CFPB Consumer Complaint Data Shows Mortgage and Credit Issues on the Rise

Recently released Consumer Financial Protection Bureau (CFPB) data regarding consumer complaints shows a significant spike in submissions to the agency during COVID.

Specifically, the report revealed complaints that mention ‘coronavirus keywords,’ which they say include terms like COVID, pandemic, and stimulus, are on the rise.

Running from Jan. 1, 2020 to May 31, 2020, the CFPB has received 187,547 complaints in total with more than 8,000 of those relating to COVID. The U.S. Public Interest Research Group (U.S. PIRG) found that consumer complaints to the CFPB are up 50 percent year-over-year from March to June.

A vast majority of consumer complaints to the CFPB this year relate to ‘credit or consumer reporting,’ which account for a whopping 53 percent of submissions. Most of those reporting said they are finding incorrect information on their credit reports.

Mortgage and credit card issues received the highest percentage of consumer grievances at 19 and 18 percent. The top concern with mortgages: consumers struggling to make payments.

MarketWatch reported one complaint involved a homeowner entering a mortgage forbearance agreement with their loan servicer.

“Now, they are requesting a balloon payment, which I am unable to make. I’ve been in my home for 16 years,” the person wrote in their complaint.

The good news is companies against which consumers submit complaints must reply.

“The CFPB doesn’t become your complaint attorney, but they require companies to respond to you, and they keep track of the response and whether it was timely,” said Ed Mierzwinski, senior director of the Federal Consumer Program at U.S. PIRG. “This means someone at the company in your complaint has to pay attention.” 

Some analysts are not concerned about recent trends as reports indicate the housing market is bouncing back with more people buying homes while interest rates on mortgages fall.

“The market’s performance has been admittedly shocking, amazing, considering that typically when you have surging unemployment, housing activity tends to fall,” said Ivy Zelman, CEO of the housing research firm Zelman Associates. “That tends to be the case going all the way back to World War II.”

However, increased home buying may conflict with rising unemployment rates. With the extra $600 in unemployment set to expire, borrowers may look to defer loans.

According to USA Today, the CARES act allows homeowners to delay payments for federally backed mortgages for up to one year. However, the act’s provision does not apply to private servicers who have their own policies, meaning consumers may have to repay the deferred payments in a lump sum.

Black Knight, a mortgage technology and data provider, reports that May home-mortgage delinquencies were at the highest level since November 2011 with 4.3 million borrowers more than 30 days late on their mortgage payments.

“If we end up losing forbearance options before the economy recovers, we will likely see a spike in mortgage delinquencies,” said Tendayi Kapfidze, chief economist for LendingTree. “The health crisis could then turn into a financial crisis, which would deteriorate the economic recovery.”

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