Mortgage Loan
Financial Services Industry

Impending federal rules prompt mortgage servicers to clean up their act

(7/24/2012) Ahead of historic regulatory overhaul of the mortgage lending industry, mortgage servicers are beginning to give mortgage borrowers more satisfaction - especially those who need it most.

There's still room for improvement.

Overall satisfaction with primary mortgage servicers increased to 725 (on a 1,000-point scale) from 718 in 2011, according to J.D. Power and Associates' "2012 U.S. Primary Mortgage Servicer Satisfaction Study."

The study measures customer satisfaction in four mortgage servicing areas: billing and payment process; escrow account administration; website; and phone contact. Satisfaction in all factors increased from 2011.

Overall satisfaction among at-risk customers, those who were behind on their mortgage payments or were concerned about making future payments, improved the most, increasing by 27 points from 2011, compared with non-prime and prime customers, up 3 points and down 3 points, respectively.

Not surprising, at-risk customers were the most likely to contact their mortgage servicer (75 percent), compared with non-prime (41 percent) and prime (32 percent) customers. Satisfaction among customers who contacted their servicer via phone increased by 52 points from 2011.

Consumer dissatisfaction when contacting mortgage servicers has been heavily targeted by upcoming regulations.

"Significant improvements in mortgage servicing, particularly with the method in which calls are handled, have improved customer satisfaction for the first time in three years," said Craig Martin, director of the mortgage practice at J.D. Power and Associates.

Mortgage servicers' failures

Mortgage servicers are responsible for collecting payments from borrowers on behalf of the actual mortgage lender. The servicer also handles customer service, loan modifications, collections, and foreclosures. Mortgage lenders can also act as servicers.

Mortgage servicers have been more than remiss at serving distressed homeowners since the housing market crashed.

Servicers continue to be the target of federal suits, state suits, joint federal and state suits, class-action suits, numerous complaints from individuals and regulatory overhaul on par with that of the tobacco industry in years gone by.

Critics say the industry's failures have been so cancerous to the recovering economy it has forcing regulators to regulate it back into shape.

New regulations

• The Consumer Financial Protection Bureau (CFPB) is poised to expand mortgage servicing regulations, forcing the industry to be more transparent and accountable to borrowers and end abusive mortgage servicing practices that cost some borrowers their homes. New rules could be effective in 2013.

• The rules dovetail on the $25 billion "National Mortgage Settlement" and the "Independent Foreclosure Review," both also designed to stop institutionalized mortgage abuse that lead to financial injury.

• Hard hit California recently, effectively codified the National Mortgage Settlement with permanent state rules under the state's new "Homeowner Bill of Rights."

"Servicers will be under pressure to comply with the guidelines and must ensure that they not only have appropriate processes in place, but that they also understand the new rules and adhere to them as well," said Martin.

Consumers' role

Martin says consumers also play a role in creating a better experience with their mortgage servicer and offers tips, based on the study's findings, to help customers avoid behavior that could lessen the chance of a positive mortgage servicing experience.

• If your refinance application failed six to 12 months ago, try again. Federal programs, including Home Affordable Modification Program (HAMP) and Home Affordable Refinance Program (HARP), have been newly implemented or upgraded since and could make it easier to modify or refinance.

• Stay on top of your mortgage servicer's payment options, terms and policies, specifically regarding late payments. That can help prevent defaulting.

• Don't wait until the last day of your grace period to pay your mortgage. Payments may not post right away and that could cost you late fees, penalties and a ding on your credit report. Consider receiving your bill and paying your mortgage online to increase the chances you'll payment will be recorded on time.

• As soon as you think you could be late or miss a payment, contact the servicer. The sooner your contact your servicer the sooner your servicer can assist you.

J.D. Powers Best and Worst Mortgage Servicers Top-Down Mortgage Servicers
  • BB&T (803)
  • Regions Mortgage (779)
  • SunTrust Mortgage (758)
  • Chase (752)
  • PNC Mortgage (739)
Bottom-Up Mortgage Servicers
  • Ocwen Loan Servicing (613)
  • Nationstar Mortgage (621)
  • Homeward Residential (643)
  • OneWest Bank (667)
  • Aurora Loan Services (669)

 

 

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