Buying a home is supposed to feel like progress. For most people, it’s the biggest financial decision they’ll ever make. So when a mortgage lender turns the process into a stressful, expensive mess, it hits harder than most bad business experiences. Long delays, surprise fees, poor communication, and loan denials at the last minute can cost buyers thousands of dollars or even the home itself.
When people search for the worst mortgage companies, they’re usually trying to protect themselves. They want to know which lenders have patterns of complaints, regulatory issues, or service problems that keep showing up year after year. That’s exactly what this article focuses on.
Below, I’ve broken down ten poorly rated mortgage lenders that consistently receive negative feedback from borrowers, regulators, and industry watchdogs. These are all legitimate companies operating in the U.S., not scams or fly-by-night operations. The issues come from how they handle applications, disclosures, fees, servicing, and customer communication.
10 Poorly Rated Mortgage Companies Borrowers Should Know About
Before getting into each lender in detail, it helps to see them side by side. The table below highlights common complaint themes tied to each company, based on borrower reports, regulatory actions, and public feedback trends.
| Mortgage Company | Common Borrower Complaints | Primary Loan Types |
| Wells Fargo Home Mortgage | Processing delays, account errors, servicing issues | Conventional, FHA, VA |
| Bank of America Home Loans | Poor communication, slow underwriting | Conventional, Jumbo |
| Rocket Mortgage | Rate changes, aggressive sales tactics | Conventional, FHA, VA |
| Freedom Mortgage | Servicing complaints, escrow problems | VA, FHA |
| Mr. Cooper (Nationstar) | Payment misapplication, customer service | Conventional, FHA |
| LoanDepot | Fee disputes, closing delays | Conventional, FHA, VA |
| Caliber Home Loans | Documentation issues, slow approvals | Conventional, Jumbo |
| NewRez (Shellpoint) | Servicing transfers, billing confusion | Servicing-focused |
| Carrington Mortgage Services | High fees, limited borrower support | Non-QM, FHA |
| PennyMac Loan Services | Escrow shortages, servicing complaints | Conventional, FHA |
Each of these lenders has funded millions in home loans. The problem isn’t size or legitimacy. It’s the repeated patterns that borrowers report after the paperwork is signed.
Wells Fargo Home Mortgage
Wells Fargo has one of the longest histories in American banking, and that history cuts both ways. While the company remains a major player in home lending, its mortgage division has faced years of criticism tied to servicing errors and internal controls.
Borrowers often report issues after closing rather than during the application stage. Problems include misapplied payments, escrow miscalculations, and difficulty correcting account errors. In several cases, homeowners have described spending months trying to fix simple billing mistakes.
Common borrower concerns include:
- Incorrect escrow analyses leading to sudden payment increases
- Long call wait times and repeated transfers between departments
- Delays when requesting payoff statements or loan modifications
For homeowners who plan to stay in their property long-term, servicing quality matters as much as interest rates. Wells Fargo’s track record has made many borrowers uneasy about that side of the relationship.
Bank of America Home Loans
Bank of America remains a dominant name in conventional and jumbo mortgages, particularly for higher-income buyers. That said, borrower complaints frequently focus on slow processing and inconsistent communication during underwriting.
Many applicants describe situations where documents are requested multiple times, or where loan officers change mid-process. This can be especially damaging in competitive housing markets where closing timelines are tight.
Issues commonly mentioned by borrowers include:
- Last-minute document requests close to closing
- Difficulty reaching the same loan officer consistently
- Appraisal delays that push back closing dates
For buyers relying on seller concessions or rate lock deadlines, even small delays can carry real financial consequences.
Rocket Mortgage
Rocket Mortgage built its brand on speed and digital convenience. While the online interface is often praised, complaints tend to focus on what happens behind the screen.
Some borrowers report that initial rate quotes change after deeper underwriting begins. Others describe aggressive follow-up calls and pressure to proceed before fully reviewing loan estimates.
Reported concerns include:
- Confusion between advertised rates and final APRs
- Frequent sales calls even after opting out
- Limited flexibility for complex income situations
Digital tools can simplify applications, but they don’t always replace experienced human oversight. Borrowers with non-traditional income often feel underserved by Rocket’s system-driven approach.
Freedom Mortgage
Freedom Mortgage is especially active in VA and FHA lending, which makes it popular among military families and first-time buyers. Unfortunately, it also draws consistent criticism related to loan servicing.
Many complaints come from borrowers whose loans were transferred to Freedom after closing with another lender. Payment processing errors and escrow shortages are common themes.
Borrowers often mention:
- Confusion after servicing transfers
- Delayed responses to billing disputes
- Difficulty correcting insurance or tax information
When a mortgage changes hands, clarity and support matter. Freedom’s reputation suggests those transitions are not always handled smoothly.
Mr. Cooper (Nationstar Mortgage)
Mr. Cooper, formerly known as Nationstar Mortgage, is one of the largest loan servicers in the country. Size brings volume, but it also brings complexity.
A significant portion of complaints involve payment application issues. Some borrowers report being marked late despite paying on time, which can damage credit scores if not resolved quickly.
Recurring issues include:
- Payments applied incorrectly to principal or escrow
- Automated notices sent in error
- Long resolution timelines for account corrections
For homeowners monitoring credit and payment history closely, even one reporting error can create lasting stress.
LoanDepot
LoanDepot expanded rapidly through online and retail lending channels. While many borrowers complete loans without incident, others report friction during closing and fee transparency concerns.
