Fairway named top lender for customer satisfaction by J.D. Power survey

Consumers' year-over-year increase in satisfaction with their mortgage originator – while a good sign in a purchase-heavy market, which typically requires more customer contact – will be hard to sustain as cost-cutting and staff reductions are likely to continue, J.D. Power said.

Meanwhile, Fairway Independent Mortgage displaced Rocket Mortgage as the company with the highest score, 776 to 759. Last year, Fairway scored 733 and was in fourth place, while Rocket scored 750.

The industry average was a score of 730, up 14 points from last year's 716.

"At Fairway we continually talk about the primary need for speed, and the importance of smooth and timely closings.  Borrowers want things to happen ASAP and without any hitches, and we have built our borrowing experience with that in mind," said Steve Jacobson, Fairway CEO, in a press release. "We have systems in place that prioritize our customers, and we believe this award recognizes that effort."

What helps drive satisfaction is a combination of providing assistance and communication with the client, as well as having the right products to offer them, explained Craig Martin, executive managing director and global head of wealth and lending intelligence.

"One of the areas that we saw the industry probably struggle a little bit with [consumers] was having a loan offering to meet [their] needs," Martin said. "That was the one area where we saw a decline, but [Fairway's] done really well in that area this year."

This year's results come after the industry was told in October 2022 that 30% capacity needed to be removed from the originations business; 12 months later, the Mortgage Bankers Association's Marina Walsh said the industry has only reduced it by 20% so far and will need to cut more.

In the third quarter, the MBA reported that losses per origination grew compared to the prior period to $1,015 from $534, primarily driven by an increase in expenses. The financial outlook for at least the next two quarters is bleak.

Given the things that drive positive satisfaction include responsiveness from their lender, Martin is concerned regarding future scores.

Purchase borrowers want their lender to help solve their problems, explain what is coming next and generally keep them informed.

The survey found that 38% of respondents started working with a lender when they first thought about buying. Meanwhile, those that felt their loan officer should have been more involved in the application process jumped to 40% from 29% in the 2022 survey.

While they are using self-service digital tools, consumers today are more often looking for face-to-face contact, Martin continued.

"It becomes more of a partnership," Martin said. "We've definitely seen that become really important, that earlier engagement, giving them the confidence to find the home and then figure out what all the steps are."

But with companies cutting back on employees, both sales and back office, that connection might be difficult to create and maintain in the future.

Given the rounds of layoffs both past and future, "if your frontline staff is always concerned and worried, how does that play out for how they treat the customer?" he asked.

Furthermore, for the past year, mortgage rates have been stubbornly high, first tentatively crossing the 7% mark briefly last November. But recently rates have soared up to a point where on an anecdotal basis some lenders were offering conforming 30-year fixed rate loans over 8%; Freddie Mac data has the rate peaking at 7.79% at the end of October.

While purchases are less rate sensitive, they are not immune. But the survey found that only 31% of borrowers picked their lender because they offered the lowest rate. The remaining 69% made their choice based on the reasons Martin alluded to, including personalized service and help navigating the mortgage market.

That being said, the rate offer still must be competitive. "If you're an extreme outlier on price, I don't think you're going to get business and that's kind of the reality of it," Martin said.

But if it is a minor difference, he said, the borrower is asking themselves in making that choice, "who do I trust?" and then in looking at the possible tradeoffs.

Meanwhile, first-time home buyers have lower satisfaction than repeat buyers. That is because higher mortgage rates likely resulted in a more difficult loan qualification scenario. Approximately half of the purchase market is made up of first-time buyers, Zillow said.

"Even the products that they're being presented may be different than it was a couple years ago, and as such we are seeing that impact their experience," Martin said.

First-timers are likely getting that same level of hand-holding by their lender they have had in the past, but it is now a more challenging environment to get a loan and that is likely influencing their response.

Other lenders at the top of the list this year are Citi with a score of 756, Prosperity Home Mortgage at 748 and Bank of America, 747.

Guild Mortgage, which just two years ago had the highest satisfaction score among originators, finished fourth from the bottom at 702.

The only lenders with lower scores were Freedom Mortgage at 699; Loandepot, 692; and NewRez, 676.

A minimum threshold of responses exists for lenders to receive a score. Furthermore, lenders that serve limited markets can be scored but are not included in the table. This year, Veterans United scored one point higher than Fairway, at 777, while Navy Federal received a score of 753.