by Broderick Perkins
(11/26/2010) Erate Exclusive - When you apply for a mortgage don't expect
to breeze through the process like your neighbors may have years ago.
And, changes are, you will be less likely satisfied with the process.
Tighter underwriting rules, more application scrutiny and greater
regulatory controls are slowing the mortgage application and approval
process and giving mortgage consumers more headaches than ever.
The average timeline of the mortgage origination process has increased
for a third consecutive year, while customer satisfaction has declined,
according to the recent J.D. Power and Associates 2010 U.S. Primary Mortgage
Origination Satisfaction Study.
The study measured customer satisfaction in four key factors of the
mortgage origination experience: application/approval process; loan
officer/mortgage broker; closing; and contact.
According to the study time from application to approval has increased
to 27.5 days in 2010 from 20 days in 2009. As a result, the time frame for
the entire origination process has increased to 52.1 days in 2010 from 46.9
days in 2009.
Overall satisfaction has decreased to 734 (on a 1,000-point scale) in
2010 from 739 in 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," said David Lo, director of
financial services at J.D. Power and Associates.
"Ultimately, this longer timeline has a negative impact on overall
satisfaction, although there are specific best practices that may mitigate
the negative perceptions," Lo said.
The study finds that the most important best practices, which are most
closely associated with high levels of satisfaction, are:
Providing proactive updates on the status of the loan.
Providing a welcome acknowledgment after an application is
Avoiding asking for the same information more than once.
Closing on the promised date.
Clearly explaining loan options and ensuring that the customer
Clearly explaining the entire process from application to
The study also finds that usage of the online application channel continues to increase.
Nearly 20 percent of customers now go online to start the mortgage
application process, up from 14 percent in 2009.
In comparison, only 29 percent of customers start the mortgage
application process in person, while 33 percent did so in 2009.
In addition, fewer customers this year say that they met with their loan
officer or mortgage broker in person during the mortgage origination process
- 50 percent, compared with 57 percent in 2009.
"Customer preference and, more importantly, perceptions, continue to
increase with the online direct channel," said Lo.
The J.D. Power study is based on responses from 3,401 consumers who
originated new mortgages between July and August 2010.
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