The Housing Scene by Lew Sichelman

Most Fulfilled Borrowers Went With Their Guts

You’ve found the house you want. Now, where do you go for a mortgage?

If you’re buying a brand-spanking-new place, do you go with the builder’s in-house lender? After all, he’ll give you thousands in free upgrades. Or maybe his rate is a quarter-percent cheaper. His reason for being so magnanimous: He wants to keep your deal in-house so he can be on top of it and make sure everything goes according to Hoyle.

If you’re buying an existing house, do you go with the lender your real estate agent recommends? (Agents are supposed to recommend three lenders, actually.)

After all, your agent has just as much riding on your deal as you do. If it doesn’t close because you can’t get a mortgage or something falls through at the last minute, she doesn’t get paid. Experienced agents know who handles glitches the best and who gets loans to the settlement table with as few blips as possible.

Or do you listen to Mom and Dad’s advice? After all, they’ve probably done this a few times in their lives, so they should know what they are talking about. Shouldn’t they?

As it turns out, buyers who chose a lender because of financial incentives provided by their builders were only marginally satisfied with their experiences. That’s according to the National Borrower Satisfaction Index produced by the Stratmor Group, a Colorado-based consulting firm.

Those who listened to their realty agents were more satisfied, and those who paid heed to advice from their folks, a friend or another relative were even happier with their choices.

But the borrowers who were most fulfilled were those who made a connection of their own with their loan agent. Their antennae wiggled. They hit it off. He or she was personable, but also took the time to answer all their questions, listen to their concerns and work with them every step of the way.

In the Stratmor study, 31 percent of the huge 10,000-borrower sample chose their officer based on “loan officer interaction.” And that group reported a 95 out of 100 when asked about their overall “borrower satisfaction.”

“Their loan officers engaged with them and made them feel comfortable,” says the company’s senior partner, Garth Graham. It’s why he believes that loan officers -- also known as “humans” -- remain a central part of the loan process. And it’s why high-production officers are pretty highly paid.

That’s not a knock on online lending: Customers who chose a lender based on the company’s online tools reported a 93 satisfaction rating on Stratmor’s index. But those customers represent less than 1 percent of the sample. That tells Graham that while more borrowers are using the internet for their initial research, real people are “still critical” to the lending process.

It’s the connection between loan officers and borrowers that pays off. That’s why 78 percent of loan volume is produced by the top 40 originators -- not 40 companies, but 40 people, Graham says.

“Loan officers are still pretty darn important,” he says.

Meanwhile, a relatively high 19 percent of the sample gave “Realtor’s referral” as the primary reason for picking their lender. That group gave their deals a satisfaction score of 91 -- very good, but still substantially lower than the 95 rating of those who based their choice on their personal interactions.

Six percent of respondents said their choice was based on the lender’s reputation; that group reported a 95 satisfaction rating. The 11 percent who listened to a friend or relative were satisfied to the tune of 92 out of 100.

Of course, there are as many reasons to choose a lender as there are fingers on your hands. Those who took a lender’s offer because it could close on time gave their lenders a 94. When borrowers decided to go with the lender who had handled their previous mortgage, the satisfaction rate dipped to 87. Ditto for those who went with a lender because of a specific loan product.

Almost 4 percent went with the lender with the lowest rate, and 2 percent picked their lender because they had a previous banking relationship with the company. But their satisfaction ratings were just 90 and 88, respectively.