SunTrust ranks highest in overall customer satisfaction among primary mortgage lenders, according to the J.D. Power and Associates 2006 Primary Mortgage Origination Study, released today. The 2006 study was based on responses from 4,115 consumers who originated a new mortgage in the previous nine months. Measuring customer satisfaction with the mortgage borrowing process, the study found that overall satisfaction has improved significantly, increasing 7 percent from 2005. Overall satisfaction is most impacted by improvements in the closing process. With an overall index score of 782 on a 1,000-point scale, SunTrust performed particularly well in the three factor areas that drive customer satisfaction with mortgage lenders: application/approval process; loan officer/representative or mortgage broker; and closing. Bank of America (781) follows closely, with strong ratings from customers in the application/approval process and closing. Wachovia (774), Wells Fargo (766) and Chase (762) round out the top five rankings. Below average performers included subprime giants Ameriquest, Option One, and New Century as well as Homecomings Financial -- which received the lowest reported ranking of the major lenders included in the study. "In a cooling housing market where we see decreases in purchase mortgage and refinance volumes, greater stability exists in the industry, allowing lenders to better focus on the needs of their customers and smooth out any wrinkles in their operations," said Rocky Clancy, executive director of the banking and mortgage practice at J.D. Power and Associates. "Contrary to other financial services sectors where smaller firms tend to perform better and relationships are key drivers of satisfaction, the highest-ranking mortgage lenders are large-scale players. Accordingly, process carries greater weight in determining overall satisfaction." The study finds 28 percent of respondents experienced some problem during the mortgage origination process, such as errors in closing documents, miscommunication of loan terms and unavailable or unresponsive loan consultants or mortgage broker. On average, 40 percent of customers with problems indicate their loans closed late due to problems, which has a major impact on overall satisfaction scores. "One of the biggest drivers of dissatisfaction in mortgage origination is not keeping commitments," said Clancy. "Top-performing lenders differentiate themselves first and foremost by framing expectations and executing well within the boundaries they establish. The bottom line for many customers in terms of how well their lender satisfies them is whether the loan closes on schedule and includes accurate closing costs, payments and payoffs." Payoffs for satisfying customers during the mortgage origination process are clear. Customers from the five highest-ranking lenders make 20 percent more recommendations than customers of other lenders and are significantly more likely to turn to their existing provider for new purchase mortgages, refinances and home equity loans. The study found the following key mortgage-borrowing patterns:
  • The speed in which customers receive final approval for their loans is a critical influence on overall satisfaction. Two-thirds of customers say they received final approval for their loans less than one week after completing their applications. Satisfaction drops nearly 100 points among customers who waited seven or more days.
  • Satisfaction levels decrease significantly among mortgage customers who are asked to provide additional information and documentation after submitting their completed loan application. Fifty-six percent of these customers complain that they were asked to produce additional information more than once, further impairing overall satisfaction.
  • Not surprisingly, decisions regarding cost (interest rates, fees, closing costs) are a driving reason for selecting a mortgage lender (28%). However, customers also indicate their previous or existing relationship with the lender as a strong motivator (17%).
  • Refinanced mortgages account for 45 percent of all recently originated primary mortgages. Nearly 70 percent of those refinancing choose their current lender. These customers record satisfaction scores 35 points higher than those who choose a new lender.
  • The Internet plays an important role in the mortgage shopping and application process. More than 40 percent of recent borrowers visited a mortgage lender's Web site or an online third-party service to gather information. While customer satisfaction is highest when borrowers deal with their lenders in person, customers managing the process online are more satisfied than those interacting with a person over the phone.
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