Driven by an increase in the length of time from application to approval, the average timeline of the mortgage origination process has increased for a third consecutive year, while customer satisfaction has declined, according to the J.D. Power and Associates 2010 U.S. Primary Mortgage Origination Satisfaction Study.
The study measures customer satisfaction relating to four areas of origination: the application/approval process, loan officer/mortgage broker, closing and contact.
The study finds that the time from application to approval has increased to 27.5 days this year from 20 days in 2009. As a result, the time frame for the entire origination process has increased to 52.1 days this year from 46.9 days in 2009. Consequently, overall satisfaction has decreased to 734 (on a 1,000-point scale) in 2010 from 739 in 2009.
The study finds that the following are the most important best practices that are most closely associated with high levels of satisfaction: providing proactive updates on the status of the loan, providing a welcome acknowledgment after an application is submitted, avoiding asking for the same information more than once and closing on the promised date. Other best practices include clearly explaining loan options and the entire process, from application to approval.
The study also finds that usage of the online application channel continues to increase. Nearly 20% of customers now go online to start the mortgage application process – up from 14% in 2009. In comparison, only 29% of customers start the mortgage application process in person, while 33% did so in 2009.
In addition, a smaller percentage of customers this year say that they met with their loan officer or mortgage broker in person during the mortgage origination process – 50%, compared with 57% in 2009.
"Customer preference and, more importantly, perceptions, continue to increase with the online direct channel," says David Lo, director of investment services at J.D. Power and Associates. "Online lenders such as Quicken Loans do a very good job of keeping their customers informed of the process every step of the way by providing periodic status updates and information pertaining to their loan."
Quicken Loans ranks highest among primary mortgage lenders, with a score of 826, and performs well in all four factors, J.D. Power and Associates says. MetLife Home Loans (808) and PNC/National City Mortgage (776) follow Quicken Loans in the rankings.
SOURCE: J.D. Power and Associates