blah, blah, blah complaints… and how to handle them · 17/12/2015 · blah, blah, blah...

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Complaints… and how to handle them

Mitchell B. Klein, Esquire Citadel Federal Credit Union

Webcast December 17, 2015

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Types of Complaints •Complaints to the CFPB •Complaints to the NCUA •Complaints to Local Agencies •Validation Letters •Credit Report Complaints •Oral v. Written •Run of the Mill Complaints

•To the CEO, Board of Directors, Manager

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Protocol

• Some complaints fall under regulatory guidelines and must be researched and answered within specific time guidelines – Mortgage Servicing Rules

• Some complaints have agency set response times – NCUA, BBB

• Some are at your discretion

Mortgage Servicing Rules

• Error Resolution = Complaint – Information Requests might also be a

complaint. • Error Resolution and Information Requests

– Have rules and time frames that almost mirror each other.

– Generally, the rules require that the credit union act in a prompt manner, and does not charge a fee for its services.

– Small servicers are not exempt!

Mortgage Servicing Rules Error Resolution- Reg X Section 1024.35 • Applies to covered errors • What is a covered error?

– 10 categories 1. Failure to accept a payment that conforms to the

credit union’s written requirements for the member to follow in making a payment

2. Failure to apply an accepted payment to principal, interest, escrow or other charges under the terms of the loan.

3. Failure to credit a payment to a member’s loan, as of the day of receipt.

.

Mortgage Servicing Rules 4. Failure to timely pay taxes, insurance premiums

or other charges the credit union has agreed to pay, or to within 20 days, refund an escrow balance.

5. Imposition of a fee, which the credit union lacks a reasonable basis to impose ( late fee, force-placed insurance)

6. Failure to provide an accurate payoff 7. Failure to provide accurate information to a

member for loss mitigation options. 8. Filing the first notice or commencing foreclosure

before 120 days of delinquency

Mortgage Servicing Rules 9. Requesting a foreclosure judgment or Sheriff’s

Sale, if a loss mit package has been submitted, at least 37 days before a scheduled sheriff’s sale

10.Any other error relating to the servicing of a mortgage loan.

– Complaints about underwriting, origination and sales are not “covered errors”


• Requirements of the error notice – In writing – Must have the member’s name and

information so the credit union can identify the account and error asserted.

– Notice may come from the member’s agent • You may ask for qualifying documents

– If there are multiple complaints, each can be treated separately.


• Acknowledgment and Response – The credit union must provide written

acknowledgment that it received the notice of error, within 5 days of receipt of the notice.

• This excludes Saturdays, Sundays and legal holidays


– If there was an error, and it was corrected, the member must be notified in writing, providing the date the error was corrected and credit union contact information.

– If the credit union finds that there was no error, the response must tell why, and what documents were relied on by the credit union.

– If a different error is found, it must provide the same resolution notice.


• The credit union may request documentation from the member, but it cannot make that a requirement before investigating the claim, or determining that no error occurred, because the documentation is not provided.

• The credit union must respond to the member within 30 business days of receipt of the notice of error.

• The credit union may extend by 15 days, if it notifies the member before the end of the 30 days.

Mortgage Servicing Rules – There is specific timing for three types of

errors: 1. 7 business days for errors relating to an accurate payoff

balance. ______________________________________________ 2. For errors in making the first foreclosure notice before 120

after delinquency, 3. or moving for a sheriff’s sale date, if the borrower has

applied for a loss mitigation option The credit union has the shorter of the date of the scheduled

sale, or 30 days • If it is a repeat claim, new and material information must be

provided to support the claim

• These time frames may NOT be extended!!!

Mortgage Servicing Rules – Alternate Compliance – The credit union does not have to comply with

the acknowledgment and response rules if: • You correct and notify the member within the initial

5 days; or • The errors concern wrongly moving forward with

foreclosure proceedings and the notice of error is received within 7 days of a scheduled foreclosure sale.

