A survey of new borrowers on home loans offers some valuable insight about how loan originators can improve their business. Among the findings from the report were that new compliance requirements are making the loan process take longer, more applications are being submitted online and fewer borrowers ever meet their loan officers.
Mortgage borrowers are less satisfied with the origination process, according to the J.D. Power and Associates 2010 U.S. Primary Mortgage Origination Satisfaction Study. Responses from 3,401 new borrowers were used in the report.
Based on four factors — the application-approval process, the loan officer-mortgage broker, the closing and the contact during origination — J.D. Power’s satisfaction index fell to 734 this year from 2009’s index of 739.
The best possible index is 1,000.
The entire origination process is taking an average of 52.1 days, deteriorating from 46.9 days last year. The average length of the origination process has increased for three consecutive years.
The average number of days from application to approval jumped to 27.5 days from 20 days during 2009.
“While the revised Real Estate Settlement Procedures Act guidelines appear to have streamlined and shortened the time from approval to closing, the unintended consequence is that the application to approval time frame has lengthened and become more complicated,” J.D. Power Director of Financial Services David Lo said in the statement.
The use of online loan applications grew to 20 percent, a significant increase from just 14 percent last year.
Applications started in person, however, fell from a third during 2009 to this year’s level of only 29 percent.
Originators and mortgage brokers met in person with borrowers at some point during the process only half of the time in the latest survey, down from last year’s 57 percent.
The report recommends that originators provide proactive updates on the status of their loans, acknowledge new applications with a welcome message and meet promised closing dates.
In addition, they should make sure that prospective borrowers clearly understand loan options as well as the rest of the process from application to approval.
But J.D. Power warned loan officers to avoid asking for the same information more than once.
The top five ranking lenders — Quicken Loans, MetLife Home Loans, PNC-National City Mortgage, U.S. Bank and SunTrust Mortgage — had scores ranging from 770 to 826.
