By Peter Ricci

August 2, 2012

 

Mortgage complains reigned supreme in the Consumer Financial Protection Bureau’s (CFPB) semi-annual report to Congress, comprising 43 percent of the 55,300 complaints the agency received from consumers in its first 11 months of existence.

 

The make-up of those complaints, though, was surprising, especially considering that obtaining home financing remains among the premier complaints from real estate agents in the homebuying process.

 

But as the CFPB explained, the specific problems consumers addressed in their complaints dealt more with the handling of loans, not so much the origination of loans. Here’s how the agency broke it down:

 

Eight percent reported problems when applying for a loan, whether it was with the loan application, the loan originator or the mortgage broker.

Two percent reported problems at the credit decision/underwriting stage.

Four percent had issues with the settlement process and costs.

Twenty-five percent experienced trouble when making payments, with either loan servicing, payments or escrow accounts.

Finally, 54 percent had problems when they were unable to pay, with loan modifications, collections or foreclosure.

For some perspective on the numbers, we chatted with Spencer Cowan, a vice president with the Woodstock Institute, a Chicago-based research and policy organization that studies fair lending and finance, among other topics.

 

The CFPB report, Cowan said, is actually not that bad from the agent/lender perspective, considering that just 8 percent of the complaints the CFPB received dealt with the origination stage of mortgages.

 

Rather, the true lingering issue with the mortgage markets, Cowan said, is actually outside of the CFPB report and even its stated mission – the problem is the financial market’s narrow offering of mortgage products.

 

“Lenders don’t seem to have a product that is between government loans and prime loans,” Cowan said. “There doesn’t seem to be much of an intermediate product.”

 

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