Worth A Deeper Dive

*Worth A Deeper Dive*
**By Lew Sichelman**

LewS***Anyone who gets his news from the boob tube probably thinks the mortgage business is full of sharks. After all, the headlines said that the feds have received nearly 64,000 complaints about lenders, and the headlines are about as deep as the rip-and-read TV news hounds tend to go. But a deeper look at the numbers is called for, especially if you are swimming in the same business as the supposed sharks.

****Sure that’s a lot of complaints. But isn’t that to be expected? Didn’t the lending sector just come through a debacle second only to the Great Depression? Didn’t millions of people lose their homes, many through no fault of their own?

****As it turns out, the 63,700 complaints taken from disgruntled consumers by Consumer Financial Protection Bureau between Dec. 1, 2011 and Feb. 28, 2013 accounted for just under half the gripes fielded by the now almost two-year-old agency. But the breakdown provided by the CFPB reveals that maybe, just maybe lenders per se don’t deserve the lashes to their collective backs they are getting in the popular press.

****For example, CFPB loosely classifies the lion’s share of the complaints as “problems when unable to pay,” and says these “generally appear to be driven by a desire to seek agreement with their companies on foreclosure alternatives.”

****The complaints indicate that consumer confusion persists around the process and requirements for obtaining loan modifications and refinancing, especially regarding document submission time frames, payment trial periods, allocation of payments, treatment of income in eligibility calculations, and credit bureau reporting during the evaluation period.

****Doesn’t that scream servicers, not lenders?

****Other common complains speak to issues related to making payments. For example, consumers are confused about whether making timely trial loan modifications will guarantee them a permanent mod? Again, SERVICING!

****Only 7 percent of the grievances seem to involve lenders directly. They involve issues related to applying for a home loan or with the originator itself. But even these are somewhat misappropriated, according to the National Association of Mortgage Brokers, which says just 22 of the 3,564 labeled “application, originator and mortgage broker” actually involved brokers. Of the total, 2,745 involved banks, the besieged group maintains.

****And then there is how these consumer complaints were addressed. The CFPB screens the complaints and forwards them to the “offending” company, which reviews them, communicates with the consumer and reports back to the CFPB. The bureau then invites consumers to review the response and provide their feedback.

****According to the bureau, outfits in the mortgage category have already responded to 53,900 of the 56,800 complaints sent their way. That’s a 95 percent answer rate. Moreover, consumers disputed only 10,500 – just 23 percent – of those responses.

****So one in four is still unhappy. Sure, that’s too large a number. No one should be pissed, no one. But that percentage stacks up as normal if you look at the other major financial categories.

****For example, credit card companies responded to 97 percent of the complaints about them, and 20 percent of the consumers didn’t like the answers. Similarly, consumer loan companies responded to 95 percent of their issues, with 23 percent of the complainers – same as in the mortgage category – remaining dissatisfied.

****Another benchmark: Median relief granted offended consumers – $110 by credit card companies, $195 by consumer lenders and $425 in the mortgage sector. Not that far out of line when you consider mortgages are generally bigger ticket items than a consumer loan or credit cards.

****One of the interesting things about the CFPB database, which is the nation’s largest public reservoir of federal consumer financial complaints: It can be sliced and diced just about any way you like. The agency uses a tool called “Scorta” that make it easy to organize the data into subsets and visualizations.

****But no matter how you cut it, it says here that mortgage companies aren’t as bad as they are made out to be. And when it comes to making things right, they are on par with other credit firms.