Watchdog Gives Lenders A Pass On Complaints

By Jessica R. Towhey

After spending months trying to arrange a repayment plan with her mortgage servicing company, a South Carolina homeowner filed a complaint with the Consumer Financial Protection Bureau. The complaint was listed as closed just days after Shellpoint Mortgage Servicing provided the agency with its explanation – one that did not resolve the issue and one that is not sufficient to the homeowner.

The homeowner learned that Shellpoint was her new mortgage servicer in December after receiving correspondence that she and her husband were behind on their payments. Although she said they were current as of September, Shellpoint said otherwise. The homeowner said they eventually reached an agreement to make down-payment of $6,577.71 so they could enter a repayment plan, but Shellpoint cancelled the payment after informing them of more than $2,000 in additional fees. 

“We need to keep a roof over our kids’ heads,” said Scarlett, the homeowner. The Mortgage Note is not sharing her last name to protect her privacy. “This is their childhood home. It is our home.”

At that point, Scarlett filed a complaint with the Consumer Financial Protection Bureau. On May 4, the bureau sent the complaint to Shellpoint. On May 15, the company responded and the complaint was promptly listed as “closed with explanation” in the bureau’s public database. 

Consumer complaints to the CFPB are listed in a public database. Consumer advocacy groups were relieved when the Trump Administration said in September it would not make good on a threat to do away with the database. 

“It’s a way to hold companies accountable,” said Ruth Susswein, deputy director of Consumer Action. “It is a tool to empower consumers. It has the potential to be helpful to empower people in making smarter financial decisions up front. It’s a place where people can turn and report their problems to an agency that has made part of its mission to help people get a response and sometimes get results to their complaints.”

“Sometimes get results” is what roils consumer advocates. The kind of quick resolution and relying on the company’s explanation that Scarlett experienced has become more common under the Trump administration, which has backed off enforcement measures to companies overseen by the CFPB. 

Change In Focus

A May 2019 report from the Consumer Federation of America found that, by that point, the Bureau has not announced any mortgage lending cases or consumer restitution while the previous administration returned nearly $3 billion to consumers at a pace of more than $10 million per week. 

The CFPB did not return a call for comment.

On June 9, The Mortgage Note published a story noting that Shellpoint Partners had the highest number of consumer complaints in both April and May.

“The fact that Shellpoint is number one on the list tells me their servicing hasn’t been very good,” said Ira Rheingold, executive director of the National Association of Consumer Advocates.

Mortgage servicing companies such as Shellpoint collect payments for the companies that own mortgages. When homeowners fall behind on mortgage payments, the servicing companies have to advance the payments to the owning companies and then try to recoup that. Or, they can move the mortgages into foreclosure and halt advancing the payments, Rheingold said.

“The service companies don’t actually have the money to advance,” he said. “No one’s required them to have that reserve.”

Solutions Available

Although there is little help available until homeowners fall behind on their payments, servicing companies can offer solutions such as payment modifications or forbearance to help homeowners, depending on the kind of mortgage they have. Still, Rheingold said that most of the companies have not invested in their employees to be able to offer those to mortgage holders. 

Scarlett would agree. 

She told The Mortgage Note that they fell behind after she became bedridden in December from an autoimmune disease. They were assigned three different Single Points of Contact, and only were able to make arrangements after contacting the lawyer on the foreclosure paperwork. Scarlett said they took money from her husband’s 401(k) for the down payment that Shellpoint wound up cancelling. 

“Shellpoint acknowledges you experienced difficulties reaching our Customer Service department to speak with your Single Point of Contact,” Shellpoint wrote to Scarlett in a letter dated May 19. “We would like to apologize for the inconvenience. … Although we apologize for any inconvenience, Shellpoint has determined there have been no errors in the servicing of the loan.”

Shellpoint did not return calls seeking comment.

Mortgage Note reporter Jessica R. Towhey can be reached at [email protected]