Analysis Reveals Foreclosure-Related Complaints Declining Faster Than Delinquent Loans

A more in-depth examination of data released last month by Black Knight Financial Services and the Five Star Institute on consumer complaints received by the Consumer Financial Protection Bureau (CFPB) over a two-year period showed that complaints related to foreclosure, modification, and collection are declining at a faster rate than non-current inventory.

Black Knight's March 2015 Mortgage Monitor released on Monday, further analyzed the white paper released in early April by Black Knight and Five Star titled "Analysis and Study of CFPB Consumer Complaint Data Related to Mortgage Servicing Activities." The analysis in the March Mortgage Monitor compared the CFPB's specific mortgage-related complaint categories and associated volumes with their corresponding mortgage servicing volumes for the full two-years period of 2013 and 2014, the number of complaints declined while the number of current loans increased. There are approximately 47 million current mortgage loans nationwide, and 3.7 million of those are 30 days or more delinquent, a decline of 27 percent from the previous year. At the start of 2013, there were fewer current mortgage loans (45 million) and more delinquencies (5.1 million).

The complaints received by the CFPB were analyzed by Black Knight and Five Star in two categories: loan servicing, payment and escrow account complaints measured against current mortgage loans; and loan modification, collection, and foreclosure complaints measured against non-current loans. The data showed that modification, collection, and foreclosure-related complaints were falling at an even fast rate than the number of non-current loans over that same period. In Q1 2013, the number of such complaints were received by the Bureau totaled 10,047; for the fourth quarter of 2014, that number was 4,741, a decline of 53 percent–compared to  the 27 percent decline for non-current loan inventory.

The number of foreclosure, collection, and modification complaints received by the Bureau computed to about 13 complaints for every 10,000 non-current loans.

The number of loan servicing, escrow, and payment-related complaints has been relatively stable with the volume of current inventory over the two-year period of 2013 and 2014. As of the end of 2014, the number of such complaints averaged less than one per every 10,000 current loans (0.77). This number briefly spiked up to 0.94 in Q1 2014, which was "potentially indicating more of a publicity effect from CFPB media efforts than discrete servicer actions," according to Black Knight.

The CFPB began accepting mortgage-related complaints in early 2013 and received about 59,000 such complaints that year, 37 percent of the total complaints received by the Bureau (163,700). The number of mortgage-related complaints declined by about 8,000 in 2014, down to 51,200, or 20 percent of all complaints received that year (250,700).

Editor's note: The Five Star Institute is the parent company of The MReport and TheMReport.com.