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Mortgages top list of troops' consumer complaints

May. 1, 2013 - 10:54AM   |  
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Half of the complaints last year to the Consumer Financial Protection Bureau from service members and veterans were related to mortgage problems, according to an analysis from the bureau’s Office of Servicemember Affairs.

The trend of complaints for troops, veterans and their families closely matches that of overall complaints to the bureau. Yet service members often face different challenges from their civilian counterparts because of frequent moves, deployments and other issues.

“I’d like to have more complaints in there before we start drawing conclusions,” said Holly Petraeus, the CFPB’s assistant director for the Office of Servicemember Affairs. “With more complaints, maybe their profile won’t be the same.”

In 2012, the bureau received 3,455 complaints from service members, veterans and their families, representing about 4 percent of the 91,000 complaints submitted to the bureau. Since the bureau first started accepting complaints in July 2011, about 5,000 were submitted by troops, veterans and families, or about 5 percent of the 104,000 consumer complaints.

The bureau isn’t currently able to determine how many of the complaints were submitted by current service members, how many by veterans, and how many by family members, Petraeus said.

While discussions with troops in the field have indicated that permanent change of station moves present unique challenges for troops — who may have to continue making mortgage payments on a house at a previous duty station — the data doesn’t capture the extent of the PCS effects, she said. But her office’s work in the field led the bureau to issue guidance to mortgage servicers last year on what to do if contacted by service members with issues related to PCS moves.

About 58 percent of the mortgage issues for troops, veterans and their families were related to loan modification, collection and foreclosure.

In the broader categories, about 4 percent of the complaints were related to student loans. The bureau issued a report last year on its concerns about how troops and veterans were being treated as they tried to repay their student loans.

The bureau works with companies to resolve consumers’ problems. Of the complaints received by the military office, 58 percent were “closed with explanation,” meaning that the company provided a response. That didn’t necessarily mean the explanation was satisfactory to the consumer, Petraeus said.

About 10 percent of the complaints resulted in monetary relief to the consumer, Petraeus said. The median monetary relief for those who received mortgage help was $494, and for student loan relief, $1,866.

Petraeus noted that non-monetary relief, which about 9 percent of consumers received, is important too. Not every complaint involves a perceived loss of money. For example, the bureau might help with an incorrect entry on a credit report, or a problem with the opening or closing of a bank account.

An emerging issue is credit reporting. Although the bureau started accepting complaints about credit reporting only in late October, 3 percent of service member complaints for the year were related to credit reporting, as were 4 percent of complaints from the overall population. Of those, 63 percent of service members reported problems with incorrect information on their credit reports.

The bureau began taking complaints about credit cards in July 2011, expanded to mortgage complaints in December 2011, and added complaints about bank accounts and services, private student loans and other consumer loans in March 2012.

The bureau began accepting complaints about money transfers on April 4 and expects to add categories for payday loans and debt collection.

Of the 20 percent of complaints registered about credit cards, 15 percent related to billing disputes.

Of the 15 percent of complaints registered about bank products or services, 44 percent related to account opening, closing or management. Another 13 percent of those bank complaints cited “problems caused by my funds being low.” The number of complaints related to overdraft fees and other problems is not available, Petraeus said.

When the bureau gets a complaint, it verifies the information, then sends it to the company, which has 15 days to respond. The company can ask for more time, up to 60 days.

“We’re happy to have taken this initial step to making complaint data transparent,” Petraeus said. “We encourage service members and families to know and use the system, and help us identify areas where they might be having problems, and we may be able to help.”

Consumers with complaints can call the bureau toll-free at (855) 411-2372, or visit more information. ■

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