Transferring mortgages from one servicer to another leads to more dissatisfied customers who lack trust in both companies, according to a study from J.D. Power.
The J.D. Power 2022 U.S. Mortgage Servicer Satisfaction Study found that customer satisfaction dropped significantly when mortgages were transferred from the originating lender to another servicer, falling by more than 130 points on a 1000-point scale.
“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,” Craig Martin, executive managing director and global head of wealth and lending intelligence at J.D. Power, said in a statement. “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.”
The study, which was redesigned for 2022, was conducted in March and April 2022 and included responses from 8,098 customers who had been with their current mortgage loan servicer for at least one year. It measured satisfaction with the mortgage servicing experience using six factors: level of trust, ease of doing business, keeping customers informed and educated, people, resolving problems or questions, and digital channels.
Overall customer satisfaction for mortgages that were originated and serviced by the same company was 646, the study found. When the mortgage was transferred to a servicer different from the originator, satisfaction dropped by 133 points to 513.
Customer trust in the mortgage servicer also fell when mortgages had been transferred to another servicer, scoring 511, 145 points lower compared to customers with mortgages originated and serviced by the same company.
After a mortgage was transferred, only 15 percent of those customers said they were “very likely” to consider using the original lender in the future, J.D. Power said.
Some customers faced challenges when the loan was transferred. More than 40 percent of mortgage customers who had a loan transferred said the transfer process was not “very easy,” J.D. Power said. For customers who saw the transfer process as “very easy,” satisfaction was 183 points higher compared to those who considered the process to be “somewhat easy,” “somewhat difficult” or “very difficult.”
“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,” Tom Lawler, head of consumer lending intelligence at J.D. Power, said in the statement. “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.”
The study also found that trust matters when customers opt for paperless statements. Among customers who had gone paperless, J.D. Power said, attributes related to brand image were rated significantly higher compared to those who did not receive paperless statements, including attributes such as “can rely on lender to keep promises” and “lender provides honest communication.” These brand attributes were rated significantly lower among survey respondents who said they would never go paperless.
“Servicers need to understand which customers are open to going paperless and what it will take to convert them,” J.D. Power said.