Published on July 23, 2020
Written by The Servion Group
While the coronavirus pandemic has badly strained many businesses, the mortgage lending world has been busier than ever. This spring and early summer, many areas of the country saw record volumes of refinances, mostly as a result of a continuing low-interest-rate environment. And while purchase volume dropped off in March as COVID-19 truly hit in the U.S., things roared back, with purchase volume hitting an 11-year high in June.
But now is not the time to get too excited. Eventually the refinance boom will slow down, and the mortgage market will again be dependent on purchases. If that happens while millions of Americans are still out of work and/or have had to deplete their savings to get by, there could be some genuinely tough times in store for lenders, borrowers and the housing market itself.
Credit unions and community banks can attempt to get ahead of this possibility by keeping in mind one fundamental thing that makes and breaks financial institutions: borrower satisfaction.
Satisfying borrowers matters. Why? Because home loan borrowers overwhelmingly choose their lender based on:
In fact, recent MortgageSAT data says 87 percent of business comes from one of those two sources.
If your institution is getting a lot of positive feedback from borrowers, now is the time to examine what you’re doing and ask, “How can we sustain this positive customer sentiment?” If you’ve received some negative feedback, it’s time to find ways to improve. You want to create excellent borrower experiences because that fosters repeat and referral business, which is always needed during slower times.
Even though making a phone call is the most personal way to provide an update, loan officers only make update calls on 15 percent of loans, according to MortgageSAT. Proactive calling leads to higher NPS scores (88) versus email (80). And if you make borrowers pick up the phone to call you, scores plummet to 11.
Asking borrowers for the same thing repeatedly leads them to feel like you are either disorganized or you’re changing the rules as you go. You don’t want your borrowers feeling that way. So far in 2020, these repeated requests have occurred on one in every four loans, according to MortgageSAT. As you can see in this chart, NPS scores take a big dive when you make more than one request for a document. Keep diligent records and if you’re going to blast an email requesting a document, make doubly sure you haven’t already received it.
Borrowers do not want to hear silence in the days leading up to closing. They need to coordinate the schedules, they may have questions, and they might need to plan on getting a cashier’s check. Lenders should make sure to call borrowers as they approach closing day to check in and see how they’re feeling and what questions they have. As you can see, failing to call before closing is disastrous for customer satisfaction.
MortgageSAT data indicates that loan officers and processors around the country have managed to step up their communications games during the pandemic, which is great. The key for your credit union or community bank will be to understand what you’re doing right, and be ready to do it even better to keep the momentum going.
If you have any questions about borrower satisfaction and how to dial in your efforts, contact your nearest Servion account executive.