That may be one of the reasons that home mortgages are among Americans' biggest gripes, a fact highlighted in a report released this week by the U.S. Public Interest Research Group Education Fund. In an analysis of four years worth of complaints to the Consumer Financial Protection Bureau, a government watchdog agency created after the financial crisis, researchers found that mortgage complaints accounted for almost 40% of the roughly 363,000 claims, or about 138,000.
The remainder, about 60% of the total complaints, was dispersed between student loans, credit cards, consumer loans, debt collection, and other financial products. The bureau, authorized by the Dodd-Frank Wall Street Reform and the Consumer Protection Act in response to the 2007-2008 financial crisis, has secured over $2.9 billion in refunds and relief by taking enforcement actions against more than 40 companies, according to the Public Interest group's research.
Before the consumer protection agency was established in 2011, "people who experienced problems with mortgages or any financial products were really at the whim of negligence, deceit, and illegal practices by mortgage companies," said Mike Litt, a consumer protection advocate with the Public Interest Research Group. "Now, we do have that 'cop on the beat.'"
Among the mortgage claims, the majority, 85%, were related to two categories of problems -- consumers who couldn't make payments or those who had problems doing so. That included difficulties with loan modifications, collections, foreclosures, loan servicing, payments, and escrow accounts.
Borrowers who complained to the federal agency were able to resolve them by getting an explanation about 86% of the time; they received monetary relief in about 4% of cases, according to the analysis of its complaints database. Just last month, the bureau started allowing consumers to post their personal stories in the database, sharing both their aggravation and their confusion.
Companies topping the grievance list, with the highest number of complaints, are Bank of America (BAC - Get Report) and Wells Fargo (WFC - Get Report), according to the report. Bank of America, based in Charlotte, N.C., generated the most claims in 45 states and the District of Columbia, a trend due in part to its 2008 acquisition of subprime lender Countrywide Financial. That company specialized in loans to borrowers with credit scores too low to qualify for traditional mortgages, and buying it made Bank of America, which didn't offer such loans, a leading mortgage provider.
"The report reflects when we held the dominate mortgage servicing market share at the peak of the economic downturn," Bank of America said in a statement. "We have since helped more than 2 million customers avoid foreclosure and reduced the number of seriously delinquent mortgage loans to less than 10 percent of peak levels."
Bank of America remains a significant mortgage lender, extended $16 billion in home mortgages in the second quarter and $3.2 billion in home-equity loans, according to its earnings statement on Wednesday.
Wells Fargo also cited market share as a cause for the volume of complaints; adjusting to account for that, the San Francisco-based company drops to ninth place.
Wells Fargo predicted Tuesday when it reported second-quarter earnings that new home loans would drop from an almost two-year high in the third quarter after applications slowed during the past three months and its pipeline shrank by $6 billion. The company issued $62 billion in home loans in the second quarter.
"No matter how we obtain customer feedback, we value it, take it seriously and we work with each customer to attempt to find solutions that meet the customer's needs and individual circumstances," said Tom Goyda, vice president of Wells Fargo consumer lending communications.
Geographically, the Public Interest group's report showed, mortgage borrowers living in the District of Columbia, Maryland, and New Hampshire made the most noise, filing the largest number of complaints per capita.
The opportunity they now have to share their stories, unfiltered, has made the consumer finance agency even less popular with the mortgage industry, which had never been a fan.
"It's a one-sided, unfiltered submission without any pre-checking or validation," said David Stevens, president and CEO of the Mortgage Bankers Association. "It's unfortunate that the bureau has chosen not to require some validation of the individual's complaints, just to make certain that we're not exaggerating what has already been a very difficult, challenging environment for so many homeowners and for other stakeholders in this housing recession that we are just emerging out of today."
The bureau has offered significant help to consumers, Stevens said, but that doesn't eliminate its responsibility to provide accurate information about the behavior of both borrowers and lenders.
"What bothers me, in this case, is that it draws an immediate assumption that all of these are accurate, definite, clear violations by the financial services industry and that's clearly not the case," he said.
Mortgage lenders "try to argue that these are unsubstantiated complaints, but really what's happening is that they don't want a flashlight shown on their practices," Litt said. "The CFPB, the database, and all of their educational tools are perfect examples of good government working in the public interest."