April 2016 - Tech Revolution

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TH E M R EP O RT | 45 O R I G I NAT I O N S E R V I C I N G A NA LY T I C S S E C O N DA R Y M A R K E T ORIGINATION THE LATEST Mortgages Top Complaint List People carp more about this type of financial product than any other, CFPB reports. M ortgage loans in today's housing mar- ket are not keeping homebuyers happy, as they are the most-complained- about product in the eighth volume of the Consumer Finan- cial Protection Bureau's (CFPB) Monthly Complaint Report. The CFPB's report showed that as of February 1, the CFPB has handled a total of 811,700 complaints nationally, up 8 percent from December 2015 and January 2016. The three most-complained- about financial products were debt collection, mortgages, and credit re - porting for January, representing 67 percent of complaints submitted. In January, the Bureau received 21,800 complaints, and 4,263 of these were mortgage-related complaints, up 12 percent month- over-month. Mortgages were the second-most-complained-about category this month, but the high - est complained-about financial product overall. The CFPB has re- ceived a total of 213,861 mortgage- related complaints. The CFPB began accepting complaints from consumers about financial products shortly after opening its doors in July 2011. The mortgage market is the largest consumer financial marketplace in the country with more than $10 trillion in total value. The CFPB enacted new mortgage rules in 2014 to ensure strong consumer protections and also ensure that lenders offered affordable mort - gages to consumers. "Despite strong protections that have been put in place to protect homeowners, this month's complaint report shows consum - ers are still having problems when dealing with their mortgages," CFPB Director Richard Cordray said. "The Bureau will continue to work to make sure that con- sumers are being treated fairly on their mortgage issues." The CFPB once again pointed to the credit reporting agen- cies—Equifax, TransUnion, and Experian—as the top three most- complained-about companies from September and November 2015. The CFPB's Consumer Complaint Database has gener - ated much controversy since June when it began publishing narra- tives of complaints from con- sumers—so much so that CFPB Director Richard Cordray issued a rare public response to the criti- cisms in late November. The CFPB's Ombudsman Office issued its annual report for FY 2015 to Cordray outlining potential changes to the database. One of the items mentioned was a need for the normalization of data presented. Also according to the ombuds - man's report, the CFPB and com- panies are working together to prevent duplicate complaints from being published in the database and that in recent months the companies are taking more of a role in identifying duplicate com - plaints. The ombudsman recom- mended that Consumer Response share an expanded definition of "duplicate complaint" on the Consumer Complaint Database website to include complaints that are from "the same person, same transaction, and same issue" and not just complaints that are simply verbatim copies of previ - ous complaints. The purpose of expanding the definition of "du- plicate complaint" is so database users can adjust their calculations and analyses accordingly, accord- ing to the report. "In our FY 2014 Annual Report, we highlighted the concern from industry groups about the need for normalization of data in the public Consumer Complaint Database to provide context to the data and continued to hear this and related concerns in FY 2015," the ombudsman stated. "This year, we provided feedback and suggestions to the CFPB regarding normalization of the data." that HELOC debts decreased 3.7 percent from $514.2 billion to $495 billion from January 2015 to January 2016. In addition, home equity installment loan balances fell 5.1 percent from $138.5 billion to $131.4 billion over the same time period. "With many HELOCs hitting their recast into amortization, we are seeing increased payoffs, reducing the debt and numbers of HELOCs outstanding. About 20 to 25 percent of HELOCs active a year prior to their recast anniver - sary will pay off and close within the year after date. Originations of new loans are not keeping pace with the payoffs." Existing first mortgage numbers rose 0.4 percent year-over-year in January to reach 50.1 million, while at the same time, HELOCs and home equity installment loans declined 3.2 percent and 2.5 percent, respectively. The Equifax report showed that the total number of new first mortgages originated January 2015 to November 2015 was 7.6 million, up 43.2 percent from a year ago. The total balance of first mort - gages originated in that same time was $1.79 trillion, an increase of 56.7 percent. The severe delin- quency rate among first mort- gages, or balances that are 90 days past due or in foreclosure, was 1.75 percent in February, down from 2.5 percent the same month last year. The total number of new home equity installment loans originated January 2015 to November 2015 was 760,900, up 32.4 percent year- over-year, while the total balance of new loans was $25.1 billion, an increase of 25.2 percent. The severe delinquency rate for these loans is 1.63 percent, down from 2.12 percent same time a year ago. From January 2015 to November 2015, the total balance of new HELOC loans was $135.3 billion, up 21.6 percent from the same time a year ago. In that same time, the total number of new loans origi - nated was more than 1.29 million, an increase of 13.1 percent, Equifax said. The severe delinquency rate for these loans is 1.34 percent, down from 1.49 percent the same time a year ago.

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