Debt Collection and Mortgages Top CFPB List of Complaints
Written by: Tina Crivello, Compliance Officer
The Consumer Financial Protection Bureau, (CFPB), made public yesterday, over 7,700 consumer complaint narratives received since March of 2015. Across all consumer financial product types the CFPB collects complaint data on, “Continued attempts to collect debt not owed”, was the number one issue consumers submitted complaints for, accounting for 13% all complaints. When narrowed down to debt collection that number jumps to 45%.
| Top 5 Consumer Complaints – All Product Lines |
||
| Cont’d attempts collect debt not owed | 1017 | 13.20% |
| Incorrect information on credit report | 918 | 11.92% |
| Loan servicing, payments, escrow account | 713 | 9.26% |
| Loan modification, collection, foreclosure | 677 | 8.79% |
| Disclosure verification of debt | 368 | 4.78% |
Of the narratives made public, 29% are related to Debt Collection, followed closely by Mortgages at 22.5%.
| Top 5 Consumer Complaints by Product | ||
| Debt collection | 2246 | 29.16% |
| Mortgage | 1739 | 22.58% |
| Credit reporting | 1456 | 18.90% |
| Credit card | 751 | 9.75% |
| Bank account or service | 578 | 7.50% |
Debt Collection
Specific to Debt Collection complaints, the majority of the narratives are related to collection of debts on products such as phone or health club contracts. Where no product line was identified almost half of the complaint narratives are consumer claims that the debt does not belong to them. Where company responses to the assertion that the debt does not belong to the consumer were made public, almost 30% of the responses indicate that the company believed they “acted appropriately as authorized by contract or law”. Credit card collection efforts rounded out the top three complaints, with billing disputes being the number one consumer issue.
| Top 5 Consumer Complaints for Debt Collection |
||
| Other (phone, health club, etc.) | 689 | 30.68% |
| (blank) | 566 | 25.20% |
| Credit card | 370 | 16.47% |
| Medical | 332 | 14.78% |
| Payday loan | 118 | 5.25% |
Mortgage
Under the product heading of mortgages, almost half of the complaints were related to conventional fixed rate mortgages. Across all types of mortgage complaint narratives made public, the top issues identified by consumers related to loan servicing, payments or escrow account handling, as well as loan modification, collection and foreclosure. Improvements over recent years to servicer loss mitigation handling efforts have undoubtedly helped many consumers; however these numbers seem to indicate there is still room for servicers to improve their handling of servicing, loss mitigation and foreclosure processes, particularly where related to non GSE loans.
| Mortgage | ||
| Conventional fixed mortgage | 777 | 44.68% |
| FHA mortgage | 325 | 18.69% |
| Conventional adjustable mortgage (ARM) | 292 | 16.79% |
| Other mortgage | 158 | 9.09% |
| Home equity loan or line of credit | 100 | 5.75% |
| VA mortgage | 76 | 4.37% |
| Reverse mortgage | 11 | 0.63% |
States by the Numbers
As would be expected, the states with the most complaints for debt collection and mortgage are the most populous: California, Texas and Florida. Of the 3985 responses by companies for Debt Collection and Mortgage, 1275 were officially “not disputed”, with 992 disputed and 1718 left blank. Georgia however leads the states with the most consumer disputes to company responses.
| State | Complaints |
| CA | 605 |
| TX | 388 |
| FL | 381 |
| NY | 200 |
| GA | 186 |
| Consumer Disputed Company Response | GA | IL | MI | NV | MO |
| No | 54 | 39 | 18 | 9 | 15 |
| Yes | 59 | 47 | 20 | 20 | 16 |
Where does the industry go from here?
It is encouraging that roughly 75% of responses from the industry were considered explanatory enough for the consumer. Additionally, less than 3% of company responses to debt collection and mortgage complaint narratives made public were not responded to timely. Of the responses not provided timely, nearly 25% were disputed by consumers, which could lead one to think there may be a correlation between timely responses and a consumer’s willingness to accept the response.
Continued focus on resolving consumer complaints in a timely manner should be paramount to anyone in the debt collection industry. By studying the data provided by the CFPB, proactive improvements, such as providing additional verification information up front, can be put in place which will help consumers and ultimately drive down expenses on the debt collection or servicer side.
