Understanding Mortgage Servicing Complaints: A Breakdown of the 2023 CFPB Report

Homeowners had a lot to say about their mortgage lenders last year, according to a new report by the Consumer Financial Protection Bureau (CFPB). The Bureau received nearly 28,000 complaints in 2023, with the biggest source of frustration being the loan payment process.

Trouble with Payments Tops the List

Over half (around 11,400) of the complaints involved problems with making mortgage payments. Borrowers reported issues with loss mitigation, where lenders were slow to review and approve requests for loan modifications or deferrals. This often happened after the borrower’s loan servicing was transferred to a new company.

The CFPB report also found that many consumers received confusing information about their payment options, amounts, and due dates.

A bar chart titled "Mortgage Complaints by Issue (2023)" shows the number of complaints submitted to the Consumer Financial Protection Bureau (CFPB) in 2023 regarding different mortgage servicing issues. The complaint category with the most entries is "Trouble during payment process" at 11,400, followed by "Struggling to pay" at 6,100.

Communication Issues and Rude Service

In addition to the complexities of the payment process, many borrowers simply couldn’t get a straight answer or any help at all from their lenders. Complaints frequently mentioned rude customer service representatives or long wait times to speak with someone.

Mortgage servicers responded by saying they often needed more paperwork to process loss mitigation applications and apologized for any delays or inaccurate information.

A table showing the number of complaints submitted to the Consumer Financial Protection Bureau (CFPB) per 1,000 people in each U.S. state. Alaska has the highest rate with 141 complaints per 1,000 people, while Maine has the lowest rate with 114 complaints per 1,000 people.

Idaho-Specific Analysis

Idaho ranks 45th in the nation for per capita complaints, with only New Hampshire, Maine, Montana, Vermont, and South Dakota having fewer. Georgia, Florida, DC, and Deleware topped the list with the most complaints.

Of the 27,853 mortgage related complaints, only 93 originated from Idaho. This represents only .33% of all mortgage-related complaints reported to the CFPB.

Other Mortgage-Related Gripes

The report also highlighted complaints about:

Late fees
Negative credit reporting
Foreclosure threats

Some of these issues stemmed from foreclosures initiated on loans that became delinquent in early 2020, right before the government offered pandemic relief programs. Borrowers in this situation often reported that their lenders wouldn’t offer them affordable repayment plans.

There were also problems with the Homeowners Assistance Fund (HAF). Consumers said that mortgage servicers were slow to provide information to state HAF programs or delays in applying HAF payments to their loans.

A bar chart titled "Mortgage Complaints by Type and Outcomes (2023)". The chart shows the number of complaints filed about different mortgage types closed with an explanation or relief in 2023. Conventional home mortgages have the highest number of complaints at 13,100, followed by FHA mortgages at 4,400. The chart breaks down the outcome, showing a breakdown between explanation, monetary relief, and non-monetary relief.

How Were Complaints Resolved?

Thankfully, the vast majority (around 92%) of complaints were resolved with an explanation from the lender. In a smaller number of cases (3%), the issue was addressed with non-monetary relief, such as correcting inaccurate credit reports or stopping unwanted calls. Monetary compensation to borrowers was less common, occurring in only 2% of cases.

The CFPB report also noted an increase in complaints about home equity lines of credit (HELOC) loans and VA mortgages compared to the previous two years. However, there was a slight decrease in complaints regarding purchasing or refinancing a home. This decrease is likely due to the rise in mortgage rates and overall housing costs, which have dampened the housing market.

The CFPB is Watching

The CFPB is keeping a close eye on the mortgage industry, particularly regarding fees associated with loan servicing. This is part of a larger effort to crack down on unnecessary and unfair charges levied against consumers.