The Right Place

Section: Real Estate And Home Life Date: 08/03/07

Held captive with home loan; Consumers rank servicers in J.D. Power survey
By Sally Duros

J.D. Power has weighed in on customer satisfaction with the process of servicing a loan, and some customers are not happy.

Surprise! If you are like most hapless recent mortgage holders, you've had the pleasure of seeing your mortgage passed around like a hot potato every six months or so.

Especially disgruntled in the J.D. Power study are mortgage customers who report making a late payment in the past 12 months. They 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 released Wednesday.

"We are the voice of the consumer" delivering a message to the large mortgage servicing companies, said Tim Ryan, senior director of mortgage financial services with J.D. Power.

Thomas P. FitzGibbon Jr., executive vice president with MB Financial Bank, Rosemont, noted, "Systemically, the top 10 servicers control 70 percent of all the servicing in the country. With the high number of delinquencies, defaults and foreclosures, servicing companies that do not staff up will not have the critical knowledge to deal with a customer who has a payments issue.

"This also happened in the banking and thrift crisis. Lots of shops were going away, and other companies had to take on the business, " FitzGibbon said.

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.

Branch Banking and Trust, BB&T, with a score of 860 on a 1,000 point scale, was graded as the top primary mortgage servicer in the nationwide survey of 39 mortgage servicers consumers.

"From the consumer's perspective, this information can give you a first cut from an independent source of who is providing good service," Ryan said.

Following in the ranking were M & T Mortgage, with an 828 score, and Citizens Bank, with a score of 825.

"BB&T is a terrific servicer," FitzGibbon said.

J.D. Power said these lenders earned high scores because they do a good job of keeping billing statement error rates lower than the industry average; providing a 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.

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, J.D. Power said.

Power's Ryan added, "Despite lenders being flexible with late payment situations, customers still feel as if their mortgage servicer is being less considerate of their specific circumstances. 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."

The J.D. Power rankings have more power to move the markets than to move consumers. Given the current meltdown in the mortgage securities markets, those servicers who pay close attention to what consumers say will be more likely to enjoy the benefit of new business as investors move servicing around.

"What we find in our study is that satisfaction is higher among people whose servicing lender is the same as the originating lender," Ryan said. "If you are in the market for a new mortgage or refinancing, these rankings might lead you in a certain direction. "

In most cases, we cannot choose who services our mortgage. Instead, we enjoy the treat of our mortgage servicing being handed off by investors as the market changes.

BB&T has "a very satisfied group of customers," Ryan said. "They have a high proportion of customers who make payments within the branch. That's a bit of an anomaly. Their error rate in terms of statements and escrow analysis is very low. And their ability to resolve problems is very good."

These days, investors who pay attention to the J.D. Power rankings will be looking for a good place to park your servicing, planning that it will stay there -- alleluia!

Said MB Financial's FitzGibbon, "As an investor I would want to make sure that my servicing would go to a company that I could trust to do it right."

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