MBA: CFPB Consumer Complaint Database A Threat To Lenders

The Mortgage Bankers Association (MBA) is lending its voice to the growing opposition against the Consumer Financial Protection Bureau’s (CFPB) proposed Consumer Complaint Narrative Database as the agency continues to solicit comments on its initiative.

Raising a number of concerns related primarily to jeopardizing business owners through making public unsubstantiated claims and misleading consumers, the MBA sent a letter to CFPB’s Office of the Executive Secretary Monica Jackson detailing why the agency’s initiative is inappropriate.

The MBA’s letter follows a letter sent from researchers from the Financial Markets Working Group at George Mason University’s Mercatus Center who say “the bureau’s plan to expand the database to include consumer complaint narratives is outside its statutory authority.”

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The MBA charges that while such narratives should remain available to the bureau for supervisory and enforcement purposes, making them available for public view is unnecessary considering the availability of more balanced non-government avenues to comment.

“MBA believes the CFPB’s posting unsubstantiated and frequently emotional narratives with accompanying complaints could mislead consumers and undermine the stated goal of improving consumer decision-making,” the MBA says. “Providing an opportunity for companies to respond to unsubstantiated narratives does not solve these privacy problems and is not workable.”

The bureau’s proposal states the agency believes the publication of narratives will lead to an increase in consumer contacts, which will have a positive effect on bureau operations.

While the proposal indicates that if information is incorrect “both consumers and the financial institutions that lose business due to misinformation would be disserved,” it adds that “the marketplace of ideas would be able to determine what the data shows.”

But both the CFPB’s and MBA’s industry data demonstrate that few consumer complaints in the complaint database warrant any action beyond an explanation.

“Lenders report that most complaints are not in face complaints in the sense that the consumer is not alleging any wrongdoing,” the MBA says, noting that many complainants file the same complaint multiple times. “Rather, they are attempts to stop foreclosure or expressing unhappiness that a loan modification was denied.”

The MBA’s letter includes three representative lenders’ statistics on their complaints from the CFPB complaint database that show a high number of misdirected or invalid complaints. For one midsized lender, 90% of complaints were misdirected or invalid and only 10% were valid.

“Display of most narratives will mislead consumers and cause significant repetitional harm to companies big and small,” the MBA says.

Access the MBA’s letter here

Written by Cassandra Dowell

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