CERTAINLY EVERYONE IN THE MORTGAGE industry spent the year 2004 living the old cliche, "Change is the only constant." The refinancing boom continues to wind down, bringing overall origination volumes with it. New products and go-to-market strategies have proliferated as lenders compete harder than ever for their share of a shrinking pie. [??] New technologies continue to drive the evolution of the mortgage lending process toward the ultimate goal of the end-to-end eMortgage. And many of the hot topics that ushered in the year, most notably proposed Real Estate Settlement Procedures Act (RESPA) reforms, faded from view, although many expect RESPA to re-emerge as an agenda item in 2005. [??] The effects of these tumultuous changes are readily apparent to mortgage industry professionals and organizations in their daily work, even when the best approaches to addressing them may not be. But what has been the impact on the ultimate arbiters of the industry's success--its customers? Is the magnitude of the changes within the industry reflected in consumers' perceptions of and satisfaction with the lending process? Where should the industry focus its efforts to drive consumer satisfaction in the near future?
To address these questions and to help keep the voice of the mortgage lending customer front-and-center in the industry's efforts to tackle the new market realities, Mortgage Banking once again has partnered with Ann Arbor, Michigan-based consultants CFI Group USA LLC to survey recent borrowers. In a follow-up to the survey first presented in the October 2003 issue of Mortgage Banking ("Consumers Rate the Industry"), CFI Group recently collected and analyzed interviews with a national sample of recent borrowers to provide an update on where the industry stands in its customers' eyes at the beginning of 2005.
The research process
Taking the 2003 survey as a starting point, CFI Group worked with Mortgage Banking to update the questionnaire for 2004. The main change to the survey was the addition of several questions regarding consumer awareness of the variety of new products offered by the industry (particularly interest-only mortgages), their level of understanding of these new options for financing and how their overall evaluations of the products behave as a driver of their satisfaction. Otherwise, the survey remained largely the same as in 2003 in order to identify any emerging dynamics in consumers' attitudes.
The surveys were conducted by phone in the second and third weeks of November 2004. Respondents were chosen at random from a nationwide sample drawn from commercially available lists of mortgage purchasers, and included homeowners who had purchased or refinanced their homes between April and October 2004.
As in the 2003 study, the resulting sample of homeowners is broadly reflective of the market both geographically and with regard to industry trends. Respondents were drawn from 38 of the states in the continental United States, and include essentially all major metropolitan housing markets.
The sample closely mirrors the recent shifts in mortgage origination volume share from refinancing to purchases, with 53 percent of the respondents having purchased a new or existing home and 47 percent having refinanced a home they already own.
One area where the sample appears to reflect market realities a bit less thoroughly is in the share of adjustable-rate mortgages (ARMs) represented. Nineteen percent of the respondents said they financed with an ARM, compared with Mortgage Bankers Association (MBA) projections for 2004 of a 35 percent ARM share. Apart from this mild variation, however, the sample provides a statistically valid basis upon which to draw insights into consumers' views of the mortgage origination process and how these views have evolved since the 2003 survey.
The questionnaire asks respondents to rate various aspects of their experiences with the mortgage lending process, both generally and on the specifics of working with their particular lender and mortgage broker (if they used one). …