As we move toward the second anniversary (July 21) of President Obama signing into law sweeping financial reforms, more commonly referred to as Dodd-Frank, more than 45,000 people have filed complaints with the newly-created Consumer Financial Protection Bureau.
In one case, a 77-year-old Army veteran and retired businessman living in Georgia was certain he had paid off his mortgage, but his mortgage servicer insisted he still owed money. To make matters even more complicated, the man was blind and had trouble finding paperwork that proved he owned his home. After CFPB got involved in late 2011, the bank agreed that the mortgage was fully repaid in 2007. For his trouble and his time, the bank sent the borrower a check for $30,000.
In another complaint, CFPB helped a 31-year old waiter from Florida reduce his monthly student loan repayments to an affordable amount. A young man’s dream of becoming an artist led to a decision to enroll in a for-profit college, where he sunk into debt at the tune of $110,000 while earning an Associate’s Degree. Without a four-year degree, he was unable to find work in his chosen field as he began paying $700 a month to a private student loan lender.
By the time his federal student loan payments were added, he could barely manage to make ends meet after paying $1,100 in total loan costs. When the private loan company refused to adjust payments, the young man contacted CFPB. They determined that he was eligible for a reduced payment program that cut his monthly payment to only $407 for a year. Further, he is still working out a plan to reduce federal loan payments.
The best news is that there are even more successful stories of how consumers working with the CFPB were better able to manage financial debt. From July 21, 2011 through June 1, 2012, 45,630 consumers contacted the CFPB with a range of complaints. Mortgage issues ranked highest (19,250 complaints), followed by credit cards (16,840), bank products and services (6,490) and private student loans (1,270).
Of these complaints, 81 percent have led to contacting identified companies for review and response. Others were referred to other regulatory agencies, found to be incomplete, or are still pending with CFPB. Companies contacted by CFPB are also responding – responses have been received on approximately 33,000 complaints.
To make filing complaints easier for consumers, CFPB accepts complaints via its Web site, by telephone, mail, e-mail and fax. Consumers opting to phone use a toll-free, U.S.-based call center that offers assistance in 187 languages, and can accommodate the needs of both hearing and speech-impaired callers.
With information in hand, CFPB then determines if the complaint falls within the bureau’s enforcement authority. Once that basic threshold is met, affected companies are contacted for review and reply. While the complaint is in progress, consumers can log onto a secure portal or call the toll-free number to receive status updates, provide additional information and review responses submitted by companies.
In addition to the consumer complaints received, CFPB has also gained further consumer insights through written comments on a range of topics that include but are not limited to: debt collection, equal credit, leasing, overdraft and payday lending.
For example, in response to a larger than expected attendance at a January 2012 payday lending public hearing in Birmingham, CFPB offered a comment period for persons and organizations either unable to attend or speak. By the time the comment period closed on April 23, a total of 620 comments were filed. The majority of comments received spoke directly to consumer needs and concerns, some citing CRL research.
Speaking on behalf of the Leadership Conference on Civil and Human Rights, Wade Henderson and Nancy Zirkin wrote in part, “Regardless of the precise source of payday loans, their effects are the same. They come with triple digit interest rates. Communities and consumers are targeted, rather than served. And according to the Center for Responsible Lending, each year more than $4.2 billion of otherwise valued and disposable income are lost to the accompanying predatory fees.”