How do mortgage servicers satisfy customers?

As the probability of a recession increases along with inflation, trust between customers and their mortgage servicers has become more critical than ever.

Findings from the latest J.D. Power Mortgage Servicer Satisfaction study showed that customer satisfaction suffers when there is a lack of trust in the servicer. On a 1,000-point scale, the overall customer satisfaction for mortgages that are originated and serviced by the same company is 646. That figure falls 133 points to 513 when the mortgage is transferred to a servicer that is different from the originator.

Customer trust in the mortgage servicer declines 145 points to 511 when a loan is transferred compared to those that are originated and serviced by the same company.  According to the research, the originating firm that made the transfer is impacted, too, with only 15% of transferred customers saying they are “very likely” to consider using the original lender in the future.

“Transparency has become the financial services industry’s favorite buzzword for a reason: customers respond favorably when brands communicate their intentions and provide clear guidance on what is happening and why,” said Tom Lawler, head of consumer lending intelligence at J.D. Power. “The complexity of the mortgage industry creates challenges in customer understanding, particularly when it comes to mortgage transfers. We’re entering a market environment where customer satisfaction is going to play a critical role in the success of mortgage brands, and transparency will be a big part of creating the trust that will determine business success.”

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Another aspect that affects customer trust is going paperless. Around 52% of mortgage servicing customers get a paper statement, but 43% say their primary means of reviewing their statement is via digital channels, so the paper bill isn’t used. Customers who have gone paperless rated brand image attributes, including “can rely on the lender to keep promises” and “lender provides honest communication,” significantly higher than with those who do not receive paperless statements. Among those who say they “never will” go paperless, the same brand image attributes are rated significantly lower.

“Servicers need to understand which customers are open to going paperless and what it will take to convert them,” J.D. Power wrote in the report.

Mortgage servicers also need to check that sufficient information is sent from the start to ensure a “very easy” transfer process to improve the customer experience and reduce call volume.

“Mortgage servicing has always been an opaque experience for customers with the firms originating, owning and servicing the loans often being different and changing over time,” said Craig Martin, executive managing director and global head of wealth and lending intelligence at J.D. Power. “In a time when brand reputation, customer trust and customer satisfaction are going to be even more critical for attracting and retaining business, different business models will be put to the test in different ways.

“Managing to the average is dangerous. Firms that are selling the value of the end-to-end relationship and working to build customer advocates will not succeed if they are satisfied with only being technically proficient. Even for firms primarily focused on sub-servicing – an area where compliance, efficiency and resource optimization are paramount – it’s critical to realize that customer perceptions heavily influence actions and, as a result, affect the bottom line.”

New American Funding earned the top spot among mortgage servicers with a score of 695. Rocket Mortgage (672) and Huntington National Bank (669) followed.