White Paper Released on CFPB Mortgage Servicer Complaints

DS News recently published an article titled Numbers Don’t Lie: Complaints to the CFPB May Not Be What They Seem.

Numbers Don’t Lie: Complaints to the CFPB May Not Be What They Seem
When entering the realm of statistics, numbers definitely have the potential to weave plenty of misleading and false narratives.

This is unfortunate since stories based on quantitative data tend to survive on their numerical authority alone, while sometimes hiding behind subtle deceptions based on the foundation of mathematical analysis.

Such is the case with the Consumer Financial Protection Bureau (CFPB) Consumer Complaint Database. The database is filled to the brim with complaints about servicers, lenders, and financial service providers.

Was a servicer late in dealing with a loan modification, unreceptive by phone, or flat out unhelpful or rude? The CFPB database of complaints is there to catch those grievances and report them to financial services industry and the world as informed data.

But probe deeper, as some analysts did recently, and the numbers from the CFPB do not look as daunting or as thorough as they do at first glance.

In fact, the industry discovered that simply analyzing data from the CFPB is not enough, especially since the database arrives with its own built-in bias—that bias being the very nature of the database itself. It collects complaints, not praises, and ignores the larger universe of loans serviced nationwide.

To fill the void of well-rounded data, Black Knight Financial Services and the Five Star Institute jumped into the missing space and used data from the CFPB database and its own analytics to inform its latest white paper on CFPB complaints.

The big takeaway from the report: servicers have improved tremendously.

The Numbers in Context

As servicers become preoccupied with fixing problems reported in the database, one significant development has slipped under the radar: the number of CFPB complaints plummeted by more than 50 percent for loan modifications, collections, and foreclosures during the two-year period stretching from 2013 through 2014, according to a recent white paper titled “Analysis and Study of CFPB Consumer Complaint Data Related to Mortgage Servicing Activities,” produced by Black Knight Financial Services in conjunction with the Five Star Institute.

The results paint a picture of an industry that has made incredible strides.

The number of non-current loans fell from more than 5 million in the first quarter of 2013 to under 4 million in the fourth quarter of 2014, reflecting a 27 percent drop.

Five Star President and CEO Ed Delgado, who initially proposed the idea for the report last year in response to mounting criticism of the industry by the CFPB, maintains the purpose of the report is not to “dismiss or diminish” the validity of the inquiries by consumers, but rather to “position and better understand the data.”

“The information contained in this report plays an important role in measuring the scope of volume related to CFPB inquiries made, in juxtaposition to the total number of mortgage holders in the U.S. market,” Delgado said. “Through the data lens, we can clearly examine operational efficiency and defect while measuring progress in providing quality service to homeowners.”

“A 53 percent reduction in complaints about loan modifications and foreclosures is great news,” Freddie Mac spokesman Brad German said. “I would attribute much of the improvement to the rising diligence and effectiveness of many servicers plus the impact of the Servicing Alignment Initiative, which requires early and frequent outreach to borrowers who need assistance.”

To produce these numbers, Black Knight and Five Star made the commitment last year to promote a greater understanding of CFPB data by creating a prototype report using data contributed by the CFPB and servicers. Conclusions from the first report published in April show servicers are performing at optimum levels in dealing with non-current loans.

“I think it does demonstrate that the industry has been focusing on the more difficult loan population: the non-performing loans, those that are in some stage of delinquency,” said Dori Daganhardt, VP of product marketing and market strategy at Black Knight Financial Services. “They are trying to ensure that the customer experience through that process has improved.”

Black Knight’s loan-level data report aims to provide the industry with a closer look at the CFPB’s data, so they have an accurate assessment of what is happening with both current loans and non-current loans facing servicing complaints.

Daganhardt said the data is intended to inform both regulators and financial firms as they track and respond to trends in the CFPB database. Her interpretation of this first report is that the “industry has been responding to the complaints and has tackled probably the most difficult cohort of the whole servicing book.”

She added, “What we see in the data, complaints are falling in the delinquent, default and foreclosure category, but the overall book is falling. The absolute overall number of complaints has decreased, and the overall book of loans has declined.” For Daganhardt, this “speaks positively of the efforts servicers have undertaken.”

The Industry Responds

Bob Caruso, EVP of sales, strategy, and servicing at Black Knight firm, ServiceLink, supports the ongoing loan-level analysis and suggests the industry is hungry for data that will detect areas of risk, while celebrating improvements made.

“The report helps servicers understand how they are performing versus the average and whether we have the same pain points as our peers,” Caruso said.

“We’re all happy that complaint volume is low but also quite aware that we have more opportunity to improve. My hope is that consumers better understand that although the industry has been through a lot, we are better for it and will continue to improve. Complaints are much lower than we think customers may be aware.”

