Mortgage servicers this year have successfully fought back the headwinds of persistently high interest rates and financial uncertainty to drive improvements in overall customer satisfaction, but significant risks loom on the horizon, according to the 2024 U.S. Mortgage Servicer Satisfaction Study from J.D. Power.
The report shows that mortgage servicer efforts to improve digital experiences and streamline problem resolution have helped drive incremental improvements in customer satisfaction, but the overall financial health of borrowers has declined sharply and an increasing number of borrowers are paying their bill after the due date.
What’s more, escrow costs are rising, and borrowers need guidance.
Meanwhile, controlling costs remains a challenge for mortgage servicers, even with self-service.
“On the surface, mortgage servicers’ efforts to elevate their digital tools and customer service are offsetting challenging market conditions,” says Bruce Gehrke, senior director of lending intelligence at J.D. Power, in the report. “But digging a little deeper, the data shows early signs of potentially serious challenges for servicers in the future. A proverbial ‘canary in the coal mine’ is the financial health of borrowers, which has materially declined in the past few years. At the same time, most borrowers are facing rising escrow costs that result in their total monthly mortgage payment increasing. This means the industry has a growing number of at-risk customers facing higher costs, a group that tends to be a lot more expensive to service.”
As per the report, just 41% of borrowers are currently classified as financially healthy, down from 46% in 2023 and 52% in 2022.
Conversely, the percentage of at-risk borrowers is now 19%, up from 17% in 2023.
Overall satisfaction scores among financially unhealthy borrowers are, on average, 117 points lower than among financially healthy borrowers.
As per the report, 56% of borrowers experienced an increase in escrow costs this year. Overall satisfaction is 62 points lower (on a 1,000-point scale), on average, among those who experienced an escrow cost increase than among those who experienced no change.
Among those borrowers whose escrow costs increased, overall satisfaction is higher among those who say they had access to tools/information on escrow from their servicer than among those who say they were not aware of such tools.
While the report confirms that self-service is key to keeping costs down borrowers say the phone is still the most likely customer service channel to drive a successful outcome – and 29% of borrowers still considered this the easiest channel to use.
Among those who had a problem, just 49% say their initial contact was calling customer service.
So which mortgage servicers rank highest in this year’s Mortgage Servicer Satisfaction Study?
Rocket Mortgage is tops, with a score of 713, while Regions Mortgage (678) and Chase (676) rank second and third.
Photo: Dollar Gill
