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Letter to CFPB on a Mortgage Consumer Complaint System

Letter to CFPB on a Mortgage Consumer Complaint System

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Published by: The Partnership for a Secure Financial Future on Jan 14, 2012
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01/14/2012

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November 7, 2011Mr. Raj DateSpecial Advisor to the Secretary of the TreasuryConsumer Financial Protection Bureau1801 L St., N.W.Washington, D.C., 20036RE: Mortgage Consumer Complaint SystemDear Mr. Date:The undersigned trade associations, the American Bankers Association, ConsumersBankers Association, Financial Services Roundtable, including its Housing PolicyCouncil, and the Mortgage Bankers Association
1
appreciated participating in the
1
 
The American Bankers Association (ABA) represents banks of all sizes and charters and is the voice for the nation’s$13 trillion banking industry and its two million employees. The majority of ABA’s members are banks with less than
$165 million in assets.The Consumer Bankers Association (CBA) is the only national financial trade group focused exclusively on retailbanking and personal financial services
banking services geared toward consumers and small businesses. As therecognized voice on retail banking issues, CBA provides leadership, education, research, and federal representation
for its members. CBA members include most of the nation’s largest bank holding companies as well as regional and
super-community banks that collectively hold two-thirds of the total assets of depository institutions.The Financial Services Roundtable represents 100 of the largest integrated financial services companies providingbanking, insurance, and investment products and services to the American consumer. Member companies participatethrough the Chief Executive Officer and other senior executives nominated by the CEO. Roundtable membercompanies provide fuel for America's economic engine, accounting directly for $92.7 trillion in managed assets, $1.2trillion in revenue, and 2.3 million jobs.
The Roundtable’s Housing Policy Council is made up of thirty
-two companies that are among the nation's leaders inmortgage finance. Member companies originate seventy-five percent of the mortgages for American home buyersand provide mortgage insurance and servicing to the majority of American home owners. Member companiesparticipate in the Council through the senior mortgage executive in their company. Members of the Council are:American Home Mortgage Servicing, Inc., Assurant, Banco Popular, Bank of America Corporation, BB&TCorporation, Citigroup Inc., CoreLogic, Deutsche Bank Securities Inc., Essent Guaranty, Inc., First American TitleInsurance Co., Fiserv, GMAC Mortgage, LLC, Genworth Financial, Huntington National Group, JPMorgan Chase &Co., Lender Processing Services, M&T Bank Corporation, MetLife Bank, N.A., MGIC, Nationwide, PMI Group, PNCFinancial Services Group, Quicken Loans, Radian, RenaissanceRe / Weather Predict Consulting, Saxon Mortgage,Springleaf Finance, Inc., State Farm Insurance Companies, Stewart Title Company, SunTrust Banks, Inc, US Bank,and Wells Fargo & Company.The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, anindustry that employs more than 280,000 people in virtually every community in the country. Headquartered inWashington, D.C., the association works to ensure the continued strength of the nation's residential and commercialreal estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBApromotes fair and ethical lending practices and fosters professional excellence among real estate finance employees
 
 
2conference call of the Consumer Financial Protection Bureau (CFPB) on October 20,2011. On that call, the CFPB outlined its plan to begin accepting mortgage-relatedcomplaints via the consumer response portal at www.consumerfinance.gov on or about December 1.
The CFPB’s complaint resolution system is enormously important to our member 
organizations and the consumers they serve. While we were grateful for the call, itraised numerous issues that we believe must be resolved before the system becomesoperational.If the new consumer complaint system is properly developed and implemented, it willprovide a highly efficient and cost effective means for consumers to submit, and lendersto address, consumer complaints. On the other hand, if the system is hastily conceived
and implemented, it will unduly increase regulatory burden and costs, put consumers’
personal information at risk, and, most importantly, harm the very consumers the CFPBis designed to protect.We strongly believe that before the consumer complaint system for mortgages isfinalized, CFPB should provide
all 
stakeholders with the opportunity to provide input tothe CFPB on the proposed system. This includes consulting and coordinating withother government agencies that receive consumer complaints about financialinstitutions and giving the industry a reasonable opportunity to provide input regardingthe system. Effective collaboration will include getting input from stakeholders on userrequirements, testing (including stress testing), training and system documentation.
A. Process
 –
Consultation with Industry
 Today, financial services companies have in place a range of systems to addressconsumer complaints. The CFPB should consult with these companies and draw ontheir expertise through the undersigned associations. Development of the complaintsystem should include regularly scheduled calls and/or meetings with a wide a range ofindustry participants or possibly a representative industry advisory council.
 
Eitherapproach
 
must assure regular input from companies of all types and sizes. Whilemention was made on the call of the CFPB conducting conversations with individualmembers to gather input, we believe such an approach is far from optimal; it willexclude important viewpoints and deprive too many entities of understanding as theywork toward system implementation. We ask that the CFPB work with us to ensure inputfrom a wide range of institutions.
through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companiesincludes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, WallStreet conduits, life insurance companies and others in the mortgage lending field. For additional information, visitMBA's Web site: www.mortgagebankers.org. 
 
 
3In order to maximize the value of the calls or meetings, we believe areas of concernshould be broken into workable subjects. Some of the areas that deserve particularattention are described below. Moreover, we believe that CFPB should provide a moretransparent process that allows all stakeholders
representatives of consumers, thebanking and nonbanking industry, and other government agencies
equal opportunityto provide input.
B. Intake/Submission of Complaints
The CFPB indicated it is now finalizing the intake screens for the system that include aquestionnaire for complainants that is modeled on the existing credit card complaintsystem. However, these screens have not been provided to the industry participants.Based on industry experience, consumer complaints regarding their mortgages differmarkedly from credit card and other financial concerns. Lenders should be invited toprovide input and advice to formulate the intake question screens to ensure they
accurately describe consumers’ complaints. Sound system development in this area
will increase efficiency and could help winnow out redundant claims or those that do notinvolve an actionable complaint.
C. Coordination Among Complaint Systems
Complaints by consumers are sent to lenders today by state regulators, attorneysgeneral and other federal, state and private agencies, as well as by consumersthemselves. Industry input on how these various systems work, their timelines andimperatives, and how they might be coordinated with CFPB complaints would, amongother things, inform decisions on how the new system should operate and itstimeframes for complaint resolution. Consultation with other regulators to ensure thesystems are as compatible as possible is also essential, and as discussed below, isrequired with federal regulators.Consultation and coordination will not only improve efficiencies, it will help to reduce thepotential for consumer confusion. For example, several large financial institutions areimplementing requirements in connection with supervisory consent orders. Specifically,the institutions must
perform a review, or ―look back,‖ of accounts over a two year 
period between January 1, 2009 and December 31, 2010. In connection with thisprocess, on November 1, 2011, the Office of the Comptroller of the Currency and theFederal Reserve announced the establishment of a website,www.IndependentForeclosureReview.com,and a dedicated phone line for consumers toobtain information about the review and claims process. This is in addition to the
institutions’ own efforts to i
dentify and contact individuals who are eligible to participatein this review.
Moreover, processes to accomplish the ―look back‖ have already beenapproved by the institutions’ supervisory agencies, and the affected institutions have
launched or are about to launch these processes.
We believe that a December 1 launch of the CFPB’s mortgage portal
yet another newintake portal for consumer complaints about mortgages
 –
may unnecessarily confuse

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