Findings from the 2014 J.D. Power U.S. Primary Mortgage Origination Study reinforce that shifting market conditions have led to new dynamics:
- Purchase has become the majority
- New Home Purchase: 57% in 2014 vs. 36% in 2013
- Refinance: 43% in 2014 vs. 64% in 2013
- The average age of respondents is younger in 2014 than in 2013
- The average age of respondents is 3 years younger in 2014 than in 2013 (45 vs. 48, respectively)
- The proportion of respondents age 35 or younger has risen sharply to 36% in 2014 from 25% in 2013
One theme that remains consistent, however, is the importance of transparent communication throughout the process. In turn, financial institutions that can maintain clear and consistent communication with their mortgage customers are more likely to ease the confusion and anxiety often associated with the origination process (particularly amongst younger or first-time purchasers).
First and foremost, it is critical to completely educate customers on ALL aspects of the process and product terms. As displayed in the chart below, successful communication regarding these topics can significantly improve customer satisfaction, yet the industry has considerable room for improvement. Currently, only 45% of customers feel that all aspects of the process and product terminology were ‘completely’ explained to them.
Additionally, it is critical for loan representatives to provide frequent status updates related to the approval and closing processes. Both of these best practices also carry a significant impact on customer satisfaction:
Although mortgage origination customers are increasingly looking to use multiple channels/methods at different phases of the origination process, it is critical for financial institutions to maintain a consistent focus on personal interactions with their customer base:
- Clear and accurate expectations must be set from the outset and reinforced throughout the process. A lack of transparency at any point in the process can create stress and concern that can harm the relationship.
- Face-to-face interactions are a key channel used by younger, first-time buyers to obtain information and learn about the process. Front-line associates must be prepared to act as an advisor and counselor.
- From limiting paperwork and preventing duplication of effort to providing proactive updates, minimizing customer effort is at the heart of a great experience.
Data from the 2014 U.S. Primary Mortgage Origination Study (released in November 2014) finds that mobile apps have an opportunity to emerge as an important interaction channel for customers.
Current usage is low, with only 8% of customers indicating that they used an app during the origination process. However, as shown in the chart below, over half (53%) of customers who have not used an app during the mortgage origination process would consider using one for their next home purchase or refinance. Specifically, customers would be most interested in using an app to check status (47%), review next steps (35%) and review/confirm loan details (34%).
Based on data from the 2014 J.D. Power Primary Mortgage Servicer Satisfaction Study, the percentage of customers reporting a ‘problem’ with their servicer has declined slightly over the past year (25% reporting a problem vs. 27% in 2013).
Across the individual problem types, there were noticeable reductions in problems such as:
Escrow account information
Conversely, there was a considerable increase in the percentage of fee-related problems reported by mortgage customers (17% vs. 3% in 2013). In response to this, mortgage servicers must ensure that their customer service representatives are well-educated on fee-application policies and are also provided a level of ‘empowerment’ that will allow them to resolve inquiries during the initial contact from a customer.
And while fees are now the most commonly reported problem, it is also important to note that the ‘negative impact’ of fee problems in the mortgage servicing industry is less profound than other types of problems experienced (-22 index points). Perceived ‘customer service’ (-212 index points) and ‘loan modification’ (-132 index points) problems are most impactful, providing mortgage servicers with further evidence of the need to ensure high quality and consistent customer service.
The 2014 J.D. Power Primary Mortgage Servicer Satisfaction Study published on July 29th, and customer satisfaction has improved significantly compared to 2013 study results (index score of 754 vs. 733 in 2013).
Analysis of this year’s study data has identified a new ‘Key Performance Indicator’ – whether or not a website visitor was able to resolve the reason for their visit entirely via the website.
Mortgage servicers that are able to provide their customers with a highly functional website can help minimize the number of ‘personal contacts’ received by a call center, in a branch, etc. In fact, 38% of customers visit the website in an attempt to resolve an issue or answer a question before they contact customer service.