Mortgage Servicing Rules – Compliance is not Required:

• If the request is overbroad, duplicative, untimely – Cannot determine what the error is, from the member’s

notice. – The credit union has dealt with the same claim before

and no new supporting materials have been provided. – The error notice was received more than a year after the

loan was paid in full.

• If the complaint falls into one of these three categories, written notice must be given within 5 days.

Mortgage Servicing Rules • Contact Information to Assert an Error

– The credit union can establish an address that the member must use to assert an error, if not, the notice can go to any branch or office.

– The specific address must be communicated to your members by listing it on certain documents

• An initial notice • A periodic statement • The coupon book, if applicable

– The credit union may, but is not required to accept an error notice on line, but it may.

• It cannot be used in lieu of accepting notices by mail.

Mortgage Servicing Rules • Tracking

– How do you keep track of the complaints that come in?

• Necessary to ensure that timeframes are being met.

– Complaints may be interdepartmental, and accurate tracking is key.

– Excel Spreadsheet? – Designated employee to oversee complaints

Challenge Question #1 True or False… If a member calls your credit union and

wants information concerning the underwriting of his/her mortgage loan, the Error Resolution Rules of Reg X Section 1024.35 apply.

CFPB v. NCUA • The CFPB has oversight over all credit

unions with assets over $10 billion. – They are responsible for administering

complaints received concerning these credit unions.

• NCUA has oversight over all other credit unions and administers complaints received concerning them – CFPB will forward complaints to NCUA

NCUA • The head of the credit union’s Supervisory Committee is

responsible for addressing complaints forwarded from the NCUA

• Section 4.12 of the Supervisory Committee Guide for Federal Credit Unions.

• Complaints to the NCUA are handled by the NCUA Consumer Assistance Center (CAC).

• Major change in the way complaints are handled, for complaints received after August 24, 2015 – Gradual Implementation

– NCUA Letter to Credit Unions 15-CU-04 • June 2015 • Streamlines and improves consumer complaint handling

process

NCUA • Previously, complaints were forwarded, in letter

form, from the NCUA Consumer Assistance Center. – Twenty (20) days to investigate and respond – Response to NCUA, not directly to member. – NCUA reviews for violations of federal

consumer protection law • By Laws, charter, Rules and Regulations

– NCUA reviews the response and will either close the case or want more info

NCUA • Credit unions can now use an on-line portal,

located on NCUA’s MyCreditUnion.gov site, to receive correspondence from the CAC about complaints concerning them, to send responses and complaint information, and to check the status of complaints concerning their institutions.

• Information contained within the portal is not accessible by the public.

• To help credit unions with questions about the CAC portal, NCUA has created a series of FAQs, available on the agency’s website.

NCUA • Using the portal is voluntary

– registration is required. • Credit unions wanting to use the portal must

request access by emailing the CAC at [email protected].

• The email must be sent by the credit union’s CEO (or senior manager, if the credit union does not employ a

CEO)and must include the CEO’s name, work email address and work telephone number.

• The registration verification takes between 10 and 15 business days to complete.

mailto:[email protected]

NCUA • The new process involves two distinct phases

– Attempted resolution by the credit union, as appropriate; and

– Investigation by the Consumer Assistance Center, when necessary.

NCUA • Phase One - Attempted Resolution by the Credit

Union • The CAC assigns a unique identification number (case

number) to each complaint it receives. • The CAC then forwards the complaint and any

documents provided by the consumer to the chairman of the FCU’s supervisory committee, with a copy to the credit union’s CEO.

• The supervisory committee reviews and, if appropriate, attempts resolution of the matter within 60 calendar days of the date of the forwarding letter.

• The CAC also sends an acknowledgement letter to the consumer indicating that the complaint was received and

NCUA • During this 60-day period, the CAC recommends

that the credit union take the following steps in attempting to resolve the complaint – Review the complaint in accordance with the

suggestions detailed in the guide Responding to Consumer Complaints;

– Communicate directly with the consumer as needed and appropriate; and

– Respond in writing to the consumer, with a copy to the Consumer Assistance Center, indicating whether the credit union has been able to resolve the matter.

