks as she tried to have her mortgage payments reduced following the 2013 death of her husband.
Thompson, who agreed to be interviewed about her CFPB complaint, said that after she applied to SunTrust for relief, the lender stopped accepting her mortgage payments. At the same time, SunTrust was reporting her as delinquent to credit bureaus, she said.
“I’d send in a payment, and a couple of weeks later here comes a form letter that didn’t really make much sense and they returned my check,” Thompson, 70, said.
“I couldn’t figure out why they kept returning my payments that I knew I owed. ... It was just a nightmare.”
SunTrust spokesman Thomas Crosson, citing client privacy, said the lender could not comment “beyond the fact that we worked with the client and this has been resolved for some time.”
Consumer advocates say mortgage companies are not investing enough to properly deal with homeowners who continue to struggle to make payments.
“There are just homeowners around the country who are still looking for help. We have places across this country where people are living hand to mouth,” said Ira Rheingold, executive director of the National Association of Consumer Advocates, a nonprofit based in Washington, D.C.
“What we’re seeing today is a continuation of the same problems of banks, of mortgage servicers, not staffing up sufficiently, of not building up competent systems to handle the volume of cases well,” he said.
70 percent denied
Ongoing consumer complaints over mortgages follow settlements designed to improve the way mortgage companies treat borrowers.
In 2012, some of the largest banks in the U.S., including Bank of America, JPMorgan Chase & Co. and Wells Fargo, reached a $25 billion government settlement to resolve claims of wrongdoing in the way the lenders handled foreclosures and mortgage servicing. That accord also ordered the lenders to make reforms to their servicing standards – such as better communication with borrowers, ending improper fees and curtailing the practice of dual-tracking, the term for moving a homeowner toward foreclosure even while working to modify the loan.
Christy Romero, the special inspector general for the Troubled Asset Relief Program, the federal bailout program for the financial system, is among those concerned about borrowers being rejected for mortgage modifications.
In July, Romero’s office noted a “startlingly high” denial rate by mortgage servicers of borrowers seeking assistance through the federal Home Affordable Modification Program, which is part of TARP.
Citing U.S. Treasury Department data, Romero said 70 percent of homeowners, or 4 million people, who applied to lower their mortgage payments through HAMP have been denied.
Banks oppose move
Consumer groups have lauded the CFPB’s database for providing more transparency into lenders’ treatment of borrowers. Banks, however, have expressed concerns about the accuracy of the complaint data, which the CFPB says it keeps anonymous in order to protect consumer privacy.
“To publish complaints that are unsubstantiated and anonymous – anyone can say anything – it just gives me concern,” said Peter Gwaltney, president of the North Carolina Bankers Association.
Banks strongly opposed the bureau’s June move to publish the detailed complaints. Banks pointed to, among other things, the negative impact the complaints might have on lenders’ reputations.
In prepared remarks from a March speech, Richard Cordray, director of the CFPB, said publication of information in the database is one of the “best tools” government agencies can use to improve the operation of the financial markets.
Nationwide, Bank of America has garnered the most complaints, about 49,470, in the CFPB’s database since 2011. Those complaints cover mortgages as well as other types of products and services. The second-largest U.S. bank by assets has also collected the most complaints in North Carolina, roughly 1,520.
Frahm, the bank spokesman, pointed out that Bank of America recorded a roughly 49 percent reduction in North Carolina complaints in the first seven months of this year versus the same period in 2013. The bank posted a roughly 46 percent decline in complaints nationwide over the same period.
Borrowers still facing difficulties
In North Carolina, rising complaints about mortgages come as the state’s economy continues to recover.
Bob Kucab, executive director for the North Carolina Housing Finance Agency, said some North Carolina homeowners still face difficulties paying their home loans, even though foreclosure rates in the state have fallen since the recession.
“We hear about these on a regular basis, where people have a mortgage that was properly written and properly sized based on the household situation a few years ago,” said Kucab, whose public agency administers a federally funded program that helps pay the mortgages for people dealing with financial hardships.
“But when they changed jobs and have to take a lower-paying job, there’s new financial stress for the household.”
More findings from the CFPB data
Here’s a look at some additional findings from the Consumer Financial Protection Bureau’s consumer complaints:
▪ According to the CFPB, since 2011 the regulator has handled about 677,200 complaints, of which about 27 percent are over mortgages, the single largest source of complaints.
▪ Since 2011, the CFPB has published more than 12,000 complaints from N.C. consumers. Of those, roughly 40 percent are over mortgages, the largest single source of complaints.
▪ So far this year nationwide, debt collection is the No. 1 source of complaints, followed by No. 2 mortgages and No. 3 credit reporting.
▪ So far this year in North Carolina, mortgages are the No. 1 source of complaints, followed by credit reporting at No. 2 and debt collection at No. 3.
▪ In North Carolina, Bank of America has generated the most complaints since 2011. Wells Fargo is in second place, followed by third-place Equifax.
▪ So far this year in North Carolina, Equifax has generated the most complaints, followed by Experian at No. 2 and Wells Fargo at No. 3.