Residential loan servicers could boost the value of their portfolios by making key improvements to their servicing processes.
Those were some of the findings of the 2007 Primary Mortgage Servicer Study released by J.D. Power and Associates today. The study, conducted in three parts from last November to May 2007, measured 11,481 borrowers' satisfaction with their servicers' administration, billing and payment processes and the ease with which they can contact servicers.
"Despite lenders being flexible with late payment situations, customers still feel as if their mortgage servicer is being less considerate of their specific circumstances," said Senior Research Director Tim Ryan in the statement. "It is mutually beneficial for both borrower and lender to work through these difficult time periods, and lenders can support the majority of these customers by being even more considerate of their situation."
The highest ranking servicer was BB&T, or Branch Banking and Trust, according to the survey. The company, which scored 860 out of a possible 100, placed prominently because of few billing statement errors, multiple options for making payments, flexible electronic payment processes, efficient phone systems and quick customer contact.
The second highest ranked company was M & T Mortgage, with a score of 828, J.D. Power said. M&T made FORTUNE magazine's list of America's Most Admired Companies 2007. Next was Citizens Bank with a score of 825, followed by Countrywide -- which scored an 824, and SunTrust, with an 822 score.
The country's biggest servicer, Wells Fargo Home Mortgage -- with a $1.467 trillion total managed servicing portfolio as of June 30 -- ranked seventh, with a score of 817.
Also making the top 10 were First Horizon Home Loans, GMAC Mortgage, Regions Mortgage and CitiMortgage.
Borrowers who responded that they "definitely will refinance" with their current lender were more likely to allow their bank account to be debited directly by the servicer, according to the findings.
J.D. Power noted that a 100 percent increase in customer retention would boost servicing valuations by 3 percent -- or nearly $40 million for a $100 billion portfolio.
"In addition to the benefit of increasing servicing right valuations, moving customers to high commitment levels can triple the number of recommendations, almost double the number of additional products that the customer utilizes and reduce marketing costs for generating new business," Ryan added. "To achieve higher retention rates, lenders can first and foremost enhance the billing and payment process to make it more convenient, and dramatically reduce errors through systems such as e-mail notifications and automatic payments."