Zaid Shariff of SLK Global Solutions: Avoiding CFPB Regulatory Actions by First Cutting Complaints

Zaid Shariff is vice president – head of solution design and product implementation for SLK Global Solutions, Dallas, a provider of digital platforms and business process management solutions to the banking, mortgage and financial services industries. He has more than 12 years of experience performing QC, compliance testing and internal audits for financial services companies. His past roles include assistant vice president in charge of internal audits at Mr. Cooper and risk and controls audit manager for Nationstar Mortgage. he can be reached at zaid.shariff@slkglobalsolution.com.

MBA NEWSLINK: Why are servicing complaints such an important issue now?

ZAID SHARIFF, SKL Global Solutions:  Complaints have always been a serious issue. They are back in the spotlight because they are increasing and likely will continue to do so. In fact, during March, complaints filed with the Consumer Financial Protection Bureau soared to the highest level in three years. Meanwhile, complaints about forbearance jumped to a 12-month high.

NEWSLINK: What are some of the issues that are leading to the rise in CFPB complaints?

SHARIFF: Many borrowers are saying that they have not been fully informed about their options by their mortgage servicers. For example, many felt the information their servicer was providing them about their post-forbearance options was confusing and incomplete.

Other complaints filed with the Bureau indicate that borrowers are experiencing long delays in getting their loans modified so they can resume monthly payments. In some cases, this was the result of the servicer making additional requests for documents. Other times, servicers reportedly provided conflicting information about what options were available and whether the borrower was eligible for a loan modification or not.

NEWSLINK: What is the CFPB suggesting that servicers do?

SHARIFF: Servicers are being encouraged by the agency to use all available tools to reach distressed borrowers ahead of the end of the forbearance period. In particular, servicers are expected to handle inquiries and evaluate a borrower’s income and work status quickly and treat borrowers fairly throughout the entire loss mitigation process.

NEWSLINK: Can servicers even do anything to avoid complaints that are filed with the CFPB?

SHARIFF: Absolutely. Many consumers who feel they’ve been wronged will first reach out to their servicer before filing a complaint with a regulatory agency. The very moment they contact their servicer is the time for servicers to act. If the borrower’s issue isn’t resolved, it will only escalate. Even after receiving stimulus money, many borrowers still face an uncertain financial future because of job or income loss. If they’re frustrated because they feel their servicer isn’t helping them, they have nothing to lose by filing a complaint with local, state or federal government regulators.

NEWSLINK: Are a few complaints filed with the CFPB cause for alarm?

SHARIFF: Not necessarily, but one complaint could be a sign of a deeper problem. If complaints accumulate, the CFPB will come in and say, “hey, we’re going to scrutinize those servicers with higher complaints because there is an underlying issue happening with the organization.”

Keep in mind the agency basically said last month it will be cracking down on servicers to prevent another foreclosure crisis from happening. According to some reports, the agency is already probing the activities of several mortgage servicers about how they’ve handled forbearance requests. 

NEWSLINK: But what if the servicer did nothing wrong?

SHARIFF: Even if the servicer can’t make the borrower whole, they should still make the effort to reach out to the borrower, try to address their concern and offer available alternatives. In fact, servicers should be doing this for every borrower regardless of whether the borrower feels they weren’t treated right. Such a strategy can help avoid the borrower filing a complaint with a government agency if the borrower believes their servicer did everything possible to help them.

NEWSLINK: What else can servicers do to prevent complaints being filed with regulators?

SHARIFF: First off, the CFPB has said that it will consider a servicer’s overall effectiveness at helping borrowers when considering whether to pursue enforcement. The best way for servicers to serve borrowers effectively is by proactively identifying and rooting out issues before they turn into complaints.

For example, every servicer has a wealth of historical data available to them. They should be constantly mining that data to identify potential future problems. This is something our own offering, Copasys, handles in an automated fashion. With the right technology, servicers can identify issues as they arise, correct their processes and prevent similar problems from happening in the future—and prevent complaints from reaching the CFPB or any regulatory agency.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)