An additional Key Performance Indicator related to the website is the ability for customers to easily locate all information and website features, which can also have an impact on minimizing ‘labor costs’. The inability for customers to find information or specific features is similar to not providing the information/features at all – eventually the customer will need to engage in a personal interaction to obtain the needed information or an answer to their question.
It is important for mortgage servicers to allocate potential investment dollars on improving website ‘range of services’ while also focusing on ‘clarity of information’ and ‘ease of navigation’. Successful implementation of these best practices can improve customer satisfaction while simultaneously decreasing labor costs associated with answering simple questions or resolving issues/problems.
While data from JD Power’s Primary Mortgage Origination Study has found that technology offerings (the ability to apply, submit documents, track status online) can raise customer satisfaction, it is important to note that customers still desire a ‘personal touch’ during the origination process.
Satisfaction is highest when customers work with one representative throughout the entire process. However, if a ‘handoff’ is necessary from one lender employee to another, it is critical to ensure that customers consider the transition ‘smooth’. Failure to ensure a smooth transition can significantly impact satisfaction and loyalty metrics, while also resulting in an increase in reported customer problems.
Data from J.D. Power’s 2013 Primary Mortgage Origination (PMO) Study identifies growing consumer demand for a more digital origination experience. Providing customers with an online option to submit supporting documents, verify receipt of their application, check status of their application and electronically sign documents can have a significant impact on satisfaction.
Quicken Loans, the top performer in the 2013 PMO study, has been among the quickest to provide a digital experience for their customers, which has helped drive their industry-best satisfaction score.
Overall customer satisfaction with mortgage lenders has reached its highest level in the past six years, according to our J.D. Power and Associates 2012 U.S. Primary Mortgage Origination Satisfaction StudySM released today.
For a second consecutive year, overall customer satisfaction has increased to 761 (on a 1,000-point scale) in 2012 from 747 in 2011 and 734 in 2010. This increase in customer satisfaction is driven by steady improvements related to transparency and communication. The study finds that during the past three years, lenders have improved in the following areas:
- Clearly explaining loan options and ensuring customers understand them
- Following up with customers in a timely manner after they complete their application
- Proactively updating customers on the status of their application
Furthermore, the results of the study show that there is a strong relationship between satisfaction with the origination process and the rates of customer consideration and usage of the same lender for refinancing. Among loan customers who have refinanced in 2012, only 40 percent cite price as their main reason for selecting their lender. Other reasons commonly cited for selection include an existing relationship; previously being a customer; and referrals.
Register for the complementary 2012 Primary Mortgage Origination Satisfaction Study Webcast
Date: Thursday, November 29
Time: 2:00 – 3:00 PM EST
By Craig Martin, Director-Mortgage Practice AND Paula Bibik, Sr. Research Manager-Financial Services
With the Consumer Financial Protection Bureau (CFPB) poised to implement mortgage servicing rules early next year, the threat of investigations and significant fines for non-compliance further raises the stakes of failing to provide a quality customer experience. Banks that consistently deliver a high level of service and have the processes and procedures in place to comply with the new CFPB requirements will certainly be ahead of the game.
The proposed CFPB rules are heavily focused on billing and payment processes; clarity of communication; and the quality of a mortgage servicer’s customer service when they are contacted. The chart below indicates how the proposed requirements align with key factors measured in our 2012 U.S. J.D. Power and Associates Primary Mortgage Servicer Satisfaction Study.
We offer the following actionable tactics to help servicers address performance improvement initiatives, and remain ahead of the customer satisfaction curve before the new CFPB guidelines are implemented:
Billing and Payments
For the majority of mortgage servicing customers, the billing and payment process represents the entirety of their relationship. When servicers avoid errors and provide correct and timely information that customers understand, the relationship is generally positive for both parties.
