Inability to Pay Mortgage Among Top Consumer Complaints

A report by NerdWallet found complaints to the Consumer Financial Protection Bureau (CFPB) were up 31% so far in 2020 compared to last year.

The top complaint fielded by the CFPB directly tied to COVID-19 was consumers not being able to pay their mortgages at 16%.

Additionally, 26% of complaints to the CFPB had “mortgage” labeled as the primary financial product.

“In reading through those labeled as mortgage complaints, we found many consumers frustrated with the lack of relief provided by mortgage forbearance offers,” the report added. “Namely, the consumers were unhappy that lenders required full repayments of delayed installments—known as a balloon payment—at the conclusion of the forbearance period.”

Complaints related to job loss were up 34% when compared to last year. The CFPB received 142,782 complaints from Jan. 1, 2020, to the end of May—a 31% annual increase.

The latest data from Black Knight revealed the number of mortgages in COVID-19-related forbearance fell for the third consecutive week. Overall, the number of active forbearance plans is down 57,000 from last week and 158,000 from the peak the week of May 22.

At these levels, mortgage servicers need to advance a combined $3.4 billion a month to holders of government-backed mortgage securities on COVID-19-related forbearances. That’s on top of the $1.4 billion in T&I payments they must make on behalf of borrowers.

Black Knight also reported that an additional 723,000 homeowners became delinquent on their mortgages in May, causing the national average to rise to its highest level in 8.5 years.

There are now 4.3 million homeowners past due on their mortgages or in active foreclosure, including those in forbearance who have missed scheduled payments as part of their plans, up from 2 million at the end of March.

Serious delinquencies are on the rise as well, increasing by more than 50% over the past two months. However, Black Knight’s McDash Flash Payment Tracker shows a higher share of payments have been made thus far in June than at the same time in May, suggesting the rise in delinquencies may be leveling off.