Consumer Bureau Turns to Mortgages

By:: Kara Johnson | December 02, 2011

Two new initiatives to help guard consumers against mortgage-related abuses were launched this week by the recently established Consumer Financial Protection Bureau (CFPB).

The CFPB has begun fielding mortgage-related complaints from consumers through its web site, and has joined with other federal entities in a task force targeting loan modification scams aimed at homeowners seeking assistance through the government’s Home Affordable Modification Program (HAMP).

Will seek to resolve consumer complaints

The mortgage complaint system is similar to one for credit card complaints that the Bureau has been operating since last July. In its first three months of operation, that system has forwarded more than 4,000 complaints to card issuers for resolution, and obtained full or partial resolutions in about three-quarters of them.

The CFPB will also forward mortgage-related complaints to the company involved, and seek resolution on those as well. Such complaints might involve such things as the application process, credit offers, the settlement process, loan servicing, payment collection, loan modifications, foreclosures or other matters.

Eventually, the CFPB plans to offer similar complaint resolution services on other consumer financial products as well.

Loan modification fraud task force launched

Also this week, the CFPB announced it was joining the Treasury Department and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) in establishing a task force targeting loan modification scams. The task force will investigate and seek to shut down scams seeking to take advantage of borrowers seeking relief through the Home Affordable Modification Program.

SIGTARP recently announced that it had reached an agreement with Google and Microsoft to shut down online advertising by more than 100 such scams. The new task force takes those efforts a step further toward enforcement and adds consumer education efforts as well.

The scams typically involve charging struggling homeowners a fee for bogus assistance in obtaining a HAMP loan modification. In some cases, they have also sought to divert homeowner’s mortgage payments to themselves and even obtain deeds to the property.

HAMP is administered by the Treasury Department using funding provided through the Troubled Asset Relief Program (TARP).

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