Some customers describe discrepancies between initial loan estimates and final closing disclosures. Others point to delays caused by underwriting backlogs.
Common complaints involve:
- Unexpected lender fees at closing
- Delays that require rate lock extensions
- Communication gaps between processors and loan officers
In mortgage lending, trust hinges on predictability. Surprises late in the process tend to erode that trust quickly.
Caliber Home Loans
Caliber Home Loans serves a wide range of borrowers, including those seeking jumbo loans. While the company is known for flexible underwriting, flexibility doesn’t always translate into speed.
Borrowers frequently report extended approval timelines and repeated documentation requests. This can be frustrating for self-employed applicants or buyers with layered financial profiles.
Reported challenges include:
- Slow underwriting decisions
- Repeated income verification requests
- Limited transparency around approval status
In competitive markets, slower approvals can cost buyers a deal, even when their finances are solid.
NewRez (Shellpoint Mortgage Servicing)
NewRez operates primarily as a mortgage servicer through its Shellpoint brand. Many borrowers don’t choose NewRez directly; their loans are transferred there after origination.
Complaints often stem from confusion during servicing transfers. Payment histories, escrow balances, and online account access can all become unclear during the transition.
Borrowers commonly report:
- Missing or delayed account setup after transfer
- Inconsistent billing statements
- Difficulty reaching knowledgeable support staff
Loan servicing may not feel important on day one, but it becomes critical over the life of a 30-year mortgage.
Carrington Mortgage Services
Carrington focuses heavily on non-QM loans and borrowers with credit challenges. While this fills an important market gap, it also comes with higher costs and stricter terms.
Borrowers often cite high fees and limited flexibility once the loan is active. Servicing complaints are also common, particularly around escrow management.
Key concerns include:
- Above-average origination and servicing fees
- Limited hardship assistance options
- Slow dispute resolution timelines
For borrowers already navigating financial recovery, added friction can make homeownership feel unstable rather than secure.
PennyMac Loan Services
PennyMac is a major player in both loan origination and servicing. Like other large servicers, many complaints arise after the loan is already in place.
Escrow shortages, insurance billing errors, and confusing statements are recurring themes among borrower feedback.
Borrowers often point to:
- Sudden escrow payment increases
- Delays correcting tax or insurance data
- Inconsistent information from customer service agents
Clear monthly statements and predictable payments are basic expectations. When those break down, trust follows.
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Why These Lenders Consistently Rank Poorly
It’s important to understand that no mortgage lender is perfect. Even top-rated companies receive complaints. The difference with poorly rated lenders is consistency. The same issues appear repeatedly across years, loan types, and borrower demographics.
Most problems fall into a few categories:
- Weak communication during underwriting or servicing
- Inaccurate escrow management
- Slow resolution of errors
- High volume servicing models that limit personal support
Mortgage lending combines strict regulation with complex financial systems. When companies prioritize volume over service, borrowers feel the impact quickly.
How Borrowers Can Protect Themselves
Even if you end up working with one of these lenders, there are ways to reduce risk.
Practical steps include:
- Requesting all loan estimates and disclosures in writing
- Monitoring escrow statements annually
- Keeping records of every payment and communication
- Reviewing servicing transfer notices carefully
Choosing a mortgage isn’t just about the interest rate. It’s about who you’ll be dealing with for years or decades.
Conclusion
The worst mortgage companies aren’t always obvious at the start. Many offer competitive rates, sleek websites, and quick preapprovals. The real problems often appear after contracts are signed and payments begin.
By understanding which lenders have long-standing patterns of complaints, borrowers can make more informed decisions and ask better questions upfront. A mortgage should support your long-term stability, not add stress to an already major life decision.
Taking the time to research lender behavior, not just loan terms, can save you years of frustration and thousands of dollars over the life of a home loan.
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Frequently Asked Questions
How can I check a mortgage lender’s complaint history before applying?
You can review a lender’s track record by checking consumer complaint databases and regulatory filings. The Consumer Financial Protection Bureau’s complaint portal shows trends tied to loan servicing, payments, and disclosures. State banking regulators and attorney general offices also publish enforcement actions. Reading patterns, not one-off reviews, gives a clearer picture of how a lender treats borrowers over time.
What warning signs should I watch for during the mortgage application process?
Early red flags often include vague answers about fees, frequent changes to your quoted rate, and repeated requests for the same documents. If timelines keep shifting without clear explanations or you can’t reach the same loan officer twice, that’s usually a sign of deeper process issues that may continue after closing.
Does switching mortgage servicers affect my loan terms or interest rate?
When a loan is transferred to a new servicer, your interest rate, balance, and contract terms stay the same. What does change is how payments are processed and how support is handled. This is why servicing quality matters. Poor servicing can lead to billing errors, escrow confusion, or delayed issue resolution even when your loan terms are unchanged.
Are online mortgage lenders riskier than traditional banks?
Online lenders aren’t automatically worse, but they often rely on high-volume systems and automation. That works well for simple applications but can create problems for self-employed borrowers or anyone with non-standard income. Traditional banks may move slower, while online lenders may move faster but offer less personalized support. The risk depends on how well the lender handles exceptions.
What should I do if my mortgage company makes a billing or escrow mistake?
Start by contacting the lender in writing and keep copies of all correspondence. Federal mortgage servicing rules give borrowers the right to request error investigations, and lenders must respond within specific timeframes. If the issue isn’t resolved, filing a formal complaint with a consumer protection agency can often speed up corrective action.
