MReport October 2021

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48 | M R EP O RT SERVICING THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T Complaints About Loan Originations Rise by Nearly 50% A new analysis by the CFPB has found that complaints from wealthier communities were more frequently about loan origination and performing servicing over the course of 2020. T he Consumer Finan- cial Protection Bureau (CFPB) has released its first report analyzing complaint submission patterns by U.S. Census tract, "Consumer Complaints Throughout the Cred- it Life Cycle, by Demographic Characteristics." The report finds that the complaints from wealthi- er communities and communities with higher percentages of white, non-Hispanic residents were more frequently about loan origination and performing servicing, while the complaints from communities of color and lower income com- munities were more frequently about credit reporting, identity theft, and delinquent servicing. The findings of the report were based on the nearly one million consumer complaints submitted to the CFPB between 2018 and 2020, matching relevant consumers to census tract-level U.S. Census demographic data. "Today's report confirms that the experiences and concerns of communities, with consumer financial products and services, vary by race and wealth," CFPB Acting Director Dave Uejio said. "Our consumer complaint data is a crucial tool for understanding varying consumer experiences, including across racial and eco- nomic divides." The report found that consum- ers from lower income and pre- dominantly Black and Hispanic communities submitted credit reporting and delinquent servic- ing complaints at a higher rate per resident than consumers from higher-income and predominantly white, non-Hispanic communi- ties, who were more likely to submit complaints related to loan origination and performing servicing. Asian American and Pacific Islander communities had higher rates of submitting credit reporting complaints than pre- dominantly white, non-Hispanic communities; however, they also had a lower share of delinquent servicing complaints. Key findings of the report include: • Complaints about loan origina- tions increased by nearly 50% over the course of 2020, driven largely by mortgage complaints. This increase was centered in higher-income neighborhoods and neighborhoods with fewer people of color. • Neighborhoods with the high- est share of white, non-Hispan- ic consumers submit complaints about loan originations at more than twice the rate of neighbor- hoods with the highest share of Black consumers. • Consumers from neighbor- hoods with the highest share of Black residents submit the most complaints per resident. Census tracts with the greatest share of Black residents (95% and over) have estimated complaint rates that are double the rates for tracts with the lowest share (5% and under). • Lower income census tracts (those at or below 40% of their area's median income) submit around 30% more complaints per resident than census tracts at around 100% of their area's median income. • Lower-income and communi- ties of color are more likely to submit complaints about credit reporting, identity theft, and delinquent servicing, while higher-income and majority white, non-Hispanic communi- ties are more likely to submit complaints about origination and performing servicing. FIGURE 19: PERCENT DIFFERENCE BETWEEN HIGH AND LOW GROUPINGS FOR ALL FOUR DEMOGRAPHIC CHARACTERISTICS Positive values mean tracts with highest concentration of the race or ethnicity, or greatest AMI, have a greater share of consumers compl aining ab out the l ife cycl e category, negative val ues mean tracts with

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