Lenders are doing a better job keeping consumers informed about the loan process, according to the latest J.D. Power Mortgage Originator Satisfaction Survey. But the actual speed of loan closings is also a key factor to borrowers' overall satisfaction.
"The percentage of customers who said [the origination process] was faster than expected is up," said Craig Martin, mortgage practice director at J.D. Power, rising to 35% of borrowers in 2015, from less than one-third in last year's survey.
Quicken Loans received the highest customer satisfaction rating among the 13 originators that J.D. Power ranked, marking the sixth straight year the Detroit-based online lender has led the annual survey results. Quicken also was received the highest ranking among mortgage servicers in a separate J.D. Power survey released earlier this year.
In addition to rating individual lenders, the survey demonstrated the relative importance consumers put on the speed of mortgage closings. Based on a 1,000-point scale, borrowers who saw their loans closed in 30 days or less gave their lenders an average score of 858. That score falls to 796 at 31-60 days, and 686 at 61 days or more.
"The faster the process on average, the better the experience," Martin said. "The one caveat to that that we've seen in our results is if the lender does a good job of setting expectations and keeping the customer informed through proactive communication, they can keep the level of satisfaction very high."
Technology plays an important role in helping lenders manage consumer expectations. But while lenders received higher marks for the functionality of their consumer-facing tools, borrower adoptions rates remained level from a year ago. This suggests customer service satisfaction remains linked more to the effectiveness of the expectation-setting rather than the form of it, Martin said.
Regardless of the level of technology use now, demographics suggest interest in automation and online tools will rise in the future, Quicken Loans CEO Bill Emerson said in a phone interview. He credited his firm's use of technology to set "clear communication and clear expectations" with consumers, while helping boost Quicken's rating to 850, from 835 a year ago.
While Quicken maintained its top rating this year, there was some shifting of positions among other lenders in the survey. Bank of America slipped one notch to No. 3 this year, but the No. 2-ranked Fifth Third beat it by only one point, and BofA's overall score of 811 was up from its score of 807 the previous year.
"We're pleased to see our consistent level of performance and continuous improvement," said David Doyle, senior vice president of business operations at Bank of America, in an interview.
The bank has made recent investments in training and technology, while putting particular emphasis on improving processing times during the first 15 days of an origination.
"The greatest technology in the world can't overcome missing a closing date for a buyer selling a home," said Doyle. "The transaction's outcome is the most important thing. Technology is an enabler. Technology's not an outcome."
CitiMortgage, meanwhile, climbed to No. 5 this year, with a score of 809. Last year it was slightly below the average score of 786, with a score of 783. This year is rose above the industry average of 793.
"We have made significant progress in how our clients feel about their interactions with us," said CD Davies, Head of Global Mortgages for Citi, in an emailed statement. "It takes hard work and collaboration across our entire organization to deliver this kind of improvement, and we are happy to see that effort recognized by our clients."
One caveat to the latest ratings is that the J.D. Power survey, completed in August, doesn't reflect the October implementation of the new Truth in Lending Act/Real Estate Settlement Procedures Act integrated disclosures.
The new rules are expected to at least temporarily slow loan closings. That, combined with a growing shift toward increased purchase mortgage originations, makes lenders' use of upfront communication to offset dissatisfaction with longer timelines all the more important.
Emerson said while managing expectations can help shape consumer perceptions, the reality of closing timelines remains central to borrowers' opinions. That will make the results of subsequent post-TRID surveys interesting.