NCUA • In the event that the CAC is notified in writing

within the 60-day time period that the matter has been resolved, it will close the case.

• However, the CAC may begin a formal investigation of the matter, if: – The Consumer Assistance Center does not receive any written

response from the credit union within the 60-day time frame; – The credit union notifies the Consumer Assistance Center in

writing that it has been unable to resolve the matter with the consumer; or

– The consumer disputes the resolution of the complaint by contacting the Consumer Assistance Center in writing within 30 calendar days of the date of the credit union's response letter.

NCUA • Phase Two – CAC Investigation • The CAC sends a letter to the chairman of the

FCU’s supervisory committee, with a copy to the credit union’s CEO. – The letter includes the consumer’s original complaint

and any documents provided by the consumer in support of the complaint.

– It indicates that the CAC is investigating the complaint and requests a written response to the CAC about the matter within 30 calendar days from the date of the letter.

• The Consumer Assistance Center also sends a letter to the consumer indicating that it has begun an investigation of the complaint.

NCUA • The CAC reviews the supervisory committee’s

response, to ensure it adequately addresses issues raised in the complaint and that the action(s) taken, if any, are consistent with federal financial consumer protection laws and regulations. – If the FCU did not address all of the consumer’s

concerns in its response, or there are remaining questions involving federal financial consumer protection issues, the CAC will request additional information and/or clarification from the credit union and notify the consumer that the complaint investigation is still ongoing.

NCUA • When the credit union adequately addresses and the

CAC analyzes all issues associated with the complaint, the CAC will notify the consumer and the credit union of one of the five following potential outcome determinations: – The complaint does not involve a federal financial

consumer protection law or federal consumer compliance regulation for which NCUA has enforcement authority, and therefore, the CAC has closed its case in this matter;

– The complaint is the subject of a pending lawsuit, and therefore, the CAC has closed its case in this matter;

NCUA – The credit union has resolved the complaint with the

consumer, and therefore, the CAC has closed its case in this matter;

– The credit union’s actions either did not violate or were not inconsistent with a federal financial consumer protection law or federal consumer compliance regulation, and the CAC has closed its case in this matter; or

– The credit union’s actions either violated or were inconsistent with a federal financial consumer protection law or federal consumer compliance regulation for which NCUA has enforcement authority.

• To the extent NCUA has any supervisory concerns about the credit union’s actions, NCUA will follow up directly with the credit union to resolve them and ensure compliance with the applicable law or regulation

NCUA • Appeal of CAC Determination • Credit unions and consumers may request that the

Director of the Division of Consumer Affairs review the CAC’s determination in complaint matters. – This appeal of the determination should be in writing and

received by the Director of the Division of Consumer Affairs within 30 days of the date of the CAC determination letter.

– Thereafter, as part of this independent review process, the Director of the Division of Consumer Affairs may seek additional information from the consumer or credit union before making a final determination.

• Credit unions continue to have the right to file a complaint with the NCUA Ombudsman, who reviews consumer complaints and recommends possible solutions.

NCUA • Who does What?

– Chair of Supervisory Committee usually does not have a day to day presence at the Credit Union.

– Need someone to investigate the matter and draft a response

• Who does the response come from? – Appoint an employee to coordinate the

response effort

Challenge Question #2 Under the revised NCUA procedures for

addressing complaints, a credit union has how many days to investigate and respond : a. 20 b. 60 c. 30 d. unlimited

CFPB • CFPB maintains a Consumer Complaint

Database. – Allows consumers to file complaints

• Separated into Loans and Products and Services – Once contacted by the CFPB, 15 days to

respond. Should be closed out in no later than 60 days

– Will forward to a more appropriate agency if necessary

• NCUA

CFPB • Consumers can follow the complaint as it

is being resolved – And comment on the response

• All complaints are logged into a Database and available for viewing by the public.

