Mortgage servicers across the board got higher marks for their customer service in a recent survey, but even as distressed mortgage borrowers said they're more satisfied with their servicer today than they were one year ago, servicers with large portfolios of distressed loans were still ranked lower than their peers.
The three lowest-ranked companies on the 2014 J.D. Power U.S. Primary Mortgage Servicer Satisfaction Study are Green Tree Servicing, Nationstar Mortgage and Ocwen Loan Servicing, all of which are nonbank special servicers that have large amount of distressed mortgages in their portfolios.
"Their business model is more challenging and from a customer experience standpoint what we've seen year-over-year is that folks who are at-risk clients have more problems, more questions and more issues, and as a result tend to have lower satisfaction," said Craig Martin, director of J.D. Power's mortgage practice.
Green Tree, Ocwen and Nationstar have been active in acquiring mortgage servicing rights to distressed mortgages, the loans that other lenders like Chase, Regions and Wells Fargo have sold or attempted to sell. That could have factored in the improved scores at the upper end of the survey results.
Such MSR sales became a concern to regulators like the New York State Department of Financial Services, which put a halt to Ocwen's purchase of a nonperforming servicing portfolio from Wells Fargo amid fears that nonbank servicers, including Green Tree and Nationstar, were becoming too big, too fast.
Much of the portfolios at Nationstar, Ocwen and Green Tree are made up of customers acquired in the last couple of years. Issues with servicing transfers could have impacted the satisfaction score, said Martin.
There is always opportunity for these companies to improve their customer service, he continued, and Nationstar has embraced that philosophy.
Nationstar's 2014 customer satisfaction score of 658 was the largest gain among those listed in the 2013 survey, when Nationstar earned a score of 610. Green Tree received a 642 score in this year's survey, while Ocwen improved 19 points from the 2013 survey, from 649 to 688.
After the release of the 2013 survey, Nationstar met with J.D. Power to "dive into the deep detail behind what led to that score, to hear from their perspective what the customers were saying," said John Hoffmann, Nationstar senior vice president of corporate communication.
"We then took that information and had a team of leaders put together a plan," which concentrated on key areas for improving the customer experience, Hoffmann said. Enhancements to the customer experience were already in the works prior to the 2013 survey, but the feedback consumers gave J.D. Power really drove the point home with Lewisville, Texas-based Nationstar.
Nationstar improved in all four areas that J.D. Power measures, with phone contact and billing and payment process seeing the biggest gains. Nationstar put a lot of effort into improving its interactive voice response system, Hoffman noted. The other areas Nationstar improved in were escrow account administration and its website.
The company was pleased with the significant increase in its score in this year's survey, but it's still not satisfied with its second-to-last position among the 20 servicers in the rankings. More meetings are planned with J.D. Power to discuss this year's results and Nationstar will continue its planning to improve the customer experience, Hoffmann said.
"Obviously, we'd love to be higher in the rankings and we are working to get there," he added.
Ocwen and Green Tree did not return a request for comment.
Technology played a large role in the improved customer service scores, especially when it comes to distressed borrowers, Martin said.
"It is not surprising when you think about it. [Consumers say] 'I'm worried about making my payment. Every penny counts, I'm going to be monitoring it very closely,'" he said.
"It is very similar to what you see in retail banking, where people back in the day would call and use the interactive voice response system to check their statements and their balances. They are now going to mobile to do that," Martin continued. "It is the same idea among mortgage at-risk folks, who are very conscious about the payment; they are watching their account very carefully."
While consumers who are current on their mortgages have less of a need to regularly check on the status of their mortgage accounts, distressed borrowers could benefit from mobile technology that provides real-time account access and status updates, Martin said.
Another reason technology is driving increased satisfaction is that younger consumers are buying homes and are more comfortable with using technology — an ongoing trend that J.D. Power has observed for a few years. And while there are still many consumers who prefer receiving a printed monthly statement, those consumers expressed a lower level of satisfaction with their servicers than those who go online to get information.
It is the "at-risk" borrowers who are leveraging mobile technology more to stay in contact with their servicer, versus the consumer who is on time with his or her payments, the survey found. For example, Nationstar rolled out a mobile version of its website late last year, Hoffmann pointed out.
But it was not just the bottom portion of the J.D. Power rankings that showed improved results. The top company in this year's survey is Quicken Loans, a newcomer to the survey that earned a score of 835.
The company began servicing its loans on a full-time basis in 2009, although prior to that it serviced its production for the brief period before loans were sold in the secondary market.
Quicken has been a mainstay at the top of J.D. Power's separate originator survey that's released annually in November, holding the No. 1 spot from 2009 through 2013.
Quicken's success in both lists is no surprise, as there's a correlation between consumer satisfaction with the origination process continuing when the loan is being serviced, Martin noted.