J.D. Power and Associates reports: Wachovia ranks highest in customer satisfaction with home equity loan servicers MortgagePress.com,J.D. Power and Associates, Wachovia, home equity line of credit, 2008 Home Equity Line of Credit/Loan Servicer Study, customer satisfaction
Wachovia ranks highest among home equity loan servicers in
satisfying customers, according to the recently released J.D. Power
and Associates 2008 Home Equity Line of Credit/Loan Servicer
Now in its second year, the study measures customer satisfaction
with home equity line/loan servicers. Four factors are examined to
determine overall satisfaction: Product features and functionality;
billing and payment; funds access; and contact.
Wachovia ranks highest in customer satisfaction with home equity
line/loan servicers with a score of 746 on a 1,000-point scale and
performs particularly well in the billing and payment factor. Bank
of America follows Wachovia with a score of 743 and performs
particularly well in the area of funds. SunTrust Bank ranks third
overall with 741.
"Highly satisfied customers can yield tremendous financial
benefits for lenders," said David Lo, director of financial
services at J.D. Power and Associates. "For instance, customers of
Wachovia are particularly loyal, with only 5 percent saying they
would 'definitely' or 'probably' switch lenders in the next 12
months compared with 11 percent for the industry average.
Additionally, a six percentage point drop in attrition rates can
translate into $134 million in 'saved' balances for every 100,000
borrowers, which further emphasizes the importance of satisfying
The study finds that overall satisfaction across the industry
has declined from 721 in 2007 to 716 in 2008. The challenging
economic market plays a key role in the decline, with actions taken
by lenders to reduce risksuch as tightening credit availability and
terms, extending fewer credit limit increases and offering less
flexibility for locking ratescontributing to the decrease. In
addition, poor performances in fundamental areas of home equity
servicingsuch as billing and payment processes, and customer
contacthave also driven the decline.
"In 2008, we saw an increase in problems and poorer problem
resolution, primarily as a result of many lenders not providing
customers with timeframes for solving issues or not following up
with customers in a thorough and timely manner," said Lo. "In tough
economic times, lenders may adopt a 'bunker mentality' and focus on
managing risks and costs at the expense of customer satisfaction.
However, now is the time for lenders to differentiate themselves
from competitors by providing a superior experience for their
customers. In doing so, those that succeed will retain more
customers and gain greater utilization of existing home equity
The study also finds that demonstrating greater flexibility and
understanding toward late-paying customers can lead to increased
satisfaction, retention and loyalty for lenders. Among those
late-paying customers who rate their lender particularly high for
willingness to work with them, satisfaction scores average 812.
Conversely, among late payers who rate their lender particularly
low in this area, satisfaction scores average only 544.
Additionally, 62 percent of late payers who report that their
lender made special payment arrangements for their circumstances
indicate they "definitely will" or "probably will" choose the
lender for their next home equity line or loan.
"Accommodating late-paying customers doesn't necessarily mean
that a lender must waive late fees, as 56 percent of customers who
are charged a late fee still say they will likely choose their
current lender for their next home equity product," said Lo.
"Generally, customers are willing to accept responsibility for
their delinquency, and treating them with respect and dignity
during a difficult time can result in higher satisfaction levels.
Ultimately, creating an experience that includes empathetic
listening, flexibility in structuring payments, and helping
customers face their challenges with compassion and integrity can
go a long way in optimizing not only the customer experience over
the long term, but also the lenders bottom line."
The 2008 Home Equity Line of Credit/Loan Servicer Study is based
on responses from 5,035 customers who originated a home equity
line/loan. The study was fielded in March through April 2008 and
July through August 2008.
For more information, visit www.JDPower.com.