• Request for Information in June (ended Aug 2015) for comments on best practices on “normalizing” the raw complaint data so it is easier for the public to use and understand

CFPB • WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) released its latest monthly consumer

complaints snapshot, which highlights mortgage complaints. According to the report, consumers continue to face problems with mortgage servicing, particularly during certain circumstances, such as when they apply for a loan modification to avoid foreclosure. This month’s snapshot also highlights trends seen in complaints coming from the Denver, Colo. metro area. As of Sept. 1, 2015 the Bureau has handled over 702,900 complaints across all products.

• “Despite strong protections that have been put in place to protect homeowners, this month’s complaint report shows consumers are still having problems when dealing with their mortgages,” said CFPB Director Richard Cordray. “The Bureau will continue to work to make sure that consumers are being treated fairly on their mortgage issues.”

• The Monthly Complaint Report can be found at: http://www.consumerfinance.gov/reports/monthly-complaint-report-vol-3/

• National Complaint Overview • As of Sept. 1, 2015 the CFPB has handled 702,900 complaints nationally. Some of the highlights from the statistics in this

month’s snapshot report include: • Complaint volume: For August 2015, the most-complained-about financial product or service was debt collection,

representing about 29 percent of complaints submitted. Of the 25,732 complaints handled in August, approximately 7,582 of them were about debt collection. The second most-complained-about consumer product was credit reporting, accounting for approximately 5,733 complaints. Overall, the CFPB received 972 fewer complaints in August than in July.

• Product trends: In a year-to-year comparison, consumer loan complaints, which include pawn loans, title loans, and installment loans, showed the greatest percentage increase – 47 percent – nearly doubling from the same time last year. Payday loan complaints showed the greatest percentage decrease – 12 percent – over the same three month (June-August) time period between 2014 and 2015, going from 526 complaints in 2014 to 463 complaints in 2015.

• • State information: Nebraska and Nevada experienced the greatest complaint volume increases from the same time last

year by a considerable margin. The volume of complaints from Nebraska rose by 54 percent, while Nevada’s complaint volume increased by 45 percent. The next largest increase was North Carolina, where complaint volume rose by 36 percent compared to the same time period last year.

• • Most-complained-about companies: The top three companies about which the CFPB received the most complaints remain

unchanged from last month’s report. From April through June 2015 Equifax, Experian, and Bank of America were the three most-complained-about companies.

http://www.consumerfinance.gov/reports/monthly-complaint-report-vol-3/

http://www.consumerfinance.gov/reports/monthly-complaint-report-vol-3/

Local Agencies • Members may choose to file complaints with

local government or consumer agencies, instead of the NCUA or CFPB – State Attorney General – Better Business Bureau

• These agencies tend to be a little less formal – Seek goodwill to member – Mutually satisfactory conclusion – Less interested in the “law” or “reg”

Local Agencies

Validation Letters • Most of these qualify as “Qualified Written

Requests” under RESPA. – Section 2605(e)

• Usually, they will tell you that it is a “Qualified Written Request”

• Letters set forth multiple disputes – who holds the mortgage – escrow payments

• And when do they show up?.....

Validation Letters

Validation Letters • Complete payment history, including application of all payments • Breakdown of all arrears and itemization of fees • Complete detail of foreclosure costs and fees • Complete detail of all escrow items charged to the account • Copy of escrow statements and any notices • Name of owner of Promissory Note • Any transferees of the promissory note • Any assignments of the mortgage and copies • Description of all loss mitigation efforts, including all calculations

(NPV, DTI) and all documentation • All initial and final loan documents signed and unsigned

– GFE, TIL, 1003, Appraisal…

Validation Letters • They may come from an attorney or the member • These type of letters request a lot of information • You’d like to throw them away • …..But, you can’t…. • You need to respond…but

– Only to those requests that are appropriate – In this case, applicable to mortgage servicing issues – Which ones can you not respond to?

• Read the request, and RESPA and then see what needs to be produced.

