Servicers that actually originated their mortgages, as well as those that provide electronic payment options, ranked high in a recent study.
J.D. Power and Associates' 2006 Primary Mortgage Servicer Study announced and released Wednesday ranked mortgage servicers on customer satisfaction across four primary areas: the administration of the borrower's account; the billing process; the payment process; and the process of contacting the mortgage servicer.
The marketing information services firm said it analyzed the responses it garnered between March and April from 12,799 home owners and then gave servicers an index score based on a 1,000-point scale.
The study reportedly found that 45% of mortgages do not remain with the originator for servicing.
"While this is common practice in the industry, removing the homeowner from the decision to sell the mortgage to a different company for servicing can create confusion and a sense of betrayal among customers," said Rocky Clancy, executive director of the banking and mortgage practice at J.D. Power, in the announcement.
The responses revealed that customer satisfaction scores were 32 index points lower among borrowers whose mortgage originator passed the servicing of the loan to a different company, according to the announcement.
"Customers want stability and consistency with their home loans, and lenders who can deliver those are rewarded with customers who are not only more satisfied and loyal, but also have twice as many additional products with the lender," Clancy added.
Another factor that improves customer satisfaction amongst servicers is providing electronic payment options, as nearly half of borrowers pay there mortgage bill electronically, compared to 34 percent two years ago, J.D. Power said.
"The more billing and payment of mortgages is automated or conducted online, the more consistent and accurate loan servicing becomes, ultimately leading to higher levels of customer satisfaction," Clancy said. "The bottom line is that satisfied customers require less contact with their servicer's customer service department, resulting in lower servicing costs for the lender."
The servicer borrowers were most satisfied with was USAA Federal Savings Bank, J.D. Power reported. The San Antonio, Texas-based entity outranked its competitors by a wide margin in each of the four primary areas analyzed and achieved the highest overall customer satisfaction index score -- 897 on a 1,000-point scale.
"USAA Federal Savings Bank is simply doing things right and doing them right the first time," Clancy said. "When USAA makes commitments to their customers, they meet those commitments. Customers will often forgive mistakes, but they tend not to forgive broken promises. Problems are inevitable, but having a proper approach to those issues can speak volumes."
Parent USAA topped all other lenders in a previous J.D. Power study of customer satisfaction with the mortgage-lending process. USAA has received rankings of Superior from A.M. Best Co., Exceptional from Moody's Investors Service, and Extremely Strong from Standard & Poor's, according to the company's Web site.
At No. 2, was BB&T, with an index score of 861. The lender reported that at the first quarter's end unpaid principal balances on its total residential mortgage servicing portfolio were $41.8 billion, while those serviced for others totaled $26.0 billion.
Citizens Bank placed third, with an 844 index score, followed by GMAC Mortgage's 841.
Wells Fargo, which reported a $1.133 trillion servicing portfolio at the second quarter's end, received score of 840. Last October, Fitch Ratings reportedly upgraded the special servicing rating of Wells Fargo Home Mortgage to ''RPS2+' from 'RPS2' due to its ability to manage and liquidate non-performing residential mortgage loans and real estate owned assets, as well as strong financials.
J.D. power said a score of 836 gave sixth place to Bank of America, which reported its servicing portfolio was $313.0 billion as of June 30.
First Horizon Home Loans had a score just two index points lower, according to the announcement. The servicing portfolio of the Tennessee-based lender reportedly ended the second quarter at $97.3 billion.
CitiMortgage came in at No. 8, J.D. Power said. Citigroup reported third party mortgage servicing was $325 billion last quarter. Late in 2005, Fitch upgraded the residential master servicer rating of the prime-lending unit to 'RMS1' from 'RMS1-,' based on "Citi's accomplished master servicing experience, strong portfolio management, and tightened procedures and controls," as well as the "company's proven ability to oversee the servicing activities of its primary and special servicers."
In the ninth spot, with a reported score of 827, was SunTrust Mortgage, which had a reported servicing portfolio size of $112.2 billion as of Mar. 31, 2006, followed by Fifth Third Bank at No. 10, with an 822, J.D. Power said.
Two of the most prominent mortgage players did not make the top 10, according to the announcement. Washington Mutual placed 11th and was followed by the nation's largest originator and servicer in the nation, Countrywide Home Loans, which said it's servicing portfolio ended the latest period at $1.196 trillion.