Ray Barbone, EVP of BankUnited, suggested the Black Knight white paper is a revelation of sorts—one that will hopefully show the industry is performing quite well when it comes to loan servicing.

“More specifically, notwithstanding the fact it has been widely publicized that mortgage servicing issues are one of the highest segments of complaints and that there have been thousands of such complaints received, it is equally worth noting that, according to the report, complaints related to general servicing of performing loans appear to be running at less than one 1/100th of a percent,” he explained. “It would be interesting to see a comparison of similar analyses for other financial services segments as well as non-financial service industries. Further, I think the report provides lenders with the benefit of some very high-level data by which to benchmark themselves.”

The white paper reflects a change in how the industry not only interacts with data, but also with the CFPB itself.
The industry has shown an interest in working with its newest regulator to fix the problems detected, but at the same time, servicers desire more informed data. One issue yet to be addressed is whether the regulator is able to add context to complaints that enter into the CFPB database.

“I would like to see the industry and CFPB continue to work together to provide even deeper context relative to complaints received, particularly regarding the percentage of complaints verified,” Barbone added.

The issue of whether complaints are analyzed and probed for accuracy and context is a sticking point for others in the industry as well.

“I think the whole report is interesting,” Caruso said. “I would like all the servicing company participants to contribute more data so we can get more granular. That may enable us to learn more yet. I’m curious on the amount of relief being given to customers and why, and I’d like to learn more details on whether many of the complaints are really complaints. Our data indicates that many of the complaints are really just inquiries and that other complaints are simply due to the customer not getting the answer they want.”

Caruso went on to explain that customers typically become upset when denied a loan modification, and the reason for the denials should not be extracted from complaints made to the CFPB.

The database, however, allows these complaints to creep into the system without specifying whether the consumer failed to qualify for a loan mod under HAMP or another government program—or whether there was truly an error on the servicer’s part.

A Desire for More Contextual Data

Going forward, the industry seems to accept the idea of a database, as long as analytics are informed and the database continues to improve in providing context to individual complaints.

Without context, it is merely an echo chamber for consumers. In the right context, it becomes a positive tool for both consumers and servicers.

“I don’t think this has changed anyone’s approach, but it is concerning that customers will have the ability to say whatever they want and the only public response we will have via the CFPB is a drop down box to explain what may have happened,” Caruso added, when discussing the limited remedies available to servicers to respond to reported complaints.

“I don’t see how this helps anyone. The more detailed data we have the more we can understand what customers issues they have and how to address them,” Caruso added. “We may not set the rules for topics like whether a customer qualifies for a modification with HAMP, Fannie, Freddie, FHA, but we can treat customers with respect and show empathy with the issues they do have.”
Daganhardt, who conveyed a desire to help both the CFPB and the industry with improved data, said there is a wish list so to speak of tools that could help all respective parties with data analysis. One of the areas of concern is the drop-down menu borrowers use when making a complaint. Often, a borrower will misclassify a home equity loan for a mortgage loan, which throws off the reporting. Daganhardt also would like to see standard codes for each “reason a loan goes into default.”

Currently, database users are able to comment in a free-flow text fashion, but this makes it difficult to structure and organize the data, Daganhardt said.

“That free text goes to the servicer as well, and they can act upon it. But, unfortunately, it gives the opportunity to misrepresent complaint trends and volumes before the back-end forensics is completed by the servicers,” Daganhardt explained. “If there is more of a survey type of process in the consumer portal, that facilitates more accurate responses by the borrower and maybe even offers some education along that way that would be better for everyone else involved.”

Daganhardt’s desired outcome would be a situation in which an improved question and answer  process is implemented to collect and organize the consumer data.

“The more intelligent questions that they would be asked would ultimately capture more accurate data from them,” Daganhardt explained. Right now, she said, “there are a limited number of drop-down menu options. Borrowers are left to their own devices.”

Tim Rood, chairman of the Washington, D.C.-based Collingwood Group, said, “I thought the report was insightful and should quiet critics of the industry’s customer service.”

Kim Yowell, SVP and servicing manager for Tulsa-based BOK Financial, echoed Rood’s comments. “The aggregated data confirms that the measures the mortgage banking industry has undertaken to address default related customer issues and complaints has had a positive impact on our customers.”

But in their second act since the CFPB launch, servicers desire something more than numbers. They want the same thing the CFPB desires: a complete 360-degree view of each borrower who makes a complaint and of the complaint itself.

Without more of this granular data, everyone is doing nothing more than chasing numbers in a box.

Please click here to view the article online.

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website: www.safeguardproperties.com.



Alan Jaffa

Alan Jaffa is the chief executive officer for Safeguard, steering the company as the mortgage field services industry leader. He also serves on the board of advisors for SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Alan joined Safeguard in 1995, learning the business from the ground up. He was promoted to chief operating officer in 2002, and was named CEO in May 2010. His hands-on experience has given him unique insights as a leader to innovate, improve and strengthen Safeguard’s processes to assure that the company adheres to the highest standards of quality and customer service.