Credit Report Complaints

Credit Report Complaints • Credit Report Complaints can come from two

sources – From the Credit Bureaus after a member has written

to them; and – Directly from the member

• Do the four “complaints” look familiar? – What are they asking for? – Are they really a “dispute” – Do you have to answer them?

Credit Report Complaints • If the complaint or dispute is coming from the

member directly, it must be submitted to an address designated by the credit union and contain – The specific information in dispute – An explanation of the basis for the dispute – All supporting documentation necessary to enable the credit

union to substantiate the basis of the dispute.

• Which one of the letters, if any, meet these standards? – What do you investigate, if anything? – What do you communicate to your member?

Credit Report Complaints • The credit union then needs to

– conduct an investigation with respect to the disputed information; – review all relevant information provided by the consumer with the

notice; – complete the investigation within 30 business days and report

the results of the investigation to the consumer within five (5) business days of completing the investigation and

– if the investigation finds that the information reported was inaccurate, promptly notify each consumer reporting agency to which the member furnished the inaccurate information of that determination and provide to the agency any correction to that information that is necessary to make the information provided by the member accurate.

Credit Report Complaints • If the complaint comes from a consumer

reporting agency. The credit union must – Conduct an investigation into the accuracy of the

disputed – Review all information supplied by the agency – Report the results to the consumer reporting agency – If the information is inaccurate, report the results to

the other consumer reporting agencies to which the same information has been reported

• Consumer reporting agency has 5 business days to notify the credit union when it receives a complaint.

• Credit union needs to respond in time for agency to report back to member, which is within 30 days

Reg E • A notice of a Reg E error can also be considered

a complaint, which needs to be addressed. – Unauthorized EFT – Omission of EFT from a periodic statement – Incorrect amount of money from an ATM

• Error can be communicated to the credit union orally, electronically or in writing. – No later than 60 days after the credit union sends the

statement which contains the error. – If notification is oral or electronic, credit union can

require written confirmation within 10 business days – provide address

Reg E • Generally, you have 10 business days to

investigate an error. • Results have to be communicated within

three days. • If an error occurred, it should be corrected

within one business day after determining an error was made

• If you cannot resolve the error in 10 days, you can take up to 45 days, providing

Reg E – You recredit the disputed funds on a

provisional basis. – Advise the member within 2 business days

after the provisional crediting, and the fact tha the member has full use of the funds

– Give the member full use of the funds • In order to take advantage of the extended

time frames, you must have given notice in the initial Reg E disclosure

Reg E • If an error did occur, you must credit the member

within one business day of determining an error occurred

• If no error, you must provide written notice to the member within three business days after concluding the investigation – Must include member’s right to request the

documents used in making the decision – If you are debiting a provisional credit, you have to

provide notice of when that will take place • Oral or written

Challenge Question #3 True or False Under Reg E, if a member calls the credit union to

report that she did not do a certain ATM transaction, you can require that she put the complaint in writing, and send it to a specified address.

Run of the Mills • What’s left…

– Letters, emails and calls to the CEO – Letters and emails to Board members – Calls to managers – Calls to a call center – Letters addressed to the “Credit Union” – Posts to websites or social media

• Centralized or decentralized? – Need procedures either way – Who reviews? – Who answers?

Run of the Mills • Need to review the complaints to see if any have

specific notice or response requirements – Reg E – Credit Reporting – Mortgage Servicing

• Most just require a good will answer to make the member happy – Confirm why they belong to a credit union!!!

Oral vs. Written • How was the complaint communicated to the

credit union? – If oral.. Does it need to be put into writing?

• Who communicates that to the member • Are you still required to look into the matter pending receipt

of a written complaint. • Is there a log of oral complaints received?

– If written, does it comply with the specific requirements of the law or regulation?

THANKS FOR LISTENING Any Questions?

If you have any questions contact NAFCU

blah, blah, blah complaints… and how to handle them · 17/12/2015 · blah, blah, blah...

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