J.D. Power and Associates reports customer satisfaction with HELOC is upMortgagePress.comJ.D. Power and Associates, Bank of America, 2008 Home Equity Line/Loan Origination Study
Despite an economy affected by a stagnant housing market,
decreasing home values and upheaval among lenders, overall customer
satisfaction with the home equity line of credit/loan origination
process has improved since 2007, according to the J.D. Power and
Associates 2008 Home Equity Line/Loan Origination Study. Overall
customer satisfaction in 2008 averages 780 on a 1,000-point scale,
increasing by 14 points from 766 in 2007.
"Ongoing troubles in the housing and mortgage lending markets
have had the effect of lowering customer expectations around the
home equity loan and line of credit origination process. Since
homeowners may have feelings of uncertainty toward property values
and lenders, they may associate the loan application process with
hassle and frustration," said Tim Ryan, senior research director of
the finance and insurance practice at J.D. Power and Associates.
"As a result, customers who obtained a home equity product report
being more satisfied with the process in 2008, compared with 2007,
even though measures of servicesuch as the average length of time
for application approvalhave remained consistent during the past
Now in its third year, the study measures customer satisfaction
with home equity lenders. Four factors are examined to determine
overall satisfaction. They are, in order of importance:
application/approval process (36 percent); closing (35 percent);
loan officer/representative or banker (26 percent); and problem
resolution (four percent).
For consumers shopping for a home equity loan or line of credit
lender, closing costs and priceincluding interest rates and feesare
particularly important considerations. Understanding and comparing
terms from various lenders may help homeowners obtain a better
"One tip for consumers who are shopping for a home equity loan
or line of credit is to contact several lenders and allow them to
compete for your business," said Ryan. "Shoppers may be able to
secure lower fees and points and better interest rates as a result.
In addition, shoppers should make sure they completely understand
the terms of their loan before signing the closing papers. If
anything is unclear or unexpected, shoppers have the right to
receive an explanation, as well as to re-negotiate the terms or to
walk away. Another approach is for shoppers to work with their
existing lender. Through this lender, shoppers may be able to
consolidate multiple accounts, as well as negotiate forand obtaina
competitive interest rate."
Bank of America ranks highest in satisfying customers who
recently obtained a home equity product, receiving an overall index
score of 811 and performing particularly well in the
application/approval process factor. SunTrust (809) and Wachovia
(807) follow Bank of America in the rankings. SunTrust performs
particularly well in the loan officer/representative or banker
factor while Wachovia performs well in the closing factor.
"Bank of America, SunTrust and Wachovia all perform well in
specific areas that are important to customers, including having
problem incidence rates and application approval times that are
better than the industry average," said Ryan. "With high levels of
service provided by these and other lenders who have performed well
at fulfilling customer expectations, now may be an opportune time
for homeowners who qualify to apply for a home equity product.
However, those homeowners with lower credit scores or who are in an
area where property values have declined may have a more difficult
time qualifying for a home equity product under the current
The study finds that there are five key performance indicators
for lenders that are critical to satisfying customers. These
indicators include: approving applications and providing customers
with access to their funds quickly; setting and meeting
expectations during the application approval process; avoiding
surprising the customer during the origination process; and being
versatile and flexible in the location of the closing.
The study also finds that lenders that perform well in these
performance indicators will increase their percentage of highly
committed customers, who are more than twice as likely to recommend
their lender to others and to reuse their current lender for their
next home equity or mortgage product. In turn, this growth can help
these lenders outperform their competitors over time.
The 2008 Home Equity Line/Loan Origination Study is based on
responses from 3,176 customers who originated a home equity
line/loan between February 2007 and January 2008. The study was
fielded in February and March 2008.
For more information, visit www.jdpa.com.