Under Alan’s leadership, Safeguard has grown significantly with strategies that have included new and expanded services, technology investments that deliver higher quality and greater efficiency to clients, and strategic acquisitions. He takes a team approach to process improvement, involving staff at all levels of the organization to address issues, brainstorm solutions, and identify new and better ways to serve clients.

In 2008, Alan was recognized by Crain’s Cleveland Business in its annual “40-Under-40” profile of young leaders. He also was named a NEO Ernst & Young Entrepreneur of the Year® finalist in 2013.


Chief Operating Officer

Michael Greenbaum

Michael Greenbaum is the chief operating officer for Safeguard. Mike has been instrumental in aligning operations to become more efficient, effective, and compliant with our ever-changing industry requirements. Mike has a proven track record of excellence, partnership and collaboration at Safeguard. Under Mike’s leadership, all operational departments of Safeguard have reviewed, updated and enhanced their business processes to maximize efficiency and improve quality control.

Mike joined Safeguard in July 2010 as vice president of REO and has continued to take on additional duties and responsibilities within the organization, including the role of vice president of operations in 2013 and then COO in 2015.

Mike built his business career in supply-chain management, operations, finance and marketing. He has held senior management and executive positions with Erico, a manufacturing company in Solon, Ohio; Accel, Inc., a packaging company in Lewis Center, Ohio; and McMaster-Carr, an industrial supply company in Aurora, Ohio.

Before entering the business world, Mike served in the U.S. Army, Ordinance Branch, and specialized in supply chain management. He is a distinguished graduate of West Point (U.S. Military Academy), where he majored in quantitative economics.



Sean Reddington

Sean Reddington is the new Chief Information Officer for Safeguard Properties LLC. Sean has over 15+ years of experience in Information Services Management with a strong focus on Product and Application Management. Sean is responsible for Safeguard’s technological direction, including planning, implementation and maintaining all operational systems

Sean has a proven record of accomplishment for increasing operational efficiencies, improving customer service levels, and implementing and maintaining IT initiatives to support successful business processes.  He has provided the vision and dedicated leadership for key technologies for Fortune 100 companies, and nationally recognized consulting firms including enterprise system architecture, security, desktop and database management systems. Sean possesses strong functional and system knowledge of information security, systems and software, contracts management, budgeting, human resources and legal and related regulatory compliance.

Sean joined Safeguard Properties LLC from RenPSG Inc. which is a nationally leading Philintropic Software Platform in the Fintech space. He oversaw the organization’s technological direction including planning, implementing and maintaining the best practices that align with all corporate functions. He also provided day-to-day technology operations, enterprise security, information risk and vulnerability management, audit and compliance, security awareness and training.

Prior to RenPSG, Sean worked for DMI Consulting as a Client Success Director where he guided the delivery in a multibillion-dollar Fortune 500 enterprise client account. He was responsible for all project deliveries in terms of quality, budget and timeliness and led the team to coordinate development and definition of project scope and limitations. Sean also worked for KPMG Consulting in their Microsoft Practice and Technicolor’s Ebusiness Division where he had responsibility for application development, maintenance, and support.

Sean is a graduate of Rutgers University with a Bachelor of Arts and received his Masters in International Business from Central Michigan University. He was also a commissioned officer in the United States Air Force prior to his career in the business world.


General Counsel and Executive Vice President

Linda Erkkila, Esq.

Linda Erkkila is the general counsel and executive vice president for Safeguard and oversees the legal, human resources, training, and compliance departments. Linda’s responsibilities cover regulatory issues that impact Safeguard’s operations, risk mitigation, enterprise strategic planning, human resources and training initiatives, compliance, litigation and claims management, and mergers, acquisition and joint ventures.

Linda assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. Her practice spans over 20 years, and Linda’s experience covers regulatory disclosure, corporate governance compliance, risk assessment, executive compensation, litigation management, and merger and acquisition activity. Her experience at a former Fortune 500 financial institution during the subprime crisis helped develop Linda’s pro-active approach to change management during periods of heightened regulatory scrutiny.

Linda previously served as vice president and attorney for National City Corporation, as securities and corporate governance counsel for Agilysys Inc., and as an associate at Thompson Hine LLP. She earned her JD at Cleveland-Marshall College of Law. Linda holds a degree in economics from Miami University and an MBA. In 2017, Linda was named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.


Chief Financial Officer

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard. Joe is responsible for the Control, Quality Assurance, Business Development, Accounting & Information Security departments, and is a Managing Director of SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Joe has been in a wide variety of roles in finance, supply chain management, information systems development, and sales and marketing. His career includes senior positions with McMaster-Carr Supply Company, Newell/Rubbermaid, and Procter and Gamble.

