Despite mounting frustrations among first-time homebuyers, Americans remain satisfied by and large when it comes to the mortgage origination process, according to a new customer survey.
All things considered, mortgage finance customers in the last year rated their experience as a C-plus, according to a recent report from J.D. Power, with overall satisfaction averaging 786 on a 1,000-point scale. That compares to a rating of 771 in the company's 2013 survey.
The annual study, which has been redesigned for the latest release, measures customer satisfaction with the mortgage origination experience across six factors: loan offerings, the application and approval process, interaction, closing, onboarding, and problem resolution.
Out of all the lenders tracked in the survey, Quicken Loans topped the list in customer satisfaction for a fifth straight year. With a satisfaction score of 835, the non-bank was the only firm to earn a full five "Power Circle Ratings" from J.D. Power.
Following Quicken were Bank of America (807), Chase (805), and U.S. Bank (802), all of which earned four Power Circles.
While originators have improved on their composite score over the last several years, J.D. Power found many mortgage customers are still frustrated by the limited understanding they have of the entire process—particularly first-time homebuyers, who accounted for 58 percent of this year's survey.
"Recent National Realtors Association data indicates the percentage of first-time home buyers is well below historical norms," said Craig Martin, director of J.D. Power's mortgage practice. "With many prospective borrowers looking for guidance and assurance, it is imperative that lenders are fully prepared to provide the detail and information these customers desire or the borrowers may decide to stay on the sidelines."
Of the first-time buyers surveyed, 54 percent said they don't fully understand the range of loan options available to them, and only 41 percent said they felt their representative adequately explained the types of loans, terms, special programs, fees, and options available to reduce their down payment.
Among all mortgage customers, 35 percent said they didn't completely understand the process, resulting in an average decline of 179 points in overall satisfaction.
The closing experience was another source of frustration for many borrowers. Among first-time homebuyers, 44 percent indicated their closing agent didn't completely explain all of the closing documents, while 26 percent of experience customers said the same. According to J.D. Power, overall satisfaction drops by an average 144 points when lenders fail to effectively communicate loan documents and terms.
Consistent communication was also a pain point for some lenders, with customer satisfaction plummeting by 236 points when loan representatives fail to call customers back.
Notably, as technology advances and communication media expand, the survey found many customers still consider their relationship with their loan representative a key part of their experience.
"The loan representative is the face of the organization for most borrowers and is relied upon to provide effective explanations, set accurate expectations and ensure consumers have confidence that they are making a good decision," Martin said. "From describing what will happen during the process in terms a customer can understand to explaining the benefits of different options, the loan representative sets the tone of the experience."