The Consumer Financial Protection Bureau’s (CFPB) controversial consumer complaint database could be the agency’s undoing if proper oversight is not put into place, says Mortgage Bankers Association (MBA) President and CEO David Stevens.
In an MBA column last week, Stevens aired out his most recent concerns with the CFPB’s complaint database, specifically emphasizing that the Bureau permits unverified consumer complaint narratives without allowing the accused parties the ability to respond.
“I firmly believe this database continues to fail the transparency test, and without real reforms its so-called growing pains will ultimately be its undoing,” he said.
While Stevens acknowledged that the premise of the database is noble in allowing consumers the ability to voice their experiences with a lender, or other financial institution, he says that the CFPB has failed to install a mechanism to substantiate the complaints submitted to the database.
These shortcomings can have serious consequences not only for the financial services industry, but for the CFPB and consumers as well, Stevens suggests.
“Equally concerning, the database could be putting the consumer’s privacy in jeopardy,” Stevens said. “Misinformation can, and has, infected the entire system and CFPB has yet to take real steps to correct it.”
Stevens’ comments arrive just days following the CFPB’s most recent Monthly Complaint Report, which provided a snapshot into the mortgage complaints filed by consumers with the Bureau. Reverse mortgages were not explicitly mentioned in the report.
Included in the monthly report were notations of the lenders with the most complaints. And to not much surprise, the largest lenders dominated the list, including Wells Fargo (NYSE WFC), Bank of America (NYSE: BAC) and Ocwen (NYSE: OCN), to name just a few.
“Is this surprising?” Stevens asked in the column. “The companies that issue the most loans have the most complaints? That’s like saying California has the most delinquent loans. Of course it does. California may have more loans past due than any other state, but its delinquency rate is much lower than that of other states, due to its relative size.”
Stevens is not the only one calling for improved management controls for how the CFPB governs consumer complaints in its database.
Several weeks ago, an audit from the Office of the Inspector General (OIG) raised concerns after it found “noticeable inaccuracies” in its analysis of more than 250,000 complaints as of June 30, 2014. As a result, the OIG listed several recommendations for the CFPB to assess the accuracy of its complaint database.
In his column, Stevens offered similar recommendations; the first and foremost being that the CFPB must verify all of the complaints before they are published.
“This includes validating the authenticity of not only the complaint, but also the person making the complaint,” he said. “It also means talking to the financial institutions and seeing what is being done to correct any problems.”
Second, Stevens recommends the CFPB has to stop releasing its monthly results until the Bureau can scale these complaints to the size of the loan provider.
“It’s quite possible that the lenders mentioned in these monthly snapshots have a low complaint rate compared to the total number of loans they issue,” he said. “However, without normalizing the data, the reader is left to draw incorrect conclusions about the financial situation.”
“There is a lot of good being done by the CFPB,” Stevens said. “But this database continues to provide a disservice to lenders and consumers alike. It is of the upmost importance that they fix the glitches in their system as quickly as possible.”
Written by Jason Oliva