As the Consumer Financial Protection Bureau, an agency established in the aftermath of the financial crisis to protect ordinary Americans from bad behavior by companies, comes under fire from the Trump administration and Congressional Republicans, a new analysis shows a steady drumbeat of consumer complaints about mortgage products – especially those that touch the most vulnerable Americans.
The analysis, from real estate data web site Trulia, shows that complaints about mortgages of any kind rose 10% from 2012, the first full year the CFPB started taking complaints, through 2016. But those about some specific types of mortgage products have surged in that time: VA mortgage disputes are up 187%, for example, and reverse mortgage disputes are up 172%.
Year Conventional 30-year mortgage FHA mortgage VA mortgage Reverse mortgage 2012 9,808 2,707 495 206 2013 14,424 4,360 771 309 2014 14,118 4,896 877 374 2015 14,339 5,505 1,171 491 2016 13,709 5,478 1,421 562 2017 (through 4/10) 3,015 1,313 359 138
These types of mortgages are “specialized products,” Trulia noted, “loans to veterans, low-income Americans and seniors – that many lenders and servicers may not have the expertise to handle.”
Put another way, more vulnerable borrowers make up a vastly disproportionate share of all Americans with mortgage problems.
For example, service members account for 1.2% of the working-age population but made 5% of all complaints, Trulia noted, while those Americans in CFPB’s category of senior citizens, those 62 and older, accounted for 10% of all complaints. But only 35.8% of people that age have a mortgage if they own a home, according to Census Bureau data, less than half the 83.8% of homeowners aged 45-54.
It’s worth noting that CFPB data tracks complaints, not problems. Still, the fact that over 200,000 consumers registered grievances with the government suggests the legacy of, especially given that so many Americans have no idea the CFPB even exists.
Capital Alpha Partners’ Ian Katz wrote in a client note Monday that some pieces of the Financial Choice Act, the Republican legislation that would restructure the CFPB, are “politically suspect. That is, they would expose supporters to criticism that they are hurting consumers or pandering to big banks…it wouldn’t take a very creative mind to come up with a biting commercial saying incumbent candidate X voted to eliminate publication of consumer complaints. That might be hard to defend in a public setting.”