New CFPB Complaint Report Shows Mortgage Brokers Are the Best Originators

by 03 Apr 2013

NAMB disputes  classification of “mortgage broker” pertaining to consumer complaints

APRIL 3, 2013—The National Association of Mortgage Brokers (NAMB) has come out in support of the Consumer Financial Protection Bureau’s (CFPB) release of the Consumer Complaint Database, a public database of federal consumer financial complaints, containing more than 90,000 individual complaints on financial products and services. One of NAMB's core beliefs is the protection of consumers and their rights to fair and equal credit as it pertains to the residential mortgage market. It is NAMB’s belief that the CFPB’s Consumer Complaint Database will assist consumers in identifying reputable and efficient sources for obtaining credit needed to purchase a home in today's heavily regulated market.

“In reviewing the information on the current Consumer Complaint Database, it seems that the mortgage broker is again being thrown into a category with ‘Application, Originator and Mortgage Brokers,’” said Donald J. Frommeyer, CRMS, NAMB president. “I would think that mortgage brokers would be in a category separate from the other two items.

According to the Consumer Complaint Database, of the 3,564 complaints filed with mortgage broker, 2,745 actually belonged to banks, not mortgage brokers. A closer examination shows that only 22 out of the 50,457 complaints filed are against mortgage brokers—a 0.0436 percent negative feedback reading against the mortgage broker community.

“It seems that this is creating a public perception that all origination complaints are against mortgage brokers when their own real data shows otherwise,” said Frommeyer. “The CFPB needs to make sure that the information that is being accumulated makes sense so that all consumers can and will eventually use this information as a correct and complete guideline.”

According to NAMB, the term “mortgage broker” has, for the last three years, been used to categorize both depository and non-depository institutions, when in fact, it should not. This unintentional oversight appears to have been made by the CFPB when defining the  institutions receiving complaints.

“A mortgage broker, as defined by the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) is a non-depository institution that, for compensation, arranges a residential mortgage,” said Richard M. Bettencourt Jr., CRMS, chairman of the NAMB Government Affairs Committee. “The mortgage broker does not close, fund, or underwrite the file in question. The depository lender and mortgage banker, however, do, in fact, underwrite, approve, fund and close those transactions in their name, thus those institutions can be categorized as anything but a mortgage broker.”

NAMB is excited about the opportunity to work with the CFPB in the years to come to ensure that consumers nationwide are provided with the highest level of consumer protection.

“The data released by the CFPB shows that mortgage brokers receive the least amount of complaints of any origination channel,” said Bettencourt. “The bulk of complaints are for mortgage servicers and about not helping with payment issues. After sorting all of the 993 complaints against origination, less than 10 were against mortgage brokers.”

COMMENTS

  • by Marc Savitt | 4/4/2013 10:07:50 AM

    Supporting this database is dangerous and wrong. Here's a direct quote from the CFPB Press Release: "Importantly, while the allegations in the complaint are not verified, a commercial relationship between the consumer and the company is substantiated before the complaint is added to the database." BUT the complaint itself is NOT verified!! While the numbers are good for brokers today, they will be increasing with our market share. Almost everyone in DC expressed concerns about releasing unverified information. Even one unverified "complaint" about a broker could be used against them by competition or trigger an audit by a state regulator. Publicly or privately supporting this database was a mistake.

Poll

Is TILA-RESPA a good or bad thing long term?