If the result of the most recent J.D. Power loan originator satisfaction survey is any indication, the future of the mortgage industry involves keeping in touch with your borrower, but that connection could be done through technology and not the human touch.
This year’s top-rated company is Quicken Loans, which received the highest satisfaction score, at 826. Last year, the company did not have a large-enough sample size to be included in the data, although it also had a high score, noted David Lo, director of financial services at J.D. Power.
He cited another online direct lender, ING, for having high customer satisfaction results, but added the company did not have a high-enough sample size to be included in this year’s results.
He notes that everyone in the business these days takes an online application. But Quicken is probably the best example of a true direct online lender, with no brick-and-mortar presence, he continued.
The customers who go through the virtual origination process with Quicken are generally very satisfied with the results. The turnaround is quicker and Quicken does “a very good job as evidenced by the ranking in the study of keeping its customers informed and adhering to the best practices we have outlined in the study.”
But Lo added he doesn’t think the online direct channel is for every consumer. “Certain people choose that channel because that is what they want. They are comfortable with (going online). They don’t necessary feel the need to have in-person interaction.
“There are going to be people who are uncomfortable with that channel,” adding that not every lender should adopt the model as the exclusive way of doing business. There are those who like and/or need the personal attention from the retail branch channel.
At Quicken and ING, he continued, there is a very good process in place to keep customers informed on where they are in the process. And that is usually done through e-mails and websites where consumers can check up on the status of their loans.
It is the automation of notifications that keep customers appraised is where the traditional lenders can learn from a firm like Quicken.
MetLife Home Loans (808), PNC/National City Mortgage (776), U.S. Bank (775) and SunTrust Mortgage (770) followed Quicken Loans in the rankings. Last year’s top company, BB&T, saw its score fall from 783 to 767.
At the other end of the scale are once again three of the nation’s largest mortgage lenders: Bank of America at 676 (last year, Countrywide, now a part of B of A, was fifth from the bottom at 720), Citibank at 691 (last year’s score 711) and Chase at 699 (713 last year). Flagstar Bank was fourth from the bottom at 708.
The worst rated company in last year’s survey was the now-defunct Taylor, Bean & Whitaker at 704, higher than the three bottom dwellers in this year’s survey.
For the broker channel, Lo said the overall satisfaction score is 718.
Overall consumer satisfaction with mortgage originators has fallen from 739 (on a scale of 1,000) last year down to 734 for this year’s survey. The changes in the good-faith estimate disclosure has increased the turnaround time between application and approval and thus negatively affected consumer satisfaction with mortgage originators, the annual J.D. Power study found.
Lo said its data shows the average time from application to approval has increased to 27.5 days in 2010 from 20 days in 2009. As a result, the time frame for the entire origination process has increased to 52.1 days in 2010 from 46.9 days in 2009. And this is much worse than when compared with 2008, when the application to approval turnaround was 10.7 days.
The increase in refinancings apparently did not play any impact in the increase in time from application to approval.
However, the survey found the changes in the Real Estate Settlement Procedures Act did result in a decrease in the time from approval to closing, from an average of 26.9 days last year to 24.5 days, Lo said.
He said, “Ultimately, this longer timeline has a negative impact on overall satisfaction, although there are specific best practices that may mitigate the negative perceptions.”
The most important best practices, which are most closely associated with high levels of satisfaction, are providing proactive updates on the status of the loan, providing a welcome acknowledgment after an application is submitted, avoiding asking for the same information more than once, closing on the promised date, clearly explaining loan options and ensuring that the customer understands, and clearly explaining the entire process from application to approval.
At the larger lenders with low scores like Chase, Citi and B of A, a lot of originations do not come through the traditional retail channel, but other methods including call centers, Lo noted.
