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A letter to the editor ...

National Mortgage Professional
Nov 19, 2007

Wachovia ranks highest in HELOC customer satisfaction for second yearMortgagePress.comBest HELOCs For a second consecutive year, Wachovia ranked highest in satisfying customers who recently obtained a home equity loan or line of credit, according to the J.D. Power and Associates 2007 Home Equity Line/Loan Origination Study. Now in its second year, the study measures customer satisfaction with home equity line/loan lenders. Three factors are examined to determine overall satisfaction. They are, in order of importance: closing process (36 percent), loan officer/representative or banker (34 percent) and application/approval process (31 percent). The study found that highly committed customers were four times more likely to stay with their current home equity lenders and three times more likely to recommend their lenders to friends and family than customers with moderate and low levels of commitment. Highly committed customers also possessed nearly twice as many additional financial services. A modest five-percent shift in customers from moderately to highly committed levels could lead to tens of millions of dollars in new and retained loan balances and deposit balances for the typical lender included in the study. Wachovia received an overall index score of 831 on a 1,000-point scale, performing particularly well in all three factors contributing to customer satisfaction. SunTrust followed Wachovia in the rankings with an index score of 794, improving by 74 index points since 2006. U.S. Bank, which was included in the study for the first time, followed SunTrust with an index score of 787. Additionally, Wachovia had a considerable percentage of highly committed customers—32 percent, compared to an industry average of 19 percent. Among home equity customers, those who were highly committed were two to three times more likely than moderately committed customers to refinance or stay with their current lenders, recommend their lenders to others or consider them for their next home equity loan. "Wachovia manages to do everything well across the board—from the application process to closing—and it shows in the results," said Tim Ryan, senior research director of the finance and insurance practice at J.D. Power and Associates. "It is particularly impressive that Wachovia records a 63-point improvement above their top-ranking score in 2006. They have made notable strides in shortening application processing and funding times. This improvement in timeliness, coupled with Wachovia's competitive rates, are important drivers in their high levels of customer satisfaction." The study also found that overall satisfaction had increased considerably across the industry, currently averaging 766 index points compared with an average of 725 in 2006. This increase was driven by improvements in loan processing times, proactive communication with customers about the status of their loan applications and a lower incidence of borrowers paying closing costs. On average, the amount of time it takes to approve an application has improved by an average of three days, from 11 in 2006 to eight in 2007. The length of time between application approval and availability of funds to customers decreased by two days on average, from eight days in 2006 to six days in 2007. In addition, loan representatives performed better in explaining the steps of the loan origination process, including providing timeframes for completion and informing customers of their credit scores. "These improvements are good news for both customers and lenders," said Ryan. "Timeliness of application approvals and availability of funds means that the loan origination process is becoming more convenient for customers. In addition, lenders are understanding the importance of setting expectations about the process and proactively communicating with customers to manage those expectations. Customers who say they have an error-free loan experience tend to recommend their lenders at a higher rate, so the payoff can be considerable for lenders whose customers are highly satisfied." The study also found that 26 percent of consumers who shopped for a home equity line of credit or loan chose a lender with whom they had an existing relationship. Along with home equity accounts, customers most frequently utilized checking accounts (47 percent), credit cards (38 percent) and primary mortgages (23 percent) with the same lender. For more information, visit www.jdpa.com.
Published
Nov 19, 2007
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