Consumers Register Discontent With Lenders' Customer Service

If the 2003 J.D. Power and Associates Home Mortgage Study is any sort of guide for mortgage lenders, they need to be forewarned. Their customers are not happy with the service they are receiving.

The survey found that only one in 10 consumers said they are loyal to their current primary home mortgage service provider. Truly loyal customers are defined as those who would consider using their existing mortgage servicer again, definitely recommend their servicer to others and are delighted with the level of service they receive. As in last year's survey, Power found that customers whose loan servicing rights were not sold are more satisfied with their current company than those whose loans were sold to another lender.

Among the 31% of the sample whose loan was sold, only 17% said they would consider using the new servicer for their next mortgage. This is down from last year, when 20% of the borrowers whose loan was sold said they would use the new servicer for their next loan. In creating rankings for the overall service experience a borrower received from the entity he or she is currently sending their monthly payment to, J.D. Power looked at four things in the following order of importance: day-to-day administration of the account, billing and payment process, customer-initiated contact experience and loan origination process. The company with highest overall satisfaction rating is USAA, a San Antonio- based financial services firm that specializes in dealing with military families. Jeremy Bowler, senior manager for J.D. Power, commented, "USAA really stands out among home mortgage providers. Not only does USAA score highest in each of these four areas, but it does so by a substantial margin."

Yet because of the nature of the survey, this might be misleading. Outsourcing arrangements are not taken into account, mostly because consumers are unaware of such deals. USAA has had a 12-year relationship with Parsippany, N.J.-based Cendant Corp. and more recently has entered into a second relationship with GMAC Mortgage Corp., Elkins Park, Pa. GMAC has a 720 rating, while Cendant has a 715. Cendant is ranked among the best only in approval time, while seen as "does not really stand out" by consumers in the origination process and responsiveness areas. Second highest rated in terms of customer satisfaction is BB&T Mortgage, Winston-Salem, N.C. BB&T received a score of 762. The company has a servicing portfolio of $35 billion and it originated $14 billion in 2002.

Atlanta-based SunTrust, with a score of 735 was third. According to the company's third-quarter 10-Q statement, it has servicing rights of $403.7 million.

Large servicers did not fair well in this survey. Of the five largest servicers in the industry, only Des Moines, Iowa's Wells Fargo Home Mortgage rates among the top five (at number four) in customer satisfaction with a score of 723. Washington Mutual, Seattle, which has the largest servicing portfolio, is ranked 17th among its peers in terms of customer satisfaction with a score of 694. The third largest servicer, Chase Home Finance, Edison, N.J., is ranked 16th with a 697, while No. 4 Countrywide Financial Corp., Calabasas, Calif., is seen by consumers as 14th best in terms of customer satisfaction with a 703. Bank of America is in 12th place in the satisfaction scale with a score of 708. The industry average is 708.

Of the remaining 10 largest servicers, besides Cendant and GMAC, only National City Mortgage of Miamisburg, Ohio, has a score above the industry average. While not broken out individually, J.D. Power notes that smaller regional servicers have a good perception from borrowers for customer satisfaction.

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