The top complaints about mortgages

More than a third of the mortgage complaints received by the Consumer Financial Protection Bureau come from people who can no longer afford their payments.

By MSN Money Partner Feb 3, 2012 12:27PM

This post comes from Seth Fiegerman at partner site MainStreet.

If nothing else, the Consumer Financial Protection Bureau has served as a great avenue for consumers to vent their money problems in the hopes of getting them fixed.

The government agency received 13,210 complaints from consumers in the second half of 2011, more than 9,000 of which were about credit cards, according to data (.pdf file) from the CFPB's semiannual operations report. Interestingly, mortgages proved to be the second most popular cause for complaint among consumers, with 2,326 complaints filed.

The actual process of applying and signing for loans, which the CFPB addressed last year with a new set of forms, accounted for just shy of 15% of the mortgage complaints that the CFPB received. Many more complained about the process of paying down their loans.

As you can see in the chart above, more than a third of the complaints received had to do with customers who were no longer able to pay off their mortgages and tried to renegotiate the terms of the loan or else face the prospect of foreclosure.

In some ways, this comes as little surprise, given the sheer number of underwater homes and the difficulty many Americans have faced in convincing banks to modify their mortgages. Yet it's also a testament to the fact that the agency needs to continue its efforts to regulate mortgage servicers and push for alternatives to foreclosure.

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3Comments

Best

Derrick Tuttle (Bluntly Obvious)

Feb 3, 2012 4:28PM

The issue with our mortgage servicer Ocwen is that they are short term thinkers at best. We've asked for them to review our mortgage a few times and they are only willing to accept HARP applications, which they already know don't apply.

Here's where we are: We don't want the condo and can rent a similar unit for $1200 per month in our area (1bd/1ba 600 sq ft). We pay $2500 per month to "buy" our home. However, the interest rate can double and we have two balloon payments that hit at retirement.

The question is why does Ocwen believe that we will just accept inevitable bankruptcy? In California, when loans are taken to purchase a property the lender goes down with the ship too. Simply, if we walk Ocwen can only retake the home they get nothing except the costs of foreclosure.

Let's look at their position. The home was purchased for $320K in 2005. It is currently valued at < $140K. The outstanding amount on the loans is $280K. We have never been late on a payment for the mortgages, taxes or insurance. In fact, we've never been late with any bill.

Pretend you are Ocwen for a moment. If customers that always pay on time stop paying, you immediately lose at least $140K . . . half the money loaned. These customers have a history of reliable payment and are willing to accept a 30yr mortgage for 7% interest and the balloon payments. This is far more than the current rate mortgages are selling for. So if we walk, they really lose more like $1M.

If we stay we bankrupt and end up the well paid/employed homeless. If we leave our credit rating takes a small hit, we can afford a much better place to rent and the proposition that we own a home that is declining in value is removed from our conscience.

Let's just be frank. The mortgage servicers are collection agencies. They are incapable of long term relationships with customers. They destroy deals. They break finances. They black ball credit ratings. Allowing such a firm to take charge of an account that is in perfect standing should be against the law.

It isn't and that is why we are in a recession. The mortgage servicers cannot play a constructive role in our society. You have seen the math I presented and yet they do not wish to talk to us. It is evident these firms are run by morons; regardless of what is motivating this era in American culture.

I am positive the investor in our home did not wish to lose half their money or to turn away borrowers that pay on time. Why would they want there representative to be telling us to take it or leave it when it so obvious that leaving it is in our best interest?

It is difficult to avoid the conclusion that they think we are "rubes" and getting a big laugh out of how we keep paying a mortgage they've already written off.

Please tell me how this is Obama's fault. I am sick and tired of the country blaming him when it is obvious that the housing crisis is being perpetuated by companies like Ocwen.

Romney isn't going to do anything about this. We are going to walk away knowing that the cause of our current economic struggle is bankers.

Don't like losing your job? Bankers are to blame. Fear future political instability? Bankers are to blame. Fear a country where nobody has a reason to pay off a debt . . . blame the bankers today do it now!

Thanks!

Previous replies

Susan7654321

Feb 3, 2012 4:55PM

My costs went up on my refi after all was ready and okayed. All of the sudden BofA wanted $9,000 more to complete the transaction they'd agreed to do. Yes, our fica scores are in the 900's so that wasn't it. Bait and switch!

Previous replies

debt_free_mt

Feb 6, 2012 1:09AM

I'll just never understand why someone would be willing to waste so much of their income servicing a loan for a property. Seems to me that upper level earners would have enough sense to live modestly, save their money and simply purchase a home outright. Ah well, what fun would that be? Much more exciting trying to find someone else to blame for one's own messes.

Previous replies

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