1. Leverage online communications and electronic billing to improve the customer experience
The study indicates that over half of all customers still receive a paper bill despite the fact that those customers have the lowest average satisfaction in the billing and payment factor and the majority of customers pay their mortgage bill electronically. Online communications and billing are becoming a way of life. According to a recent Pew Research Center study (1) 80% of American adults use the internet, and 88% have a cell phone, with nearly half of the adult population (46%) being smartphone owners. As adoption of these various technologies continues to rise, traditional concerns related to security and the desire for paper documents are being replaced by a preference for greater convenience and timely information. Servicers should continue to promote this option to customers and educate them on the benefits of adoption.
2. Utilize multiple touch points to communicate billing
Problem prevention is the name of the game. Overall satisfaction declines by over 100 index points (on a 1,000-point scale) when a problem is experienced. In the study, nearly one third of respondents said they experienced a problem in the past 12 months. Some of the most common issues are related to Billing and Payment and while contacting customers via multiple channels to alert them of an upcoming bill or change may seem unnecessary, over-communicating ensures transparency and demonstrates that mortgage servicers are making every effort to keep customers informed. Start early with a billing and payment guide at the beginning of the relationship when customers are likely to be more engaged. When changes occur in the future don’t rely on just one method of communication. A statement stuffer may get tossed in the trash, but if you combine it with online messaging and other channels you improve the chance the information will be received and prevent the need for a call.
3. Ensure that the online payment process is easy
The majority of customers pay their bill electronically, yet almost forty percent of respondents in the study that pay electronically indicated that making an online payment is “not very easy”. The Billing and Payment Process satisfaction declines by 168 index points when customers say their online payment is difficult to make. To help improve the process ensure the website is reliable and consistently available; easy to navigate and use; and provides clear instructions on payment options. Taking the time to educate customers can pay dividends. Among homeowners surveyed who receive a welcome packet that includes billing and payment information, almost three quarters say that making an online payment is “very easy”.
THE BOTTOM LINE:
When it comes to mortgage servicing, Benjamin Franklin’s immortal words sum it up well, “an ounce of prevention is worth a pound of cure”. To the extent that companies can approach the proposed CFPB guidelines as an opportunity to prevent problems, and become more efficient they will experience a win-win situation of both complying with regulations and improving customer satisfaction.
 The Pew Research Center’s Internet & American Life Project’s February Tracking Survey conducted January 20 – February 19 2012.
For more information, or to purchase a copy of this 2012 U.S. Primary Mortgage Servicer Study , please contact: Holly Zagresky at (248) 680-6319 or via email at Holly_Zagresky@jdpa.com
According to our 2012 U.S. Primary Mortgage Servicer Satisfaction Study released today, Phone Contact accounts for only 15% of the overall Satisfaction Index. However, when a customer has a phone contact with their mortgage servicer, this experience increases in importance and accounts for 57%, becoming the most important factor in determining the customer’s overall satisfaction.
Improvement in this area is critical for banks, and the following best practices will help you to create a more positive customer experience:
Emphasize the “who” vs. the “what”
In many cases, customers who call their servicer are facing major financial challenges that require understanding and empathy. When reps do not demonstrate concern and courtesy, they jeopardize the effectiveness of any knowledge they convey.
Understand what resolution customers seek and set appropriate expectations
Mortgage servicers should take the time to understand customers’ goals before explaining the steps to achieving them and establishing a realistic time frame for resolution.
Strive for first-call resolution
Even when problems are not resolved, avoiding the need for additional customer contacts improves their experience. For more complex issues, set clear expectations and proactively contact customers with updates so they will not need to follow up.
Focus on addressing the most common issues, with first-call resolution as a goal
Designing a simple process to address the most common issues reduces the time needed to achieve resolution. It also demonstrates a level of competency that improves customer confidence in the solutions being provided. Plus, it helps employee morale!
For more insights and best practices, join us for the 2012 Primary Mortgage Servicer Satisfaction Study webcast!
Complementary Webcast Details:
Date: Thursday, July 26 – 2:00 PM EST
For more information regarding this study, please contact: Holly Zagresky at (248) 680-6319 or via email at Holly_Zagresky@jdpa.com
Data Source: The chart included in this post is from J.D. Power and Associates 2012 U.S. Primary Mortgage Servicer Satisfaction Study.