As home-equity lines-of-credit become harder to access, borrower satisfaction is climbing.

Overall customer satisfaction with the origination process for HELOCs and home-equity loans averaged 780 on a 1,000-point scale in the J.D. Power and Associates 2008 Home Equity Line/Loan Origination Study announced today. The index -- which measures satisfaction based on the application and approval process, closing, originator and problem resolution -- climbed from 766 in 2007.

The increase in satisfaction comes despite an overall contraction in HELOC lending.

HELOC lending standards were tougher at 70 percent of domestic banks that participated in the Federal Reserve's April 2008 Senior Loan Officer Opinion Survey on Bank Lending Practices. Respondents blamed declining property values, increased defaults and changes in borrowers' financial circumstances for tightening terms on these lines.

Among HELOC lenders to recently restrict advances are Washington Mutual Inc., which reduced or suspended $6 billion in available credit during the first quarter, and Countrywide Financial Corp., which earlier this year advised thousands of borrowers that it suspended further advances. JPMorgan Chase & Co. projects its HELOC production will fall from $48 billion last year to around $24 billion this year.

"Ongoing troubles in the housing and mortgage lending markets have had the effect of lowering customer expectations around the home-equity loan and line-of-credit origination process," J.D. Power Senior Research Director Tim Ryan explained in the press release. "Since homeowners may have feelings of uncertainty toward property values and lenders, they may associate the loan application process with hassle and frustration."

Borrowers who recently closed a HELOC with Bank of America were most satisfied. The Charlotte, N.C.-based institution fared especially well in application and approval process, pushing its overall score to 811.

SunTrust originators were well-regarded, giving the second best HELOC lender an 809 score.

Wachovia achieved a third-place ranking with an 807 score. The Charlotte-based bank's closings were cited as a big strength.

A report from Fitch Ratings indicated that Countrywide Financial Corp., Washington Mutual Inc., First Horizon national Corp., National City Corp. and Wells Fargo & Co. were among companies with the biggest exposure to HELs at the end of last year -- with between 21 and 31 percent of their loans tied up in second lien HELs or advances drawn on HELOCs.

The J.D. Power report said home-equity lenders need to explain terms to customers who don't understand what is contained in closing documents. Existing borrowers were encouraged to use their existing HELOC lender.

Key performance indicators critical to satisfying borrowers included meeting expectations and avoiding surprises, quick approvals and fundings, and flexible closing locations. "Being mindful of the pitfalls of using a mortgage broker" was another indicator noted in the findings.

"Lenders that perform well in these performance indicators will increase their percentage of highly committed customers, who are more than twice as likely to recommend their lender to others and to reuse their current lender," statement said.