My name is Rich Andreano, and this is my first day at Ballard Spahr. I’m excited about joining the firm and making my first post to the CFPB Monitor. I plan to add regular posts addressing residential mortgage industry developments as they relate to the CFPB, and hope that you’ll find them to be informative.
The CFPB is now taking complaints about mortgage loans on its web site. Using a complaint form similar to the one it already uses for its on-line credit card complaint system, the CFPB asks for information such as a description of what happened, which part of the mortgage process was involved (such as applying for the loan or making payments), the type of mortgage, the consumer’s name, address and contact information, and the account or loan number. It also includes some of the unsettling questions found on the credit card complaint form, such as “what do you think would be a fair resolution” (which seems likely to create unrealistic expectations for consumers.) and “do you believe the issue involves discrimination” (which seems likely to generate many unfounded fair lending claims)
In fact, the concern about unfounded discrimination claims was raised by industry representatives during the CFPB’s presentation on November 30, 2011 to unveil the complaint system. Industry representatives also noted an apparent perception among many consumers that by claiming discrimination their complaint will receive a higher priority in the review process.
Although the consumer must identify the part of the mortgage process related to the complaint, on a separate page the form simply requests the consumer to provide “information about the company” without expressly indicating which company involved with the mortgage loan should be identified. That may result in complaints being routed to the wrong party, such as lenders who no longer own the loan or have any of the relevant records. The CFPB advised that complaints will undergo an initial quality control review to assess if the complaint is being directed to the appropriate company. The review also will be used to assess other matters, including whether a consumer is attempting to make a qualified written request under RESPA, which requests must be sent directly to the servicer.
The CFPB advised that companies will have 15 days to respond to a complaint and 60 days to close out the complaint, although extensions may be permitted when appropriate. Although Dodd-Frank provides for a “timely response” by companies, it does not specify the 15-day or 60-day timeframes. Resolved complaints will be designated as “closed with relief” (to the consumer) and “closed without relief”, without further designation of why there was no relief. Because the “closed without relief” designation would encompass all situations in which there was no relief, including situations in which a consumer failed to respond to requests for information or otherwise cooperate, industry representatives raised a concern that reports to Congress and the public on the number of complaints closed with and without relief will be misleading.
Without a confirmed director, the CFPB can only bring enforcement actions against banks with more than $10 billion in assets for violations of the federal consumer financial laws for which Dodd-Frank transferred enforcement authority to the CFPB from other agencies. We assume that, as it does for credit card complaints, the CFPB will refer mortgage complaints against banks with $10 billion or less in total assets to the appropriate federal prudential regulators. Mortgage complaints against non-banks will possibly be referred to state attorneys general or bank regulators.
It remains unclear who will have access to the information in the complaint system. In the proposed policy statement recently issued by the CFPB on the disclosure of credit card complaint data (which we will soon be blogging about), the CFPB says that how it deals with that complaint data may impact its disclosure of complaint data for other products.