Times are tough enough in the mortgage origination field with all of the changing regulations, guidelines, overlays, pricing, etc.
But if the results of a recent MortgageMatch.com survey are to be taken at face value, one of the biggest impediments to consumer perception of the business is loan originators themselves.
Nearly one-third of the respondents in that MortgageMatch.com survey are complaining that understanding the process and coping with lender’s requirements are the most challenging aspects of getting a home loan.
This outranked getting the mortgage itself or negotiating the sales price on the home, both of which nearly one in four consumers cited as the most challenging.
Sue Stewart, senior vice president at Move Inc., the parent company of MortgageMatch.com, said the survey is a “wakeup call” to the industry. Consumers “want to be able to depend on their mortgage lender. For most people, the home buying process isn’t about the mortgage—it’s about getting a home.”
Furthermore, 79% of recent homebuyers said getting a mortgage was as or more difficult than they expected; the complaint was particularly one brought up by buyers whose annual income was $50,000 or more.
When asked about what caused them frustration, 21% of recent homebuyers said waiting to hear if they were approved for a loan was more stressful than waiting to hear if they got a new job. A similar number complained that their originator used too much technical jargon. The same amount complained that finding a lender they considered to be easy to work with was a challenge. Only 7% cited problems with qualifying due to their credit score.
Approximately 11% of those surveyed complained that they were given a higher rate than originally quoted and 9% (12% of female buyers and 6% of male buyers) felt the originator asked for inappropriate information.
A lot of the problems, Stewart said, can be traced to the ever-changing lending environment, especially in terms of underwriting guidelines.
As a result Move is seeing complaints from real estate agents, brokers and homebuilders that their clients are not sure if they are qualified to purchase a home.
When the company was developing the MortgageMatch site, she said they wanted to find the “biggest pain points” in the process. And it has found in its surveys, even after the site launched, is that there is a lot more work that needs to be done in making the consumer comfortable and knowledgeable about the loan origination process.
MortgageMatch attempts to set the expectations for the consumer of what he or she is going to need to provide to the originator get the loan. By educating the consumer upfront, the company believes a lot of the frustration can be eliminated on the back end.
And no group needs more help with understanding the process than the first-time homebuyer. Nearly three out of five of those who said they are planning to purchase a home in the next three years fit into this group.
“We may not be able to minimize the paperwork—and I don’t think that is going to go away—but what we can do is educate and we can put people into a more transparent process where they are not afraid to do this and the expectations are set up front,” Stewart said, describing the aim of MortgageMatch, but what also should be the aim of every originator.
Setting expectations also helps the real estate agent and builder as well as the loan originator because it gives them an educated consumer.
But there are still issues out there, such as lead aggregator sites that provide teaser rates that only a small number of consumers qualify for, Stewart said.
The ones going online looking for deals are consumers with mid-600 credit scores, with a blip or two in their file. They can still get a loan, but she said they should be shown a realistic rate, and not given what she termed as a bait-and-switch rate.
To be successful in customer service in you own industry, said J.D. Power and Associates, one needs to look at best practices across a range of industries. The company has released a report, “Achieving Excellence in Customer Service.”
Gary Tucker, senior vice president of global services and emerging industries, said, “Elevating service levels is particularly challenging for a variety of reasons. Customers have a seemingly contradictory expectation for both standardization and customization and expect to receive service that is both consistent and reliable and, at the same time, customized to their specific needs.
“With the availability of real-time information from the Internet, customers increasingly compare service experiences across brands and industries. As a result, when one company raises the bar for service quality within an industry, it raises the bar for other industries, as well.”
Brands that provide exceptional customer service employ certain key practices, including communicating effectively and proactively with customers, empowering their people to solve problems, measuring and understanding customer expectations, and providing their products and services with speed and convenience.
Only one mortgage originator, Quicken Loans, is named as a J.D. Power Customer Service Champion.
Originators are going to have to step up their customer service efforts because business should improve, if a Wolters Kluwer Financial Services survey is to be believed.
The company spoke with over 1,000 banking professionals and nearly 80% said they expect their consumer lending businesses (including mortgage lending) to remain steady, if not grow, this year.
“It’s encouraging to see financial institutions optimistic about their consumer lending businesses in 2011,” said Craig Focardi, senior research director for consumer lending at TowerGroup. “Job growth will play a large role in the ability of consumer lending markets to recover this year. But so will the amount of regulatory change occurring and the strategies lenders put in place to address it. Financial institutions that are proactive in their efforts will have a definite advantage over those who don’t.”
Ironically, what banks see as having an impact on their business next year are the same ones Stewart believes are causing consumer uncertainty.
Nearly one-quarter said the Dodd-Frank law would likely have the most significant regulatory impact on their operations. Another one-quarter said Truth in Lending Act and Regulation Z changes probably would. And nearly one-fifth said revisions to mortgage disclosures and new originator requirements could.
