The Consumer Financial Protection Bureau (CFPB) this week started publishing consumer complaint ‘narratives’ on its website. Previously, the complaint narratives were not made public.
Publishing the complaints is obviously going to do far more damage to lenders' reputations than it is to servicers' reputations. The basic fact remains: Consumers get to choose their mortgage lender – they do not get to choose their mortgage servicer – and they will always remember the lender that ‘sold’ them their loan.
The new section on the CFPB's website where the narratives are published includes a search tool that lets consumers search complaints by institution name, loan type and in a wide variety of other ways. This means when a consumer is shopping for a home loan, they can quickly search for recent complaints about the lenders they are considering.
That's bad news for lenders – especially because, initially, the complaints aren't vetted beyond the fact that the CFPB checks to make sure each complainant actually has a relationship with the lender they are complaining about.
So what can lenders do to prevent borrowers from complaining about their customer service or business practices?
Well, first and foremost, they have to deliver top-notch service. But lenders should also be asking each and every customer to rate his or her service after completing an interaction or transaction, says mortgage consultancy Stratmor Group.
Once a lender has a positive review from a borrower in hand, it makes it less likely that the borrower will then complain about the lender's service online. By the same token, when a lender asks a borrower if there were any parts of the mortgage process that could have gone better, at least the lender has a chance to work with that borrower to resolve any problems – before the borrower complains online.
‘Our experience surveying tens of thousands of mortgage borrowers tells us that when consumers are not happy, they tell people about it,’ says Garth Graham, managing director of Stratmor's MortgageSAT program, in a statement. ‘Lenders do not want these borrowers placing long, angry narratives into the public complaint database. If the CFPB moves forward with this, the best defense will be for lenders to reach out to these consumers quickly, solving their problems where possible before they complain publicly.’
Recent research conducted by the firm shows that 64% of borrowers will comment on customer satisfaction if asked.
Of those who ranked customer service a six or less on a scale of 10, about 80% posted a negative comment, the research shows.
‘We see that when lenders reach out directly to consumers right after closing to provide feedback, the consumers will provide it,’ Graham says. ‘We think it's better to have that approach than to wait until an unhappy consumer tells the story to CFPB.’
The bureau reports that as of June 1, it had handled more than 627,000 complaints, with mortgages and debt collection being the most frequent topics, since the consumer complaint database was launched in 2012.
Lenders have 180 days to respond to each complaint using pre-set responses that are part of the database and that are also public-facing.
Stratmore's MortgageSAT borrower feedback solution lets borrowers provide feedback directly to a lender via a secure portal 24/7. The lender, in turn, can use this feedback to improve internal processes and enhance customer service.