JD Power study shows more homeowners unsatisfied with mortgage servicers
The J.D. Power and Associates 2011 primary mortgage servicer satisfaction study showed "frustration continues to mount for homeowners who originated their mortgages during the peak of the housing boom" and are unable to refinance despite historically low interest rates.
The survey of 4,516 homeowners measured consumer satisfaction with the billing and payment process; escrow account administration; website; and phone contact. J.D. Power and Associates said respondent satisfaction declined in all four areas from a year ago.
"Many homeowners who are still in home loans that were originated between 2006 and 2008 — when home values peaked and credit standards were the most lax — would like to refinance, but can't because they either don't have enough equity in their home due to falling home prices or their credit profile doesn't meet today's tougher standards," according to David Lo, director of financial services at J.D. Power and Associates.
The study found servicers often fail to deliver on several major best practices, including staying within an approved time frame, asking for customer information only once, explaining all of the details in full during the application process and providing homeowners with updates on the process. These all contribute to increases in time and money.
The study applauds BB&T ($32.96 0.32%), SunTrust Mortgage ($31.70 -0.18%) and U.S. Bank ($35.28 -0.095%) for ranking as the top three servicers when it comes to delivering on key best practices, with BB&T securing the top spot due to its high performance in dealing with payments and processing fees.
"Excellence in mortgage servicing revolves around minimizing problems and addressing them quickly and efficiently when they do occur," Lo said. "Servicers that excel in these areas benefit from much higher consideration rates for new loans and other products, more recommendations, and a more positive perception of their brand."
The study found only 28% of customers were asked to provide information more than once during the mortgage origination process, but mortgage servicers had a hard time on this metric, with 80% of customers saying they had to provide information multiple times.
The survey concluded servicers who perform well in all key areas improve customer service, decrease the number of inbound calls and save money. Meanwhile, customers who are not satisfied with the information they receive from servicers are 3.5 times more likely to keep calling in, according to the report.
Those call volumes go down when customer satisfaction improves. In some cases, following best practices can lead to as much as a 13% drop in inbound call volumes, cutting down on a servicer's operating expenses.
Write to Kerri Panchuk.
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