Joe has an MBA from The Weatherhead School of Management at Case Western Reserve University, is a Certified Management Accountant (CMA), and holds a bachelor’s degree from The Ohio State University’s Honors Accounting program.


AVP, High Risk and Investor Compliance

Steve Meyer

Steve Meyer is the assistant vice president of high risk and investor compliance for Safeguard. In this role, Steve is responsible for managing our clients’ conveyance processes, Safeguard’s investor compliance team and developing our working relationships with cities and municipalities around the country. He also works directly with our clients in our many outreach efforts and he represents Safeguard at a number of industry conferences each year.

Steve joined Safeguard in 1998 as manager over the hazard claims team. He was instrumental in the development and creation of policies, procedures and operating protocol. Under Steve’s leadership, the department became one of the largest within Safeguard. In 2002, he assumed responsibility for the newly-formed high risk department, once again building its success. Steve was promoted to director over these two areas in 2007, and he was promoted to assistant vice president in 2012.

Prior to joining Safeguard, Steve spent 10 years within the insurance industry, holding a number of positions including multi-line property adjuster, branch claims supervisor, and multi-line and subrogation/litigation supervisor. Steve is a graduate of Grove City College.


AVP, Operations

Jennifer Jozity

Jennifer Jozity is the assistant vice president of operations, overseeing inspections, REO and property preservation for Safeguard. Jen ensures quality work is performed in the field and internally, to meet and exceed our clients’ expectations. Jen has demonstrated the ability to deliver consistent results in order audit and order management.  She will build upon these strengths in order to deliver this level of excellence in both REO and property preservation operations.

Jen joined Safeguard in 1997 and was promoted to director of inspections operations in 2009 and assistant vice president of inspections operations in 2012.

She graduated from Cleveland State University with a degree in business.


AVP, Finance

Jennifer Anspach

Jennifer Anspach is the assistant vice president of finance for Safeguard. She is responsible for the company’s national workforce of approximately 1,000 employees. She manages recruitment strategies, employee relations, training, personnel policies, retention, payroll and benefits programs. Additionally, Jennifer has oversight of the accounts receivable and loss functions formerly within the accounting department.

Jennifer joined the company in April 2009 as a manager of accounting and finance and a year later was promoted to director. She was named AVP of human capital in 2014. Prior to joining Safeguard, she held several management positions at OfficeMax and InkStop in both operations and finance.

Jennifer is a graduate of Youngstown State University. She was named a Crain’s Cleveland Business Archer Award finalist for HR Executive of the Year in 2017.


AVP, Application Architecture

Rick Moran

Rick Moran is the assistant vice president of application architecture for Safeguard. Rick is responsible for evolving the Safeguard IT systems. He leads the design of Safeguard’s enterprise application architecture. This includes Safeguard’s real-time integration with other systems, vendors and clients; the future upgrade roadmap for systems; and standards designed to meet availability, security, performance and goals.

Rick has been with Safeguard since 2011. During that time, he has led the system upgrades necessary to support Safeguard’s growth. In addition, Rick’s team has designed and implemented several innovative systems.

Prior to joining Safeguard, Rick was director of enterprise architecture at Revol Wireless, a privately held CDMA Wireless provider in Ohio and Indiana, and operated his own consulting firm providing services to the manufacturing, telecommunications, and energy sectors.


AVP, Technology Infrastructure and Cloud Services

Steve Machovina

Steve Machovina is the assistant vice president of technology infrastructure and cloud services for Safeguard. He is responsible for the overall management and design of Safeguard’s hybrid cloud infrastructure. He manages all technology engineering staff who support data centers, telecommunications, network, servers, storage, service monitoring, and disaster recovery.

Steve joined Safeguard in November 2013 as director of information technology operations.

Prior to joining Safeguard, Steve was vice president of information technology at Revol Wireless, a privately held wireless provider in Ohio and Indiana. He also held management positions with Northcoast PCS and Corecomm Communications, and spent nine years as a Coast Guard officer and pilot.

Steve holds a BBA in management information systems from Kent State University in Ohio and an MBA from Wayne State University in Michigan.


Assistant Vice president of Application Development

Steve Goberish

Steve Goberish, is the assistant vice president of application development for Safeguard. He is responsible for the maintenance and evolution of Safeguard’s vendor systems ensuring high-availability, security and scalability while advancing the vendor products’ capabilities and enhancing the vendor experience.

Prior to joining Safeguard, Steve was a senior technical architect and development manager at First American Title Insurance, a publicly held title insurance provider based in southern California, in addition to managing and developing applications in multiple sectors from insurance to VOIP.

Steve has a bachelor’s degree from Kent State University in Ohio.