J.D. Power: Fintech firms edging out banks on mortgage lending

TRADITIONAL BANKS are losing their grip on the mortgage industry to nontraditional lenders, according to J.D. Power’s 2021 U.S. Primary Mortgage Servicer Satisfaction Study. / COURTESY J.D. POWER

PROVIDENCE – Traditional banks are losing their grip on the mortgage industry, with fintech firms and other nontraditional servicers gaining a major increase in customer satisfaction, according to J.D. Power’s 2021 U.S. Primary Mortgage Servicer Satisfaction Study.

The study, which scores and compares customers’ satisfaction with their mortgage lenders out of a 1,000-point scale, found that nonbank lenders saw an average 17-point bump in customer satisfaction year over year. By comparison, traditional bank lenders, which have historically outperformed nonbanks, increased their satisfaction ratings by an average of 4 points.

Among traditional bank mortgage servicers, other bank products were a key driver behind satisfaction scores, with customers who use other bank services scoring their servicers 55 points higher, on average, than those who only use the bank for a mortgage, the study found.

Nevertheless, traditional banks claimed three spots among the top five rated mortgage servicers, including Rhode Island-based Citizens Bank, which came in at No. 5. Rocket Mortgage by Quicken Loans was the highest-ranked mortgage service for the eighth consecutive year, followed by Guild Mortgage, Huntington National Bank and Chase Bank.

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Industrywide, customer satisfaction increased 6 points over the prior year, driven largely by pandemic relief efforts, including loan forbearance programs, as well as an increased array of digital options, the study found. However, with most loan forbearance programs ending, that satisfaction may be short-lived, according to Jim Houston, director of consumer lending intelligence at J.D. Power.

“In fact, despite the attention on relief programs, nearly one-fifth of current mortgage customers have had no interaction with their servicer during the past year,” Houston said in a statement. “Mortgage servicers will really need to up their customer engagement games as the marketplace stabilizes.”

Other findings included:

  • “At-risk” customers, those most likely to default on their mortgage, reported the biggest year-over-year increase in satisfaction with their services, up 15 points, while low-risk customers’ satisfaction declined by 1 point.
  • Customers increasingly want more digital services. While website usage increased 5 percentage points, more than 60% could not find the desired information on their servicer’s website within the first two web pages, which correlated to lower satisfaction scores.
  • Among customers who said they wanted to switch lenders, better rates, better customer service and easier access to information were listed as the top reasons.

The survey reflects responses from 8,507 people who took out or refinanced a mortgage loan more than one year ago. Customer satisfaction was measured across five categories: customer interaction, communications, billing and payment process, escrow account administration and new customer orientation.

Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.

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