Americans' No. 1 financial complaint
Quick quiz: Which financial product prompts the most complaints by consumers?
If you're thinking of things like risky payday loans or high-interest-rate credit cards, try again. The product that consistently causes people the most grief is mortgages, according to an analysis of the Consumer Financial Protection Bureau's complaint database by the U.S. PIRG Education Fund.
Since the federal agency started accepting mortgage complaints in 2011, it's received more than 138,000 grievances from consumers, more than any other product and representing about 38 percent of all published complaints.
The report found that one bank stood out, earning the dubious distinction of being the most complained about company in 45 states and the District of Columbia: Bank of America (BAC).
Bank of America has attracted more than 31,000 complaints about mortgages, or almost 23 percent of overall complaints, the study found. That was followed by Wells Fargo (WFC), with more than 19,000 complaints, or about 14 percent, and Ocwen (OCN), with about 15,500 complaints, or 11.2 percent of overall grievances.
"Before the CFPB was created, victims of mortgage errors like misapplied payments and incorrect late fees were at the mercy of the banks," said Mike Litt, consumer program advocate with the U.S. PIRG Education Fund, said in a statement. "Now, we have a cop on the beat."
So what are the complaints about? About 85 percent of grievances fall into two categories: problems that arise when consumers are unable to pay, and difficulties making payments, the study found.
With the former category, consumers cited issues with delays and a lack of clarity when they sought loan modifications. Borrowers facing foreclosure complained about the fees assessed in the process, since some mortgage servicers refuse to roll those expenses into the loan balance, making it more difficult to avoid foreclosure. The issues involved with making payments include difficulties when loans are transferred, escrow deficiencies and late tax payments, which lead to fees and penalties.
"Imagine getting approved for a loan modification that you need to avoid a foreclosure, only to risk losing your home because you've been given less than two weeks to turn in paperwork instead of the four weeks you were originally told you would have," Litt said, adding that a U.S. veteran from Virginia faced exactly that situation.
The sheer number of disputes over mortgages may partly reflect their popularity, with almost two-thirds of Americans owning their homes. The flood of grievance also likely represents fallout of the housing crash, when home values plummeted and foreclosure rates spiked. Even today, 15.4 percent of U.S. homeowners are underwater, meaning they owe more on their mortgages than their homes are worth, according to real-estate data site Zillow.
Consumer trouble with mortgages appears to be tapering off. In early 2015, debt collection become the top complaint on the CFPB database, while mortgage complaints become the second most-complained about product, the report found.