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Origination Process Improves

Mortgage lenders are doing a better job with the loan process. Those with the biggest improvements are attracting more borrowers — who often put existing relationships and strong referral recommendations ahead of the lowest rate in deciding on a lender.

Borrowers who have closed on a new loan had more satisfaction with their lenders this year than last year. It was the third consecutive year of improvement.

More transparency and improved communication were behind the increased satisfaction.

The findings were discussed in the J.D. Power and Associates 2012 U.S. Primary Mortgage Origination Satisfaction Study. Responses were obtained between July 31 and Aug. 27 from more than 3,500 borrowers who originated a new mortgage.

Using a 1000-point scale, J.D. Power determined that the satisfaction score improved to 761 in 2012 from 747 last year. In 2010, the score was 734.

“The study finds that during the past three years, lenders have improved in the areas of clearly explaining loan options and ensuring customers understand them; following up with customers in a timely manner after they complete their application; and proactively updating customers on the status of their application,” the research firm explained.

J.D. Power’s mortgage practice director, Craig Martin, highlighted in the report that the higher score was especially impressive given the longer turnaround times this year. He noted that the highest-performing lenders have cut down on customer uncertainty and apprehension about what to expect in the origination process.

The study found a “strong” connection between borrower satisfaction with the origination process and the borrower’s choice about whether to refinance with the same lender.

Among borrowers who refinanced this year, just 40 percent cited price as the main reason for choosing a lender. Other commonly cited factors that include existing relationships, previously using a lender and referrals.

“Lenders that enjoy high levels of repeat business are those that typically deliver high levels of satisfaction and don’t necessarily offer the lowest rates,” Martin explained. “From the perspective of customers, peace of mind in the loan origination process is critically important, and selecting a lender with a slightly higher rate, but that provides superior customer service, may be worth the few extra dollars in their monthly payment.”

America’s top-rated lender was Quicken Loans Inc. The Detroit-based company, which was the fifth-biggest originator during the third quarter, scored 817. Quicken was also the best lender in 2011 and 2010.

Among the four factors considered by J.D. Power — application/approval process, loan representative, closing and contact — Quicken performed “particularly well” in each category.

Next was Branch Banking & Trust Co., which scored 791. BB&T moved up from third position last year.

This year’s No. 3 was U.S. Bank, where its score was 784. After that was 776 at Chase and 773 at SunTrust Mortgage.

At the bottom of the list, which is limited to the biggest U.S. mortgage lenders, was Bank of America — with a score of 696.

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