ServiceLink Loan Officer Survey Finds Gap Between LO Perceptions, Borrower Expectations

(Cover illustration courtesy of Johnson via Unsplash)

ServiceLink, Moon Township, Pa., surveyed more than 500 loan officers and found a “definitive gap” between homebuyer expectations and mortgage industry perceptions.

The ServiceLink Loan Officer Report indicated that borrowers want a faster, more streamlined mortgage experience than many loan officers realize. “Findings revealed borrowers also lack in-depth knowledge of certain areas of the mortgage process, specifically when it comes to fees,” the firm said in a statement. “There is opportunity for originators to provide greater transparency, innovative technology and in-depth education–ultimately giving borrowers the ease and guidance they desire.”

The report is a companion to ServiceLink’s April report that examined the psychology of homebuyers.     

“ServiceLink surveyed more than 500 loan officers with at least three years’ experience to get an inside look at the housing market through their unique lens,” the report said. “Their close proximity to borrowers–from pre-approval all the way to the closing table–provides them with an unparalleled understanding of borrowers’ mindset, habits, behaviors and needs. Alongside the responses of more than 1,500 people who purchased a home in the last two years, their insights provide a new perspective on the industry.”

Dave Steinmetz, division president, origination services with ServiceLink, noted originators who want to stand out in a competitive market should focus on two key areas: innovation and education. “Our research shows that today’s borrowers are ready for a more digital experience, with many willing to switch lenders for the convenience and cost savings a digital closing provides,” he said. “At the same time, the data reveals an opportunity for originators to provide greater education around fees and closing processes. By embracing technology and delivering clear guidance, originators can alleviate frustrations and better meet the desires of today’s borrowers.”

Key report findings include:

Innovate or stagnate: Borrowers want the opportunity to eClose

• Loan officer respondents see the benefit of using technology throughout the mortgage process. 60% cited time savings and 59% noted its convenience and ease of use.
• Nearly 85% of loan officer respondents say they’re seeing a moderate to substantial uptick in the use of eClosings throughout the industry in the last two years. But despite widespread momentum behind eClosings, fully digital closings, specifically remote online notarizations, remain far from mainstream.
• So, what’s causing the holdup? ServiceLink said 45% of loan officers surveyed cite the lack of borrower interest or comfort with digital closings as the biggest reason they don’t offer more of them.
• Borrowers see it differently. 82% of recent homebuyers said they would be swayed to work with a lender that offered the opportunity to close virtually while 87% would switch to a lender that offered the option to use a smart phone or tablet to self-schedule an appraisal or closing appointment for the exact date and time of their choosing.

Fee education: Borrowers don’t know as much as they think they do

• Borrowers are fairly confident they understand the fees that go along with buying a home. But loan officers aren’t so sure.
• 53% of borrowers said they fully understand application and document fees, but only 39% of loan officers believe the borrowers they work with have a complete understanding of these fees.
• 50% of borrowers said they fully understand private mortgage insurance, while only 27% of loan officers said the borrowers they work with fully grasp it.
• 47% of borrowers said they fully understand lender origination fees, yet only 28% of loan officers agree. These knowledge gaps point to the need for more borrower education from originators to deepen borrower understanding on the importance of these fees.

Where borrowers want to see improvement

• When it comes to changes in the mortgage process, borrowers want to see greater speed (39%), increased transparency (39%) and less paperwork/more electronic forms (36%). Loan officers generally agree.
• In terms of where the industry should focus its efforts, loan officers say it should concentrate on reducing unexpected or hidden costs for the borrower (40%), increasing transparency (35%) and improving customer service by providing proactive support and guidance to the borrower (35%).