Sunday, June 10, 2018

The CFPB's Complaint Database and Property Problems

Acting director of the Consumer Financial Protection Bureau (CFPB) Mick Mulvaney has been in the news quite a bit lately. He recently dismissed all 25 members of the agency’s Consumer Advisory Board (a stakeholder group required by the Dodd-Frank Act), and he has also been telling groups and members of Congress that he will likely close the CFPB’s consumer complaint database to the public:

"I don’t see anything in [the law] that says I have to run a Yelp for financial services sponsored by the federal government,” [Mulvaney] said at a banking industry conference in Washington. “I don’t see anything in here that says that I have to make all of those public."

This is truly unfortunate news. The database (which is scrubbed of consumer-identifying information) has been hugely helpful to academics (like me!), consumers, businesses, and policy makers. I recently joined a number of consumer finance law professors in providing comments to the CFPB on why, among other things, the public nature of the complaint database is important and should be maintained.

One of the reasons we argue that the database should remain public has to do with how it serves as a source (and sometimes the only source) of information for consumers in deciding whether to do business with certain firms. This is particularly true when a financial service business doesn't have an established operating history with lots of publicly available information. It's also useful for getting information about financial firms that lack a comprehensive regulator where consumer review and complaint information can be obtained or requested.

For us property folks, consider mortgage lending. Mortgage lending was long dominated by regulated financial institutions, such as banks, thrifts, and credit unions. But in today’s market, nonbank financial companies are the major players. The firm that originates the most mortgage loans in the United States is currently Quicken Loans—a Detroit-based, nonbank company that started making online mortgage loans around the late 1990s.


(Source: Home Mortgage Disclosure Act Data 2008-2017 using Lender ID 7197000003-7 and filtering for "all originated mortgages")

The CFPB’s database gives consumers a place to learn about how people are interacting with Quicken and other online firms that lack brick-and-mortar storefronts. The entries include not only the product type and the issue/problem that the consumer encountered, but also important information about whether the firm responded to the complaint and how it was ultimately resolved. The complaints are also broken down by location and date, thereby allowing a more nuanced analysis of the data for researchers. More information, one hopes, leads to consumers making better and more informed decisions about obtaining a home loan.

(Source: CFPB Complaint Database using Quicken Loans, Inc. and filtering for Product/Sub-product: Mortgages)

And lastly, many of the complaint entries include narratives. Individuals have the option of telling their story when they submit a complaint to the CFPB. These real life stories provide perhaps one of the only venues where the lived experiences behind the complaint numbers are revealed to the public. A few mortgage-related narratives aimed at Quicken Loans so far from 2018 include:

Consumer Complaint No. 2858565 (2018)
XX/XX/XXXX - I applied for a home mortgage with Quicken Loan website and a banker contacted me to ask for all confidential information ( income, debt, credit report, assets, etc ). XX/XX/XXXX - Quicken Loan requested my current credit report. XX/XX/XXXX - Quicken Loan contacted me via online email saying my debt to income ratio can not qualify for mortgage with them. I totally understand the reason and rejection. XX/XX/XXXX - Another Quicken Loan banker " XXXX XXXX '' blind called me that she can help me get the mortgage approved this time and ask me again a lot of information. As she walk through the term and rate and cost, she kept emphasizing the call is recorded and ask for my agreement to do business with Quicken Loan ; she requested {$500.00} deposit using credit card. I disagree with the urgency because I do not have rights to compare bank interest rate offer and terms with others at the moment. I simply ask her to provide me everything on record, such as email, paper mail, etc. She refused and pretend never heard. The worst part is she kept asking me for the agreement to do business with Quicken Loan and ask for credit card for deposit {$500.00}. I deeply concerned about my personal information may be misused by Quicken Loan. Please please investigate this company 's mortgage practice. I believe they are attempting to take advantage of home buyers who is in tight schedule to secure a mortgage for closing. Thank you. The call on XX/XX/XXXX is between XXXX - XXXX EST from number XXXX.

Consumer Complaint No. 2851684 (2018)
After Hurricane Irma left us with property damage I called Quicken Loans to place the mortgage in forbearance. They walked me through the process of how an adjustment would work and applied the forbearance. I've had monthly phone calls where they've checked in and they've asked me each time if it was my primary residence and if it was occupied and each time I've told them it is not my primary residence, but it does have a tenant who is renting from us. This month when the time came to adjust the mortgage they've told me that they can't adjust it because it's a second home so I now have a {$7000.00} balance due, or {$510.00} a month for 12 months ( they adjusted from 6 months to 12 ). I can not afford an extra {$510.00} a month, I don't have that money sitting in my checking account. Quicken 's response is just " sorry we made a mistake, you need to pay for it ''. I've done the right thing in trying to repay the loan on a property that is upside down when everyone else foreclosed or short selled, now my credit and life is ruined. They are engineered to " amaze '', but not in the way their marketing department wants them to be.

Consumer Complaint No. 2829194 (2018)
Around XX/XX/18 I applied for a fha mortgage through quicken loans. After uploading paystubs and a2 's and having a phone conversation with a XXXX XXXX i was given a pre approval. I was then asked to write a letter of explanation as to what happened to the house that it's listed in my bankruptcy case. It was explained that the house was foreclosed. At no point did anyone from quicken loans ask when it was foreclosed. After I found a house, signed a contract to purchased the house, paid {$300.00} for a inspection and gave quicken loans {$500.00} to be used for appraisal was i then told two days later on XX/XX/18 that I was denied because my foreclosure was not three years old. I was told no appraisal had been ordered so i would be getting my money refunded. On that same day XX/XX/XXXX a appraisal was done on the property. At this point I am out {$800.00} for a mortgage that I never should have been pre approved for. They knew I was applying for a fha mortgage, they knew I had a foreclosure and they knew the waiting period for a fha mortgage after foreclosure is three years, yet they didn't ask when the foreclosure took place.

Now of course, these data can tell many different stories. Sometimes the company (like Quicken) did nothing wrong. At other times, consumers have clearly gotten unfairly lost in the lender's corporate bureaucracy. And still at other times it's hard to tell where the break-down happened. It’s up to researchers, industry, advocates, and consumers to interpret the data so that they are useful and help us build a stronger way for Americans to access homeownership online.

But one thing is for sure—closing the complaint database to the public prevents these stories from ever being told. And that serves no one. As of today, the database is still available to the public. We'll see if Mr. Mulvaney follows-through on his threat.

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