Servicers “Fail” Mortgage Modification Expectations
With more than a million borrowers signed up for mortgage modification programs the overall result is that most are wildly unhappy with their loan servicers.
According to J.D. Power and Associates, mortgage servicers often fail to deliver on certain best practices during the loan modification process, “including providing and meeting a time frame for approval; not asking for information more than once; explaining the entire process during application; and providing proactive status updates during the process.”
“While the loan origination process is already a milestone event for most homeowners, the stakes are even higher for those going through the modification process,” said David Lo, director of financial services at J.D. Power and Associates. “Homeowners navigating the loan modification process may be fearful of losing their home, and that can add significant fear and anxiety to an already stressful experience. As a result, it’s especially important that servicers make every effort to deliver on key best practices and make the experience as painless for customers as possible.”
The company reports, for example, that “only 28 percent of customers were asked to provide information more than once during the mortgage origination process, compared with nearly 80 percent of customers during the loan modification process.”
Context
One has to wonder if there are any conditions under which mortgage servicers — the folks who collect monthly loan payments and process foreclosures when payments are not made — can satisfy borrower expectations. After all, when a loan is originated that’s a happy experience because the borrowers are getting a home. In the case of a loan modification borrowers are in deep trouble and likely facing foreclosure, bankruptcy or both. In such an environment you can pretty much understand that borrowers may not be too thrilled with anything done by a loan servicer.
Service Practices
Power says there are several key service practices that can have a particularly strong positive impact on customer satisfaction:
Fee transparency: Communicating all fees in a concise way to ensure complete understanding and no surprises.
Informative account statements: Providing account statements to ensure that the most important information customers need is easily found.
Billing and payment by preferred method: Ensuring that customers are able to receive account statements and make payments through their preferred method.
Problem resolution: Ensuring that once a problem is identified, it is resolved quickly and efficiently.
You can easily understand that clarity is required with the first three items, it’s the fourth which is a problem. “Resolution” may not possible and in cases where a borrower has lost a job there’s nothing the servicer can do to help the homeowner short of offering them employment.
On a scale of 1,000, Powers says that “BB&T (Branch Banking & Trust) ranks highest in customer satisfaction among primary mortgage servicers with a score of 795 and performs particularly well in fees and billing and payment process. SunTrust Mortgage follows with a score of 767, and U.S. Bank ranks third with 755.”
Given the terrible circumstances involved, it’s amazing that any servicer can satisfy distressed borrowers.
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