The Consumer Financial Protection Bureau (CFPB)has issued its April 2016 complaint report which highlights complaints about mortgages and complaints from consumers in California. The CFPB began taking complaints about mortgages in December 2011.

General findings include the following:

• As of April 1, 2016, the CFPB handled approximately 859,900 complaints nationally, including approximately 26,500 complaints in March 2016. As of April 1, 2016, debt collection continued to be the most-complained-about financial product or service, representing about 26 percent of complaints submitted. Debt collection complaints, together with complaints about credit reporting and mortgages, collectively represented about 69 percent of the complaints submitted in March 2016.
• Complaints about “other financial services” showed the greatest percentage increase based on a three-month average, increasing about 53 percent from the same time last year (January to March 2015 compared with January to March 2016). This category includes complaints about debt settlement, check cashing, credit repair, refund anticipation checks, and money orders. Complaints during those periods increased from 126 in 2015 to 193 2016.
• Payday loan complaints showed the greatest percentage decrease based on a three-month average, decreasing about 14 percent from the same time last year (January to March 2015 compared with January to March 2016). Complaints during those periods decreased from 489 in 2015 to 420 in 2016.  In the March 2016 complaint report, payday loan complaints also showed the greatest percentage decrease based on a three-month average.
• Student loans were the product with the greatest month-over-month increase in complaints, with complaints increasing by 83 percent from February to March 2016. We note that, rather than reflecting an increase in the number of borrowers making student loan complaints, the increase most likely reflects that in March 2016, the CFPB began accepting complaints about federal student loans. Previously, such complaints were directed to the Department of Education.
• New Mexico, Indiana, and Minnesota experienced the greatest complaint volume increases from the same time last year (January to March 2015 compared with January to March 2016) with increases of, respectively, 32, 29, and 26 percent.
• Hawaii, Vermont, and Maine experienced the greatest complaint volume decreases from the same time last year (January to March 2015 compared with January to March 2016) with decreases of, respectively, 29, 23, and 20 percent.

Findings regarding mortgage complaints include the following:

• The CFPB has handled approximately 223,100 mortgage complaints, representing about 26 percent of total complaints. Mortgages are the second most-complained-about product or service after debt collection.
• The most-complained-about issue involved payment-related problems. Problems raised in complaints included prolonged loss mitigation review processes in which the same documentation was repeatedly requested, a lack of responsiveness from the consumer’s single point of contact, receipt of conflicting foreclosure notices while the consumer was undergoing a loss mitigation assistance review, denial of modification applications, and offers of unaffordable modification terms.
• Problems related to servicing transfers were also raised in complaints (such as not being properly informed of a transfer), a prior or current servicer’s failure to apply payments made around the time of transfer to the consumer’s account, a lack of explanation for increased monthly escrow payments, and a failure to provide a new servicer with documentation related to a loss mitigation review process that was ongoing at the time of servicing transfer.
• Other problems raised in complaints involved payments not being accepted or applied as intended particularly for consumers approved for a loss mitigation option, difficulty in communicating with servicers that resulted in confusing and contradictory information, escrow discrepancies (such as over-collection, unexplained shortages and untimely tax and insurance disbursements), the failure by servicers to release funds needed for repairs after receiving insurance proceeds from the consumer that were paid to cover property damage, and difficulties with the loan origination process (such as unresponsive loan representatives, requirements for multiple loan applications and processing delays resulting in loss of favorable interest rates or expiration of rate locks).

In its press release about the complaint report, the CFPB highlighted the mortgage loan complaints regarding loss mitigation, servicing transfers, and communications with servicers. These matters are of significant concern to the CFPB, because it views them as presenting a greater risk of consumer harm. One must consider the potential for the CFPB to use the complaints to justify decisions regarding revisions to the RESPA and TILA servicing requirements in the upcoming final rule or to provide a basis for enforcement activity.

Findings regarding complaints from California consumers include the following:

• As of April 1, 2016, approximately 118,900 complaints were submitted by California consumers of which approximately 50 percent were from consumers in the Los Angeles and San Francisco metro areas.
• Mortgages are the most-complained-about product, representing 32 percent of the complaints submitted by California consumers and 26 percent of complaints submitted by consumers nationally.
• Debt collection and credit reporting were, respectively, the second and third most-complained-about financial products by California consumers. The percentage of debt collection and credit reporting complaints submitted by California consumers was lower than the national average.