Mortgage Servicing: Top Complaints Include Misapplied Escrow Funds, Resolving Payment Issues

The $10 trillion U.S. mortgage market is the largest in the world and credit consumers continue to report problems with mortgage servicing.

The U.S. Consumer Financial Protection Bureau says that more than 80 percent of mortgage-related complaints submitted to the Bureau had to do with issues that arise when making payments, or when they were unable to pay their mortgage.

Over the past three years, the Bureau has created new protections for consumers such as requiring lenders to determine that consumers can afford to repay their mortgages. The Bureau has also debuted consumer-friendly forms to help mortgage shoppers avoid unexpected issues at the closing table.

As of Jan. 1, 2017, the Bureau handled approximately 260,500 mortgage-related complaints. Some of the findings:

Funds misapplied: Consumers complained that when they paid for identified shortages in their escrow accounts, the money they paid was not applied accurately and resulted in an increase in their monthly payments. Additionally, consumers complained that electronic monthly mortgage payments made via bill pay services through their financial institutions were not properly credited to their loan accounts.

Issues with servicers when trying to resolve loan problems: A frequent mortgage-related complaint from consumers had to do with problems dealing with their servicer when trying to negotiate foreclosure-relief assistance on their loans. Consumers stated that servicers were slow to respond, made repeated requests for already submitted documents, and provided ambiguous denial reasons.

Companies with the most mortgage-related complaints: The three companies that the Bureau has received the most average monthly complaints about were Wells Fargo, Bank of America, and Ocwen.

Consumers can file a complaint with the CFPB here.

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