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Although Borrowers Say Their Primary Mortgage Lenders Are More Flexible About Late Payments, Mortgage Customers Still Believe Lenders are Generally Less Accommodating Than They Could Be
BB&T Ranks Highest in Customer Satisfaction with Primary Mortgage Services
Amid the turmoil in the housing and mortgage markets, mortgage customers who report making at least one late payment in the past 12 months indicate that lenders are showing some flexibility in scheduling late payments, but tend to be less understanding and accommodating of their circumstances when compared to 2006, according to the J.D. Power and Associates 2007 Primary Mortgage Servicer Study(SM).
The study measures customer satisfaction with the process of servicing a loan based on four primary areas: the administration of the customer's account; the billing process; the payment process; and the process of contacting the mortgage servicer.
The study finds that while borrowers who have made late payments indicate their lenders are slightly more flexible in scheduling payments, customer ratings for the ability of lenders to understand their specific circumstances and their willingness to work with them declined from the 2006 study.
"Despite lenders being flexible with late payment situations, customers still feel as if their mortgage servicer is being less considerate of their specific circumstances," said Tim Ryan, senior research director of the finance and insurance practice at J.D. Power and Associates. "It is mutually beneficial for both borrower and lender to work through these difficult time periods, and lenders can support the majority of these customers by being even more considerate of their situation. These circumstances often lead to the development of valuable, regular-paying customers."
BB&T (Branch Banking and Trust) ranks highest in overall customer satisfaction with a score of 860 on a 1,000-point scale. M & T Mortgage follows in the rankings with 828 and Citizens Bank ranks third overall with a score of 825. These lenders all perform particularly well in keeping billing statement error rates lower than the industry average; providing a wide range of options for making payments; providing flexibility when scheduling electronic payments; designing and/or using automated phone systems that address customer needs; and handling customer contacts quickly and efficiently.
USAA, a financial services provider open only to the U.S. military community and their families and therefore not included in the rankings, also achieves a high level of customer satisfaction.
The study finds that there are considerable financial benefits for lenders in delivering a highly satisfying customer experience, including increased referrals and higher customer retention rates-which is the percentage of customers who pay off a loan and then refinance or take out a new mortgage with their current lender. Specifically, doubling the rate of customer retention from the industry average can result in an increase of nearly 3 percent in mortgage servicing valuations, or approximately $38 million for lenders with a $100 billion portfolio.
"In addition to the benefit of increasing servicing right valuations, moving customers to high commitment levels can triple the number of recommendations, almost double the number of additional products that the customer utilizes and reduce marketing costs for generating new business," said Ryan. "To achieve higher retention rates, lenders can first and foremost enhance the billing and payment process to make it more convenient, and dramatically reduce errors through systems such as e-mail notifications and automatic payments."
The study also finds that customers who say they "definitely will refinance" with their current lender are much more likely to make monthly payments via the Automated Clearing House (ACH) method, which allows the lender to take payments directly from the customer's bank account. ACH can eliminate issues with lost, late and misapplied payments, which all negatively impact satisfaction. In addition, the elimination of high-impact errors -- particularly, the mismanagement of tax and insurance escrow accounts and payments -- and the prompt and precise resolution of problems can directly and positively impact satisfaction.
The 2007 Primary Mortgage Servicer Study is based on responses from 11,481 home owners regarding their experiences with their primary mortgage servicer. The study was fielded in three waves in November 2006, February 2007 and May 2007.

  Overall Primary Mortgage Servicer Satisfaction Ranking
   (Based on a 1,000-point scale)

  BB&T (Branch Banking and Trust)                      860
  M & T Mortgage                                       828
  Citizens Bank                                        825
  Countrywide Home Loans                               824
  SunTrust Mortgage                                    822
  First Horizon Home Loans                             818
  Wells Fargo                                          817
  GMAC Mortgage                                        816
  Regions Mortgage                                     807
  CitiMortgage                                         805
  Chase                                                804
  Bank of America                                      803
  Washington Mutual                                    798
  Industry Average                                     798
  Wachovia                                             797
  Fifth Third Bank                                     790
  U.S. Bank                                            788
  World Savings                                        787
  PHH Mortgage                                         786
  ABN AMRO Mortgage                                    784
  National City Mortgage                               784
  IndyMac Bank                                         781
  USDA RHS                                             772
  CitiFinancial                                        771
  Aurora Loan Services                                 762
  American Home Mortgage                               751
  Everhome Mortgage                                    748
  Beneficial                                           747
  *HSBC Mortgage                                       742
  Ameriquest Mortgage                                  738
  CitiFinancial Mortgage                               738
  Homecomings Financial                                733
  Midland Mortgage Company                             706
  Greentree Mortgage                                   692
  Litton Loan Servicing                                688
  EMC Mortgage Corporation                             683
  Vanderbilt Mortgage and Finance                      672
  Option One Mortgage                                  669
  Ocwen Financial                                      627

  **USAA Federal Savings Bank                          910

Included in the study but not ranked due to small sample size are: Charter One Bank, CIT Group, CitiCorp Trust Bank, Coldwell Banker, Ditech.com, First Franklin, Flagstar Bank, GreenPoint Mortgage, HomeEq Servicing, Household Finance, Navy Federal Credit Union, Saxon Mortgage, Sovereign Bank, and Taylor, Bean & Whitaker Mortgage.
*HSBC Mortgage may include responses for HSBC Mortgage Corporation (USA) and HSBC Mortgage Services.
**USAA is a financial services provider open only to the U.S. military community and their families and therefore is not included in the rankings.
For more information: http://www.jdpower.com/

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