JD Power Reports Mortgage Servicing Satisfaction Downward Trends Continue

WESTLAKE VILLAGE, Calif., September 9, 2008 /PRNewswire/ — For a second consecutive year, customer satisfaction with the servicing of mortgages declined, according to the J.D. Power and Associates 2008 Primary Mortgage Servicer Study(SM) released today.

The study measures customer satisfaction with four areas of loan servicing: billing; payments; contact with the lender; and annual account administration. Overall satisfaction in 2008 decreases 14 index points to 784 on a 1,000-point scale, down from 798 in 2007 and 812 in 2006. Increased billing errors, more service "hand-offs," and a larger number of customers making late payments all contribute to lower satisfaction levels.

"For most customers, their mortgage servicer is akin to a utility company - they just want things to work, and they expect a friction-free experience," said Rocky Clancy, executive director of financial services at J.D. Power and Associates. "Any bumps in the road that cause customers to have to spend time asking questions or solving problems negatively impact satisfaction, particularly if they have to call more than once or talk to more than one person to get their issues resolved."

The study finds that, in addition to reducing the number of problems and improving the resolution experience, a key to customer satisfaction is increasing customer adoption of electronic billing and payments. Fifty-six percent of customers report making payments through an automatic deduction or a Web site, compared with 36 percent of customers making payments by mail. In 2006, 49 percent of customers made payments electronically, while 42 percent paid via mail.

"Satisfaction with payment processing is 50 points higher for people making payments electronically instead of through 'snail' mail," said Clancy. "Automatic deductions, in particular, are associated with fewer problems because once things are on auto-pilot, the chances of something going wrong are slim."

Branch Banking and Trust (BB&T) ranks highest among primary mortgage servicers for a second consecutive year with a score of 839. BB&T performs well in all four areas driving satisfaction and achieves high levels of commitment from its customers. SunTrust Mortgage (825) and Wells Fargo (813) follow BB&T in the rankings.

Customers with high levels of commitment to their primary mortgage servicer are more than three times more likely to say they "definitely will" continue to do business with their current lender than those customers with moderate levels of commitment.

"Primary mortgages tend to be a highly commoditized product, so lenders can benefit considerably by increasing loyalty among their current customers," said Clancy. "Highly committed customers tend to make more recommendations, intend to use the mortgage servicer again in the future, are less likely to switch and are more likely to use multiple products with the same firm - all of which help to benefit a lender's bottom line."

In addition, servicers stand to earn considerable financial gains by making improvements in key areas, according to the study.

"By improving the billing and payment processes, reducing the number of problems, improving retention and increasing the acquisition of new customers through recommendations, lenders may generate increased annual profitability of approximately $30 million for every 1 million loans serviced," said Clancy.

The 2008 Primary Mortgage Servicer is based on responses from 10,241 home owners regarding their experiences with their primary mortgage servicer. The study was fielded in July 2008.

                                                          J.D. Power.com 
                                                            Power Circle
     Lender                           Index Score      Ratings For Consumers


  BB&T (Branch Banking and Trust)       839                      5
  SunTrust Mortgage                     825                      5

  Wells Fargo                           813                      4
  Chase                                 812                      4
  Bank of America                       811                      4
  Regions Mortgage                      808                      4

  Wachovia                              806                      3
  CitiMortgage                          803                      3
  U.S. Bank                             803                      3
  PHH Mortgage                          802                      3
  WaMu/Washington Mutual                802                      3
  GMAC Mortgage                         797                      3
  Fifth Third Bank                      788                      3
  National City Mortgage                787                      3
  M & T Bank                            784                      3
  Industry Average                      784                      3
  HSBC Mortgage Corp.                   775                      3
  CitiFinancial Mortgage                764                      3
  Countrywide Home Loans                756                      3
  IndyMac Bank                          743                      3

  CitiFinancial                         736                      2
  First Horizon Home Loans              735                      2
  HSBC Mortgage Services                735                      2
  Beneficial                            723                      2
  Homecomings Financial                 688                      2
  Greentree Mortgage                    675                      2
  Ocwen Financial                       616                      2

  *USAA Federal Savings Bank            912                      5




*USAA is a financial services provider open only to the U.S. military community and their families and therefore is not included in the rankings.

Included in the study but not ranked due to small sample size are: ABN AMRO Mortgage, American Home Mortgage Corp./MortgageSelect.com, Aurora Loan Services, Charter One Bank, CIT Group, CitiCorp Trust Bank, Citizens Bank, Ditech.com, EMC Mortgage Corp., Everhome Mortgage, First Franklin, Flagstar Bank, HomeEq Servicing, Household Finance Corp., Litton Loan Servicing, Midland Mortgage Co., Navy Federal Credit Union, Option One Mortgage, Saxon Mortgage, Sovereign Bank, Taylor, Bean and Whitaker Mortgage, USDA RHS and Vanderbilt Mortgage and Finance.

Source:  JD Power and Associates

Posted by Mark Rodrigues at 9/10/2008 8:53 AM
Categories: Customer Satisfaction, Mortgage
 

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