Borrower complaints against lenders have been collected since July 2011 by the Consumer Financial Protection Bureau (CFPB), created as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. So far it has collected 45,000 complaints from consumers about unfair or abusive lending practices.

37,000 of those complaints were forwarded to the relevant companies, who responded to 89% of them. 80% of the complaints the CFPB received have been resolved to the consumer’s satisfaction. Most important to our readers, a whopping 42% of the complaints pertained to mortgages.

The CFPB has made these consumer complaints available to the public via an online searchable database. The database does not reveal the individual personal information of the consumer, but  details the company involved, its response, whether the response was disputed, the zip code from which the complaint originated and the type of complaint.

So far, the database is limited to credit card complaints, but will expand in the coming months to include mortgage complaints for all to review. Once these become available, agents will have another source to check into the conduct of a lender before they steer a client their way.

first tuesday take

Government is good at many things in spite of clichés – which was the fear lenders had about establishing the CFPB.  In nearly one year, the CFPB has exceeded expectations, proving not all government efforts are purely lip service.

As the above report shows, consumers’ individual complaints are indeed being addressed. Further, consumers are given 30 days to dispute a company’s response if it is unsatisfactory. The CFPB’s website is also designed to be accessible to the layperson, increasing transparency and empowering consumers to actively participate in the CFPB’s efforts to decrease unfriendly (and unsound) lending practices.

Once the CFPB makes consumer mortgage complaints searchable, mortgage borrowers (and their agents) can readily see which lenders receive few complaints, and are thus more likely to be borrower-friendly, versus those with a rap sheet pocked and scarred with the evidence of malfeasance. Likewise, agents can search for banks by zip code to determine which lenders are bad actors and which ones to recommend. Thus equipped, agents can knowledgeably inform their clients where they can receive the best service.

Related article:

Borrowers must stay savvy among increased loan options

If you don’t already have a mantra, consider adopting “transparency, transparency, transparency” (admittedly not as catchy as location, location, location) as the CFPB has done. Disclosing all complaints and responses, as well as making the data searchable and user-friendly, is something the real estate industry can learn from and implement before legislation does it (as was the case with agency law disclosures). Instead of following in the lenders’ footsteps, speak plainly and willingly, and share all readily available property details – ASAP. Transparency gets the deal done.

Related articles:

Holmes v. Summer: dilatory disclosures and the damage done

Closing the real estate information gap

View the CFPB’s Consumer Complaint Database, here.

Re: Consumer Bureau Says It Resolved 4 of Every 5 Complaints