Study: Homeowners are often annoyed when mortgage lenders outsource maintenance
JD Power’s annual Mortgage Servicer Satisfaction Study finds that customer satisfaction is 26 percent higher when mortgages are originated and administered by the same company.
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Mortgage lenders are increasingly moving their loan servicing operations in-house because it provides a revenue stream that’s not as subject to the ups and downs of the real estate cycle and gives them a better chance of refinancing existing customers when mortgage rates fall.
But it turns out there’s another benefit — lenders are likely to lose their customers’ trust if someone else is responsible for collecting the monthly payments on the loans they make.
That’s a finding from JD Power’s yearbook Mortgage Servicer Satisfaction Studywhich found that overall customer satisfaction is 26 percent higher when mortgages are originated and managed by the same company rather than outsourced to another company for maintenance.
Only 15 percent of borrowers whose loans are transferred to another company to service say they would be “very likely” to consider using the original lender in the future, the study found.
Loan servicers not only collect monthly payments from homeowners, but also help them find alternatives to foreclosure when they’re having trouble making their payments. As a recession looms large and mortgage defaults increase, “customers want to be sure their mortgage servicers are on their side,” JD Power summarized the study.
“Different business models will be tested in different ways at a time when brand reputation, customer trust and customer satisfaction will be even more critical to winning and retaining business,” said Craig Martin, executive of JD Power, in a statement. “Dealing with the average is dangerous. Companies that sell the value of the end-to-end relationship and work to build customer representatives will not be successful if they settle for just being technically competent.”
JD Power surveyed 8,098 borrowers who had made their monthly mortgage payments to the same servicer for at least a year and found that overall customer satisfaction averaged 646 on a 1,000-point scale when loans were originated and serviced by the same company.
Overall customer satisfaction dropped 133 points to 513 in cases where the loan was transferred to a servicer other than the originator.
New American Funding, a technology-driven direct lender that recruited mortgage industry veterans Roger Stots 2014 to Start in-house serviceranked highest among mortgage servicers with an overall customer satisfaction rating of 695.
Rocket Mortgage, which grew its mortgage services portfolio 17 percent year over year and now collects more than $546 billion in mortgage payments from 2.6 million borrowers, ranked second with an overall customer satisfaction rating of 672.
Also above the industry average of 607 were Huntington National Bank (669), Regions Mortgage (661), Chase (658), Guild Mortgage (655), Citizens Mortgage (648), Bank of America (645), United Wholesale Mortgage (643) , Truist (641), US Bank (635), LoanDepot (626), Arvest Central Mortgage (622), Home Point Financial (621), Amerihome (617) and PNC Mortgage (610).
JD Power 2022 US Mortgage Servicer Satisfaction Study
Shown are overall Customer Satisfaction Index rankings on a 1,000-point scale, based on surveys of 8,098 borrowers who have made their monthly mortgage payments to the same service provider for at least a year. Source: JD Power.
USAA and Navy Federal Credit Union performed well but were not rated because they did not meet the study’s eligibility criteria.
Service providers that score well below the industry average of 607 include ShellPoint Mortgage Servicing (481), PHH Mortgage (487), Cenlar (511), LoanCare (516), and NewRes (535).
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