Uncertainty, Financial Challenges Driving Down Satisfaction with Mortgage Servicers
With mortgage rates at their highest level since November 2022 and costs for everything from home insurance to maintenance still elevated, mortgage servicer customers are feeling strained, reported J.D. Power, Troy, Mich.
The J.D. Power U.S. Mortgage Servicer Satisfaction Study found the combination of reduced financial health and increased rate of mortgage transfers and a rise in reported account problems is driving a significant decline in customer satisfaction.
“The past year has been an incredibly challenging time for both customers and the mortgage industry, and there remains a lot of uncertainty,” said Craig Martin, executive managing director and global head of wealth and lending intelligence at J.D. Power. “So far, the worst-case scenarios haven’t come to bear, but mortgage servicers need to ensure they aren’t ignoring key advanced indicators.”
Martin said J.D. Power has seen the percentage of financially unhealthy mortgage customers rise to 54% from 48% during the past year. “Servicers need to ensure they are building trust and engaging with their customers so they can effectively stay ahead of potential problems when customers face financial hardships,” he noted. “When customers lack trust in their servicer, the costs to serve increases materially because those customers will gravitate to more costly service channels and they are at higher risk to take their complaints beyond the company.”
Study Rankings:
Rocket Mortgage ranked highest among mortgage servicers with a score of 686, the report said. Guild Mortgage (668) ranked second and Chase (665) third.
Other Key Findings of the 2023 Study:
-Mortgage servicers cannot ignore customers’ financial health: The proportion of mortgage servicing customers identified as financially unhealthy is 54% this year. Overall satisfaction among financially unhealthy customers is 107 points lower than among customers in the financially healthy category. Default risk is also up 4% this year among mortgage customers.
-A rise in mortgage transfers exacerbates the year-over-year decline in customer satisfaction: Overall customer satisfaction with mortgage servicers is 601 (on a 1,000-point scale), down 6 points from 2022. The drop is most significant among the 37% of customers who had their mortgage transferred to a servicer that they did not choose. Overall satisfaction scores are 119 points lower when customers do not choose their servicer.
-Problem resolution suffers: While problem incidence hasn’t had a major shift this year, overall customer satisfaction with problem resolution declined 10 points. Customers who said their most recent problem contact was payment- or escrow-related increased to 43% from 36% in 2022. At the same time, customers who said they contacted their servicer about their problem increased to 19% from 17% year-over-year and the number of customers who said they had a problem that was not resolved increased to 20% from 15% a year ago.
-Advice for mortgage customers: Mortgage servicers want to help customers when they are under financial stress or having problems with their account. The key for customers is to notify their mortgage servicer as early as possible and to provide as much detail as they can to get the best guidance.
“It’s at times like this, when market conditions and personal financial health are strained, that great customer experiences can have the biggest influence on loyalty and advocacy,” said Bruce Gehrke, senior director of lending intelligence at J.D. Power. “Servicers that recognize proactive customer outreach and effective problem resolution as opportunities to build stronger client relationships—rather than obstacles to overcome—are in a great position to differentiate themselves and set a new standard for the industry to follow.”
