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Fastest Growing Servicers Rank Worst in 2013 Study

Mortgage News

While mortgage servicers as a group have improved overall customer satisfaction, a pair of the fastest-growing servicers in the country landed at the bottom of the new ranking.

On a thousand-point scale, the nation’s biggest residential loan servicers scored a 733 this year based on customer satisfaction.

The score reflects servicers’ performance with the billing and payment process as well as escrow account administration, website functionality and phone contact.

That was according to the J.D. Power 2013 U.S. Primary Mortgage Servicer Satisfaction Study. The study reflects responses from 4,669 borrowers collected between April 17 and May 8.

This year’s score was a little better than the 725 garnered by the group in 2012.

J.D. Power noted that smaller servicers which performed well above average in prior years are now performing more in line with the overall group.

“This leveling off is potentially the result of an increase in new clients combined with a new set of rules released by the Consumer Financial Protection Bureau — effective January 2014 — which has had many firms focused on ensuring their policies and procedures are fully compliant,” the report stated.

The new rules, according to marketing information services company, require that servicers have systems, policies and procedures in place that ensure borrowers receive the appropriate information and support.

J.D. Power Director of Investment Services Craig Martin suggested in the report that the improved customer satisfaction score reflects the effectiveness of the new regulations.

Reforms also emerged from the February 2012 national mortgage servicer settlement between 49 state attorneys general and the biggest servicers. The single point of contact requirement is reducing confusion faced by distressed borrowers. The index level for borrowers who indicated that they had a single point of contact was 154 points higher than those who didn’t.

Martin said that a single point of contact could become the standard among all servicers.

Borrowers’ satisfaction with escrow account administration improved, with that index rising 21 points. This factor — which considers management of escrow payments, effectiveness of communication and ease of understanding how the escrow payment applies to the loan — was likely impacted by improved communications, according to J.D. Power.

“We have seen an increase in the use of escrow analysis guides, which are very helpful in explaining how the escrow process works,” Martin explained.

Despite a 38-point decline from 2012, Branch Banking & Trust Co. was the highest ranking servicer with a score of 765. BB&T has grabbed the top spot for four consecutive years.

Regions Mortgage maintained its No. 2 standing with a score of 764, down from 779 last year.

After that was SunTrust Mortgage, with a score of 762. SunTrust, which was also No. 3 in 2012, raised its score from the previous year’s 758.

The country’s biggest mortgage servicer — Wells Fargo Home Mortgage — took the fourth spot in 2013 with a score of 761. Wells Fargo moved up from the seventh position last year, when it had a score of 738.

No. 5 Chase saw its score inch up to 755 this year from 752 in 2012, though it slipped from fourth position.

Although Bank of America was among the five-worst servicers in the latest report, its score has improved from 707 in 2012 to 714.

At the bottom of the list, which scored a total of 22 servicers, was Nationstar Mortgage. The Lewisville, Texas-based company’s score tumble to 610 from 621 in 2012.

Nationstar’s mortgage servicing portfolio has skyrocketed over the past year — climbing to $312 billion as of March 31 from just $103 billion at the same point in 2012, according to data maintained by Mortgage Daily.

While Ocwen Loan Servicing’s score increased from 613 last year to 649 in the latest report, it still landed in the second-worst position.

Ocwen’s poor showing came as it has grown its servicing portfolio to $470 billion as of March 31, 2013, from around $145 billion a year earlier.

The fast growth at Nationstar and Ocwen is likely a major factor in their poor showings. Boarding new loans and integrating systems takes a big toll on customer satisfaction.

This was the case with the failed Washington Mutual, which more than a decade ago acquired Dime Bancorp, Homeside Lending Inc., Fleet Mortgage Corp., Bank United and PNC’s residential mortgage banking business all within a one-year period.

At the time, Mortgage Daily received multiple complaints from borrowers whose loans were taken over by WaMu.

Far more significant was the litigation that followed — with several class actions and lawsuits filed on behalf of disgruntled borrowers.

Walter Investment Management Corp. and Quicken Loans Inc. are also in a rapid-growth mode.

Walter’s servicing portfolio, has shot past $200 billion as of March 31 from less than $100 billion a year earlier.

Quicken, which reported a mortgage servicing portfolio of $123 billion as of March 31, didn’t report any servicing portfolio as of a year prior.

However, Quicken has proven its ability to maintain customer satisfaction — ranking at the top of J.D. Power’s Primary Mortgage Origination Satisfaction Study each of the past three years.

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