Mortgage servicers – what’s worrying clients?

• Mortgage servicers cannot ignore customers’ financial health: The proportion of mortgage servicing customers identified as financially unhealthy is 54% this year. Overall satisfaction among financially unhealthy customers is 107 points lower than among customers in the financially healthy category. Default risk is also up 4% this year among mortgage customers.
• Rise in mortgage transfers exacerbates year-over-year decline in customer satisfaction: Overall customer satisfaction with mortgage servicers is 601 (on a 1,000-point scale), down six points from 2022. The drop is most significant among the 37% of customers who had their mortgage transferred to a servicer that they did not choose. Overall satisfaction scores are 119 points lower when customers do not choose their servicer.

Given such findings, the study’s authors provided advice for mortgage customers: “Mortgage servicers want to help customers when they are under financial stress or having problems with their account,” researchers wrote. “The key for customers is to notify their mortgage servicer as early as possible and to provide as much detail as they can to get the best guidance.”

Inflation emerges as survey antagonist

Craig Martin, of JD Power, noted the proportion of customers identified as financially unhealthy was due to external factors spurred by inflation, not as a result of shortcuts taken in pushing through applications to qualify otherwise ineligible borrowers.

“It’s important to make a distinction between people’s ability to pay and financial health,” Martin told Mortgage Professional America during a telephone interview. “It’s not a delinquency or a reflection of paying ability, but rather how customers view themselves.”

To secure such data, questions run the gamut – including queries on how spending matches up with income, ability to pay bills on time, the level of savings customers have in terms of covering life expenses, Martin said. “It’s not a reflection of delinquencies but rather their financial well-being,” he added.

Customers are, by and large, financially strained against a backdrop of inflation: “Some of it could be ‘I’m spending too much money, I’ve overcharged on my credit card,’ things like that,” Martin said. “Or it could be ‘my savings are dwindling; the cost-of-living is too high.’ They’re still able to keep up with their bills. We haven’t seen a major rise in delinquencies nor people saying they won’t be able to pay their mortgages in the next 12 months. It’s just that these other early indicators indicating that people are being strained financially strained.”