What mortgage borrowers complained about most last year

Consumers submitted nearly 28,000 complaints about mortgage firms to the Consumer Financial Protection Bureau last year, largely regarding trouble with the payment process. 

Just over half of the submissions, or 11,400 complaints, related to trouble during the payment process. The report highlighted concerns around loss mitigation, in which borrowers said servicers delayed reviewing and implementing loan modifications and deferrals. Many of the issues occurred after servicing transfers, according to the CFPB.

"Consumers also reported receiving confusing or conflicting communications about modification and deferral options, and about payment amounts and timing," the report said. 

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Common borrower complaints included rude servicer representatives, or being unable to reach someone at all. Servicers in response said they often needed further documentation to review loss mitigation applications, and apologized to customers for delays and inaccurate information. 

Other customer gripes ranged from late fees, negative credit reporting and foreclosure threats. Some of those grievances stemmed from foreclosure starts on loans which became delinquent in March 2020, just before the passage of federal pandemic aid. According to the CFPB, companies usually responded that those customers' payments were not made on time, or they couldn't provide those borrowers with affordable payment plans.

Other problems arose from the Homeowners Assistance Fund. Consumers told the CFPB that mortgage firms didn't provide requested information to state HAF programs on time, or apply HAF payments on schedule. 

The overwhelming majority of grievances were closed with explanations, the regulator said in its 2023 Consumer Response Annual Report. Of the approximately 27,900 complaints it received, the CFPB sent 84% of those to firms; referred 10% to other regulators; and found 6% to be non-actionable. 

Mortgage players closed 92% of complaints via explanation and 2% with monetary relief. By comparison, in 2022 3% of complaints led to cash compensation and in 2021 and 2020 4% of issues were resolved in the same manner. 

The new CFPB report found that in 2023, 3% of issues raised were handled with non-monetary relief, defined by the CFPB as actions such as correcting inaccurate information and stopping unwanted calls from debt collectors. The report did not specify how much money mortgage companies paid to consumers for claims.

The majority of issues involved conventional mortgages, followed by Federal Housing Administration loans and Department of Veterans Affairs-backed mortgages. The monthly average of complaints regarding home equity line of credit loans and VA mortgages were up 21% and 11%, respectively, compared to the prior two years. 

Issues related to purchase and refinance applications and closings were down 1% compared to the same monthly average for the prior two years. 

"This decrease is likely due at least in part to inflation and the rising costs of homeownership, which have had a significant impact on housing sales," the report said. 

The number of complaints was relatively flat year-over-year, according to the CFPB's 2022 report. As of March 1, the regulator said less than 0.1% of grievances were outstanding. 

The mortgage watchdog has recently scrutinized fees related to servicing, part of its push against "junk" fees in consumer lending.