TRID Behind Buyers Remorse With Mortgage Lenders

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MORTGAGE EXPERT
11 · 10 · 16

Although customers who took out a new mortgage are more satisfied this year, a significant share have experienced buyer’s remorse.

The level of overall satisfaction among borrowers who closed on a residential loan is higher for this year than it was for last year.

But despite the improvement, a big share of borrowers who financed a home purchase were remorseful about their choice of lender.

That is according to the J.D. Power 2016 U.S. Primary Mortgage Origination Satisfaction Study.

The study is based on customers’ opinions about loan offerings, applications/approval process and interaction as well as closing, onboarding and problem resolution.

Among borrowers who financed a home purchase, 21 percent
expressed regret over their choice of lender.
Among first-time home buyers, 27 percent regretted their lender choice.

One of two groups identified by J.D. Power were borrowers who regretted their lender choice because of
an above-average incidence of problems, lack of communication and unmet promises.

“While this group’s responses aren’t unexpected, they are often vocal about their displeasure, making an average of 9.0 negative comments, compared with the study average of 0.7,” the report stated.

The second group had high satisfaction levels but were price-focused and frequently obtain multiple quotes. Among customers who regret their lender decision, 72 percent said they were pressured to choose a particular mortgage product.

“This ‘happy buyer’s remorse’ is in part due to customers feeling that circumstances out of their control drove them to a particular choice and that options weren’t totally clear,” J.D. Power Director of Mortgage Practice Craig Martin said in the report. “Like a lot of consumers, they are happy with a good deal, but they can feel that they have to jump through hoops to get the deal. In the end, they may not fully understand exactly what they got, and the longer-term risk for lenders is that customers’ perceptions of the deal may change in the future.”

The report suggested that the TILA-RESPA Integrated Disclosures — or TRID — might have contributed to buyer’s remorse, though lenders that have improved communication and appropriately set expectations have helped offset TRID’s impact.

On a thousand-point scale, borrowers financing a home purchase had a satisfaction score of 840, compared to 921 for borrowers who are refinancing.

Twenty-eight percent of borrowers indicated that they completed an application online, up from 22 percent in 2015.

The highest-ranking lender — again — was Quicken Loans Inc. It was the seventh year in a row that the Detroit-based company dominated the ranking.

Quicken, which originated $69 billion in the first-nine months in 2016, scored the maximum in every category except problem resolution. Its overall score climbed to 869 from 850 last year.

“Our talented team has spent three decades of blood, sweat and tears making sure we provide clients the best mortgage experience in the world,” Quicken Loans Founder and Chairman Dan Gilbert said in a written statement. “The passion our team members extol in every interaction they have with our clients is driven by a culture that focuses on our team members and the millions of people we serve above all else.”

Next up was USAA, which achieved the highest
score in every category.

No. 3 was Navy Federal Credit Union,
which scored maximum in each category except interaction and wasn’t rated for problem resolution. The Vienna, Virginia-based financial institution reported more than $9 billion in year-to-date Sept. 30 production.

Fourth on J.D. Power’s list was CitiMortgage Inc., where the maximum score was achieved for
loan offerings. The second-highest ranking was achieved by CitiMortgage in the other categories except interaction, which was the third-highest score, and problem resolution, which wasn’t scored.

O’Fallon, Missouri-based CitiMortgage, which moved up three spots from last year with a score of 851, has funded in excess of $18 billion during the first-three quarters of 2016.

In its first time being rated, Ditech Financial
LLC
landed in the fifth spot. The Walter Investment Management Corp.-subsidiary achieved the maximum score only in the area of interaction and wasn’t rated for problem resolution. Ditech’s year-to-date originations as of September stood at nearly $16 billion.

Though it didn’t make the top-five, the nation’s largest home lender, Wells Fargo Home
Mortgage
, improved its score by 52 points on a year-over-year basis — the biggest gain. Nationstar Mortgage LLC was close behind with a 50-point improvement.

Author

Mortgage Daily Staff

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