Keeping borrowers happy is crucial
There’s nothing that ticks off home buyers more than their lenders taking time off.
They don’t even like it when a lender shuts down for a federal holiday, like most businesses. In fact, according to one recent survey, they don’t like delays at all.
Lenders getting their acts together will help customer satisfaction, said Mike Seminari of the Stratmor Group consulting firm. A former loan officer, Seminari is now the director of MortgageSAT, an interactive customer satisfaction tool for lenders. But borrowers also can take steps to keep the closing process moving smoothly.
For example, as a home buyer, you can keep up with the bank statements, tax returns and pay stubs your lender will need from you. It can be helpful to have a checklist to work from: “If you don’t get a checklist, ask for it,” Seminari said.
You also should let your lender know what your expectations are: how often the company should be in touch with updates on your application, for instance, and how you want them to communicate — email, text or phone. Seminari said borrowers who have to call their lenders frequently are among the least satisfied customers. So discuss your expectations up front.
“Coach your loan officer into giving you a better experience,” he said.
As measured by Stratmor’s National Borrower Satisfaction Index for the past 12 months, borrowers became somewhat steamed at their lenders last December. The index dropped two points from November, as back-office staff took time off for holiday parties and shut down completely on Dec. 25 and Jan. 1. But then a funny thing happened. Borrower approval of their lenders not only jumped back up in January, but it has stayed at the higher level ever since, despite an increase in loan applications during the spring — a boom time that might have slowed lenders down and delayed settlements.
“Rather than decline in May 2017,” according to the report, “the average satisfaction score of MortgageSAT lenders remained at 91, a very good score, despite a 28 percent increase in second quarter 2017 origination volume” as projected by the Mortgage Bankers Association. Why such good ratings? In good news for consumers, the report suggests that lenders now are paying more attention to customer satisfaction. Branches may be actively competing with their back-office crews to show the bosses a better record on borrower happiness.
Hitting closing dates is key, and refinance customers, who have been around the track at least once before, are especially miffed if those deadlines are missed. The satisfaction number for refi customers crashes from 98 to 73 if the lender misses the closing date by more than 30 days.
The ratings by purchase customers, who may be firsttime buyers who are new to the game, drop only slightly with that delay: from 94 to 90.
Refi borrowers anticipating lower house payments “clearly are unhappy when that reduction is delayed,” the report said. Another source of animus: Borrowers seeking a cash-out refinance to consolidate credit-card debt “face unanticipated late charges if their loan closes much later than expected.”
On the purchase side, borrower impatience may be lower because closing dates are often keyed to something beyond the lender’s control.
Should borrowers seek out lenders that are better at satisfying their mortgage customers? Is a hometown lender better than a national bank, for instance?
Not really, the study indicates. There’s not a big difference between the giants of the business and smaller, local establishments. Satisfaction may even decrease with the size of the lender. Small lenders generated a satisfaction score of 87: the same as midsize firms, but four points less than national lenders.
There are a couple of other things borrowers can consider when choosing a lender. One is whether the loan officer will attend the closing. Some don’t, and if there is a problem, chances are good the closing will be delayed for hours or even days.
Stratmor not only advises its officers to attend closing, it also warns them to arrive on time. The borrower certainly will, and often has taken time off work to do so.
Another thing lenders should be doing is reaching out to their borrowers in advance of the closing.
“The 86.4 percent of borrowers who recall being contacted before closing — not a tough thing to do — recorded a borrower satisfaction score of 93,” the study found. “Compare this excellent score to the low score of 61 recorded by the 8.1 percent of borrowers who said they were not contacted.”
That simple step results in a 32-point satisfaction swing.
Freelance writer Mark Fogarty contributed to this report. Lew Sichelman has been covering real estate for more than 30 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.