Bank of America Corp., which handles customer service on about 15% of U.S. home loans, has accounted for 30% of the mortgage complaints logged by the Consumer Financial Protection Bureau, according to a new database made public by the federal watchdog.
The level of customer discontent — far greater than at home-lending rivals Wells Fargo & Co. and JPMorgan Chase & Co. — reflects BofA’s struggles since its 2008 acquisition of Countrywide Financial Corp. in Calabasas. Countrywide had become the No. 1 mortgage firm by specializing in subprime and other high-risk loans.
BofA, which has recorded tens of billions of dollars in losses on Countrywide loans, was the object of 15,136 mortgage complaints since December 2011, when the consumer bureau began taking complaints about home loans.
The bank noted that the bureau’s website shows that 98% of the problems have been resolved.
Two-thirds of the complaints involved BofA’s handling of loan modifications, debt collection and foreclosures, a fact the bank attributed to the concentration of toxic Countrywide loans. An additional 20% involved customer-service problems, such as the handling of payments and escrow accounts for funds used to pay taxes and insurance.
Bank analyst Nancy Bush, a contributing editor to SNL Financial, said the complaint data “enforces what we already knew — that Countrywide was a hot mess.”
“The lack of infrastructure at Countrywide left Bank of America in the lurch from day one when it came to enacting the tsunami of directives that came at them [from regulators] after the meltdown,” Bush said.
The regulators were responding to a huge problem, the consumer bureau numbers show. All told, the bureau listed 50,457 mortgage-related complaints as of Thursday, more than half the total 90,000 complaints it has received about all financial products and services.
The bureau — created in response to the financial crisis — previously made available a database of complaints about credit cards; on Thursday it added complaint data on student loans, bank accounts and other consumer loans.
“By sharing these complaints with the public, we are creating greater transparency in consumer financial products and services,” the bureau’s director, Richard Cordray, said in remarks prepared for a meeting in Des Moines. “The database is good for consumers, and it is also good for honest businesses.”
In a statement issued late Thursday, BofA said it supports the consumer bureau’s goal of “providing greater transparency in banking service.”
“As a result of the Countrywide acquisition, Bank of America became the largest mortgage servicer at the peak of the housing crisis, and the servicer of a disproportionate share of loan types impacted by the economic downturn,” the bank said.
“While we make every effort to provide a good experience for all customers, the servicing of mortgage loans in delinquency or foreclosure predictably results in more frequent customer concerns,” the bank said.
Bank of America is the second-largest provider of mortgage customer service, which involves bookkeeping, billing, collecting payments for distribution to mortgage owners and investors, and dealing with distressed borrowers and foreclosures.
No. 1 is Wells Fargo, which according to National Mortgage News serviced 21.5% of all U.S. home loans as of Dec. 31. The San Francisco bank accounted for less than 16% of total mortgage complaints. As with BofA and other major mortgage companies, most involved foreclosures and loan modifications.
JPMorgan Chase, with a 12.7% share of the servicing business, accounted for 10% of the complaints. Citibank, the fourth-largest servicer with 5.2% of the business, accounted for 4.8% of the complaints, while No. 5 U.S. Bancorp, with a 2.9% market share, generated 1.7% of the complaints to the consumer bureau.
BofA Chief Executive Brian Moynihan has taken a knife to the mortgage business in his efforts to downsize his Charlotte, N.C., bank into a leaner, more profitable business. BofA no longer makes mortgages through independent brokers and no longer buys them from smaller mortgage bankers.
Moynihan also has been selling chunks of the mortgage-servicing operations, which include collecting payments on loans that have been sold as well as those in its portfolio.
The shrinkage is a stark contrast to Countrywide’s expansion before the mortgage meltdown.
“If we needed an object lesson in the perils of excessive growth, Countrywide provided it,” said Bush, the bank analyst. “Let’s hope the regulators remember.”