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Few borrowers feel loyal to lender

December 2, 2002

Only 10% fit high-retention profile of ‘loyal customers'

Inman News Features

Only 10 percent of borrowers feel a sense of loyalty toward their current primary home mortgage servicer, according to a study released today by customer satisfaction guru J.D. Power and Associates.

The 2003 home mortgage study defined "loyal customers" as those who definitely would consider choosing the same mortgage servicer again, definitely would recommend the servicer to other people and have been delighted with the level of service they have received.

J.D. Power and Associates Senior Manager Jeremy Bowler said being the first lender a loan shopper contacts is "a tremendous competitive advantage."

"With more than 7,800 lenders in North America offering to originate a new loan, it's very easy for customers to simply walk away from a mortgage provider that fails to meet their expectations," he said.

Customers whose loans have been "flipped" or resold to another lender are far less satisfied than those whose loans haven't been transferred, the study found. Thirty-one percent of borrowers surveyed experienced the abrupt transition to a new lender and only 17 percent of them indicated they definitely would consider using the new servicer for their next mortgage.

The survey ranked 27 home mortgage providers on a customer satisfaction scale. Topping the list was USAA, which ranked highest in overall customer satisfaction and scored higher than all other lenders on day-to-day account administration, billing and payment process, customer-initiated contact experience and loan origination process.

"USAA really stands out among home mortgage providers. Not only does USAA score highest in each of these four areas, but it does so by a substantial margin," said Bowler.

The other top four placements on overall customer satisfaction were Branch Banking & Trust, Sun Trust, Wells Fargo and First Horizon.

J.D. Powers and Associates said many smaller often regional lending institutions also performed very well in the customer satisfaction survey.

"Smaller lenders often are able to provide their customers with more personal attention. However, with the rapid consolidation taking place in this industry, there is a move to centralize the day-to-day servicing of mortgages. The challenge lenders face is to deliver the same quality of customer care, yet achieve the economies of scale many believe is necessary to remain competitive," Bowler said.

The answer for many financial institutions has been to form strategic relationships with other lenders, according to J.D. Powers and Associates. USAA has partnerships with PHH/Cendant Corp. and GMAC Mortgage Corp. to handle some of its loan origination and servicing.

The study was based on responses from 10,872 home mortgage borrowers across the country.

Westlake Village, Calif.-based J.D. Power and Associates is known as an expert in market research, forecasting, consulting, training and customer satisfaction surveys.

Copyright: Inman News Service

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