Mortgage Servicing and Debt Collection among Major Issues According to EY Analysis of Consumer Financial Protection Bureau (CFPB) Complaint Data

- Analysis shows complaints increased monthly to more than 14,100 in 2015 from 9,022 in 2013

- Servicers taking complaints seriously with a 97 percent timely response rate, but giving relief to only 21 percent of the borrowers

Nov 18, 2015, 09:00 ET from EY

NEW YORK, Nov. 18, 2015 /PRNewswire/ -- With an average of 14,100 complaints added to the Consumer Financial Protection Bureau's (CFPB) Consumer Complaint Database every month this year, the database has begun to offer meaningful insight into the problems facing both financial institutions and their customers. Based on in-depth analysis of this data, a multi-disciplinary EY team of compliance professionals, investigators, and former regulators uncovered two primary findings. Specifically:

  • Continued issues with mortgage servicing and collection efforts with more than 35 percent of complaints related to mortgages and their servicing, origination, modification and collection efforts, and
  • Complications over debt collection efforts indicating that servicers are having trouble keeping loan files up-to-date and are using harmful communication tactics to collect debts.

The EY team analyzed more than 460,000 publicly available complaints submitted by consumers from December 1, 2011, through September 30, 2015. In addition to using complaints to identify trends, EY analyzed social media feeds to gain a deeper understanding of problems facing consumers.

Analysis of the complaints revealed that total complaints have steadily increased to a monthly average of 14,100 in 2015, up from 9,022 in 2013. Complaints consistently spiked starting in March of each year and stayed at least 4,600 complaints above the average monthly complaints submitted through the summer months.

Servicers appear to be taking the CFPB complaints seriously with more than 97 percent of the complaints responded to in a timely manner after the CFPB sent the complaints to the applicable servicers.  However, lenders responded to the complaints stating they granted some form of relief to only 21 percent of the borrowers, whether monetary or otherwise.

"In our experience assisting financial services clients responding to regulatory and law enforcement challenges, one of the key drivers for success is the institution's philosophy on the consumer's experience," said Stephen Ross, Partner, Ernst & Young LLP Fraud Investigation and Dispute Services (EY FIDS). "Clients who proactively understand gaps in processes and controls, and then remediate, often fare better in their dealings with regulators and law enforcement."

Additional findings include:

  • On a product level, from March 2014 through August 2015, consumer loans saw the largest increase in complaints at 92 percent. The main sub-product of consumer loans relate to auto loans and leases which accounted for 65 percent of complaints submitted during the same time period.
  • The increase in consumer loan complaints was largely due to an increase in installment loan complaints over the past 12 months, to 196 from September 2014 through August 2015 from 71 complaints per month from September 2013 through August 2014. This falls in line with the CFPB's continued focus on auto lending and their recent supervision of nonbank auto lenders.
  • Money transfer complaints increased 27 percent, and credit reporting complaints increased 32 percent during the same time period.

"Using non-traditional data sources, such as the CFPB Complaints Database, social media, and internal data analytics, can help identify areas requiring attention such as harmful servicing communication tactics, inaccurate disclosures to customers or discriminatory lending practices," said Stephanie White Booker, Executive Director, Financial Services Risk Management, Ernst & Young LLP.

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