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   ARTICLE   |   From Scotsman Guide Residential Edition   |   November 2016

Creating a Clear Reflection

Accuracy is paramount in the online complaint process

Creating a Clear Reflection

Transparency, clarity and accuracy are important aspects of mortgage lending. Likewise, they are equally essential when it comes to the online-complaint process. Imagine a cluttered, dark room with a tarnished and dusty mirror. The mirror is only useful if it is in good condition; otherwise, it presents a distorted reflection.

The allegory of the mirror can signify the process for handling online borrower complaints in the mortgage industry. When inaccurate complaints are posted on the internet, it’s as if the individuals who read those complaints are using a tarnished, dusty mirror. Pieces of “truth” may show through, but they are skewed by an unclear, incomplete picture. With a thorough cleaning and relocation to a bright room, the mirror reflects a much clearer, more accurate and distinctive picture.

The topic of online complaints in the mortgage industry has recently come into the spotlight — specifically, in June, when U.S. Rep. Matt Salmon, R-Ariz., introduced H.R. 5413. The legislation would, among other things, require certain changes to the consumer-complaint database hosted on the Consumer Financial Protection Bureau’s (CFPB’s) website. Also known as the “CFPB Data Accountability Act,” Salmon’s bill has drawn the attention of mortgage lenders in recent months.

Currently, individuals have the option of writing a narrative when submitting a complaint to the CFPB’s consumer-complaint website. The CFPB Data Accountability Act, if passed, would require the bureau to verify the accuracy of the information submitted before making it available to the public, if the information submitted contains an alleged violation of law. This might require some extra legwork on the part of the CFPB, but it would help prevent untruthful claims from making their way to the public database.

The bill also would require the CFPB to make complaint information available to the public on its website only “in an aggregated format and after taking steps to ensure that proprietary, personal or confidential consumer information is not made public on such website.”

Consumer-advocacy groups, such as Americans for Financial Reform, the National Association of Consumer Advocates and the National Fair Housing Alliance, have come out against the bill. Proponents of the CFPB complaint database point out that the bureau does at least verify that complaints come from individuals who have an account with the company they are lodging a complaint against. They also note that other government agencies, such as the National Highway Traffic Safety Administration and the Consumer Product Safety Commission, also provide publicly searchable databases for consumer complaints.

As of the end of this past September, no further action had been taken on H.R. 5413 after its introduction in the House of Representatives in June, and Govtrack.us only gives the bill a 3 percent chance of being enacted. The fate of the CFPB Data Accountability Act may still be swayed one way or the other, however, in the wake of this month’s presidential election.

Vital platform

Whether it passes or not, H.R. 5413 brings up a topic that is of vital importance to mortgage professionals across the industry, and should be important to borrowers as well. Ensuring that accurate and helpful information about mortgage lenders is available to the public is critical to the proper functioning of the mortgage market.

It is vital for borrowers to have a platform to publicly share their complaints, so that other homebuyers are made aware of issues and concerns and can make more informed choices about selecting a mortgage lender. Considering that borrowers are making a significant financial decision when they opt to apply for a mortgage loan, the more informed they can be about their lender, the better.

The accuracy of information in the online world is not always guaranteed.

The CFPB’s website states: “By submitting a complaint, consumers can be heard by financial companies, get help with their own issues, and help others avoid similar ones. Every complaint provides insight into problems that people are experiencing, helping us identify inappropriate practices and allowing us to stop them before they become major issues. The result: better outcomes for consumers and a better financial marketplace for everyone.” Again, this reflects the end goal of equipping borrowers with the most accurate information, so they can make the best decisions for their unique situations and goals.

In a digital world, information is certainly readily available — which can be a huge advantage for individuals who are researching the possibility of making significant financial purchases. The accuracy of information in the online world is not always guaranteed, however, which is what has many mortgage professionals concerned.

Borrowers cannot make informed choices if the complaints they rely on are inaccurate. Even when making choices as simple as where to have dinner or which hotel to reserve, consumers typically read online reviews and do research. Deciding to take out a mortgage loan is a much more monumental decision, and should never be based on potentially flawed information.

In a highly regulated industry like mortgage lending, borrowers should be accurately informed about which lenders follow the rules and which lenders do not. Specifically, borrowers should be fully apprised of the fact that certain lenders have a verified pattern of cutting corners and engaging in unethical practices. Again, this has a significant impact on a prospective home-buyer’s decision to pursue a mortgage loan with a particular lender.

Confidentiality guarantee

Equally important to those in the mortgage industry, however, is the effect that one inaccurate complaint can have on the reputation of a mortgage company or its employees. Because online public complaints are not monitored for accuracy, they have the potential to severely tarnish the reputation of an otherwise ethical mortgage company and the reputation of a single loan originator. This is not only unfair to the company and the loan originator, but also to other homebuyers who rely on the inaccurate complaint when making a decision about which company to select when searching for a mortgage loan.

Mortgage companies should bear the majority of the responsibility for ensuring their online reputations are accurate, but many feel constrained from responding to inaccurate complaints on the internet because of a lack of guarantees that confidential information will remain nonpublic. Without these guarantees, mortgage companies believe it becomes nearly impossible for them to defend their reputations.

Many in the industry argue that with no guarantee that all confidential client information will be removed from their responses to online complaints, they cannot respond to these complaints with the full story because doing so often requires divulging information that could be damaging to lenders and borrowers if not safeguarded properly. Instead, these mortgage companies feel forced to provide canned responses filled with generalities.

These canned responses provide no benefit to other borrowers when making decisions, nor do they allow mortgage companies to defend their reputations and the reputations of their loan originators. Many in the mortgage industry believe that as the database is currently set up, companies often have no choice but to provide generic responses when a more specific response would contain confidential information that should not be made available to the public.

Overall, the utmost priority when it comes to online mortgage-company complaints is to ensure that borrowers are receiving truthful information. If the process for online concerns is carefully monitored for accuracy, the information contained in the consumer-complaint database will reflect a truer illustration of what transpired in the mortgage process and will better prepare other homebuyers in selecting a mortgage lender.

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When it comes down to it, everyone — from the CFPB to Realtors to mortgage loan originators — are working to ensure that eligible borrowers are able to achieve their homeownership dreams in the most streamlined, transparent and efficient way possible. By helping them make informed decisions about this intricate process, we are all working toward creating an exceptional home-loan experience. Much like a freshly polished mirror, public feedback on mortgage companies should be clear, accurate and truly reflective of the company’s qualities, and its shortcomings.


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