Garth Graham is a partner with Stratmor Group and has more than 25 years of mortgage experience.
Garth Graham is a partner with Stratmor Group and has more than 25 years of mortgage experience.

Last time, I talked about the intense pressure operations folks are under today to deal with imminent regulatory changes and took credit for convincing the Consumer Financial Protection Bureau to delay TRID implementation by two months.

Interrupting previously scheduled programming (the discussion about operations), let's talk about the CFPB's complaint database this week.

I'll even issue my personal guarantee that the CFPB will be so moved by my prose that they will change their mind about that, too. (Note: "guarantee" is used herein as a joke and should not be considered a binding agreement between reader and writer).

We will return to ops departments next time. I hope you have a strong stomach.

By now, you’ve certainly read the news about the CFPB’s enhanced consumer complaint database. Despite the fact that it cannot verify many of the details provided by consumers, the bureau started allowing your past customers (and even those who never became your customers, including realtors) to post what they want about your company online. The identities of those who post are anonymous but lenders are clearly identified. You’ve read the newsbut have you read any of the complaints? I have, and this database poses a significant threat to the industry.

As of July, 2015, there are nearly 8,000 recent negative stories in the regulator’s public database. According to the CFPB, "the narratives provide context to complaints, are easily searchable, and help spotlight specific trends."

Check out the site. It sure meets those objectives.

CFPB promised that "the narratives can also help consumers to make more informed decisions, as well as encourage companies to improve the overall quality of their products and services and more vigorously compete over good customer service."

It’s hard to find anything wrong with that, on the surface. But upon closer examination of the various complaints lodged by consumers against financial services companies, a few things become clear.

Consumers don’t understand our process. They complain when lenders ask for information, going so far as to suggest that such requests are a violation of their privacy. They don’t understand what the lender can control and what it can’t.

On its surface, the complaints may not seem valid, but they do point to how critical it is that the process is explained, that the customer truly understands the process, and that the lenders are proactive in measuring whether the customer is satisfied before they decide to complain to someone else.

The CFPB hopes including the narratives in their database will drive lenders to be more customer-service oriented, but anyone reading the complaints already lodged will see that the vast majority relate to issues that are beyond the lender’s ability to change. This leaves the lender only one real option for mitigating this risk: they must get the borrowers’ stories first.

It’s natural for a dissatisfied person to want to tell their story and be heard. It’s far better for the lender to get this story and provide the information the borrower needs to better understand the situation. If this is done soon after closing, the lender is much less likely to see an inflated version of the issue show up on the CFPB’s website. This requires the lender to survey each borrower as soon after the close as possible, using a reliable method that provides the borrower with a sense of objectivity.

The complaint database is more than simply a resource for consumers to share their views; it’s also designed to allow those that use the database to share the results. The CFPB helpfully provides tools right on the website for visitors to share the comments with others, leveraging the standard social media tools of Facebook, Twitter or even email. So, the complaint is not only there for someone to read, it’s also there for someone to share. That sort of negative viral marketing is enough to give a company a virus.

What is a lender to do? While some lenders persist in the hope that a one-sheet survey slipped into the set of closing documents will somehow lead their borrowers to satisfaction, we have enough experience with our research to demonstrate that closing table surveys won’t reveal a fraction of the detail and insights that other approaches provide.

It's best to survey consumers soon after closing and solicit their candid feedback before the complaints and dissatisfaction escalates. If asked, the consumer will tell the story, and in the vast majority of cases, lenders have the time they need to turn these borrowers into brand evangelists. This provides a powerful antidote to the CFPB’s negative story archive and can become the lender’s most powerful marketing tool.

In fact, we have found that happy customers are willing to allow their positive comments to be posted online in the form of a testimonial. That is much better than having only the negative comments out there. In fact, that viral marketing is the antidote to the virus of the complaint database.

Finally, and perhaps most importantly, if the negative stories in the CFPB’s database reveal trends, then so too will the positive stories lenders can gather with the help of a robust survey tool. In fact, having such narratives is the best insurance a lender has against any negative repercussions when the regulator considers punitive action based on borrower stories.

And this brings us back to the operations department. Routinely surveying past customers for satisfaction data must become part of your standard operating procedure and it may point to changes you have to make in your various departments to ensure high levels of customer satisfaction going forward. So, we’ll talk about enacting change in your operation next time. Meanwhile, try to avoid the virus of complaints that might infect your business.