Despite the percentage of loans in delinquency dropping to less than 5% of all loans in June, mortgage servicers are still paying an inordinate amount of attention to delinquent borrowers, severely impacting the servicers’ overall customer experience, a new report from J.D. Power shows.
The J.D. Power 2015 U.S. Primary Mortgage Servicer Satisfaction Study, released Thursday, found that many current customers feel ignored by their mortgage servicer in favor of “at-risk customers,” which J.D. Power defines as those currently behind in their mortgage payments or concerned about keeping current during the next year.
According to the J.D. Power report, while at-risk borrowers represent only 15% of the survey respondent pool, which is based on responses from 5,922 customers who have had a mortgage on their primary residence for at least one year, servicers focus on those at-risk borrowers to the detriment of all current customers.
“Bank mortgage servicers’ desire to retain and expand the broader relationship with the borrower has driven some improvement in customer service,” said Craig Martin, director of the mortgage practice at J.D. Power.
“Non-bank servicers have had less business incentive to improve the experience as their focus is on keeping borrowers paying their mortgage, not on delivering a better relationship,” Martin said.
“As non-bank servicers have gained an increasingly larger share of the market, they have tended to apply policies geared toward at-risk customers that are designed to avoid legal or regulatory actions,” he added.
The J.D. Power report found that there is a “disproportionate” amount of time and resources spent on at-risk customers, which diverts efforts to help improve the experience for the majority of customers, such as website upgrades.
The study showed that enhanced self-service capabilities can improve satisfaction and help reduce servicing costs at the same time.
When customers are able to resolve an issue entirely on their servicer’s website, satisfaction is 765, compared with 650 when they are not able to completely resolve the matter online, the study showed.
Satisfaction is calculated on a 1,000-point scale.
Quicken Loans is an exception in the mortgage servicing industry with a website interaction satisfaction of 868, the survey showed.
If customers aren’t able to resolve their issue completely via a servicer’s website, 67% ultimately turn to a live agent to resolve the issue, which increases both the cost and the negative impact on satisfaction, the survey showed.
An additional 14% of customers give up trying to resolve their issue with the company altogether, which J.D. Power speculates may give them the motivation to turn to the Consumer Financial Protection Bureau or other regulatory agencies.
Overall satisfaction with website interaction is 750, which is 86 points below the average score for website interaction in the J.D. Power 2015 U.S. Retail Banking Satisfaction Study and 75 points below average in the J.D. Power 2014 U.S. Credit Card Satisfaction Study.
More than one-fourth (26%) of mortgage customers indicate having had a sub-optimal self-service experience and having had to turn elsewhere for support, resulting in a 115-point decline in overall satisfaction.
“A lot of time and resources have been spent on the live representative interaction to help distressed borrowers,” Martin said.
“While improvement is needed, the majority of mortgage customers haven’t seen a lot of meaningful changes in their experience,” Martin said.
“Mortgage servicers must ensure that all customers’ concerns receive the appropriate attention in customer experience management decisions,” Martin added. “For example, the typical mortgage servicing customer prefers to interact online, so a high-quality self-service website experience should be a priority, but it is often an afterthought.”