Newfound optimism in the housing market from both lenders and borrowers is causing mortgage-related complaints to subside as customer satisfaction improves and financial institutions alter the way they do business.
For the first time since the Consumer Financial Protection Bureau (CFPB) began accepting complaints from consumers about financial products shortly after opening its doors in July 2011, mortgage-related issues are no longer the most unsatisfactory product on the list.
The mortgage market is the largest consumer financial marketplace in the country with more than $10 trillion in total value. The CFPB enacted new mortgage rules in 2014 to ensure strong consumer protections and also ensure that lenders offered affordable mortgages to consumers.
According to the CFPB's Monthly Complaint Report, mortgage complaints now total 218,407 and 4,529 of these occurred in February, up 6 percent from last month.
Beating mortgage complaints this month were debt collection issues. According to the data, debt complaints total 219,229 and 7,360 of these happened in February, which makes this sector the new most-complained about product in the Bureau's report.
Debt collection, mortgage, and credit reporting complaints continue to be the top three most-complained-about consumer financial products and services, representing about 69 percent of complaints submitted in February 2016.
As of March 1, 2016, the CFPB has handled approximately 834,405 complaints, including approximately 22,800 complaints in February 2016, the report said.
One plausible explanation behind the silenced mortgage complaints is the optimism surrounding borrowers and lenders, according to recent reports.
Mortgage lenders remain optimistic and unbothered by the news surrounding the dismal, but improving, state of the U.S. economy.
A recent survey of 200 mortgage lending professionals from Lenders One showed that lenders are exuding confidence in the real estate market. In addition, lenders say that millennials, Hispanics, and boomerang buyers will lead the expected gains in business.
According to the survey, 62 percent of lenders surveyed said that they expect mortgage purchase production to increase by an average of 11 percent in 2016. Another 87 percent indicated that the mortgage purchase market will be extremely active.
“The strong confidence levels we’re seeing among lenders highlight the continued bounce back from one of the most challenging real estate and lending environments in U.S. history,” said Lenders One Interim CEO Dan Goldman. “In an environment where lenders can once again focus on business growth initiatives, it will be more important than ever for mortgage professionals to have access to the tools and ongoing training they need to capitalize on these emerging trends.”
The American Enterprise Institute (AEI) International Center on Housing Risk found that the share and volume of first-time homebuyers rose significantly in February 2016 compared to a year earlier.
According to AEI's First-Time Buyer Mortgage Share Index (FBMSI) released Monday, first-time buyers accounted for 56.7 percent of primary owner-occupied home purchase mortgages with a government guarantee in February 2016. This number is up from 55.9 percent last February and up from January's share of 56.1 percent.
"The first-time buyer share has been trending higher on a year-over-year basis, pushed up by improvements in the labor market, riskier mortgage lending, and continuing low mortgage rates," the report stated.
“On a year-over-year basis, the first-time buyer share increased in February, reflecting a continuation of strong first-time buyer participation,” said Edward Pinto, Codirector of the American Enterprise Institute’s International Center on Housing Risk. “The current housing market, particularly at the entry-level, is exhibiting strong, leverage-fueled demand, which in combination with shortness of supply, will continue to drive home prices up faster than incomes and inflation.”