J.D. Power ranks USAA highest in mortgage servicing satisfaction.

USAA FSB, San Antonio, Texas, ranked highest in customer satisfaction in terms of servicing of mortgages, according to a study by J.D. Power and Associates, Westlake Village, California.

The J.D. Power and Associates 2006 Primary Mortgage Servicer [Study.sup.sm] measured customer

USAA received an overall customer satisfaction index score of 897 points based on a 1,000-point scale (see Figure 1), recording the highest ratings in each of the four factors by a wide margin. USAA was followed by BB & T Corporation, Winston Salem, North Carolina, at 861 points, and Citizens Bank, Providence, Rhode Island, at 844 points.

Rounding out the top five were GMAC Mortgage Group Inc., Horsham, Pennsylvania, with a score of 841 points, and Wells Fargo Home Mortgage, Des Moines, Iowa, with a score of 840 points.

USAA ranked the highest for both getting its customer service right and for getting it right the first time, explained Rocky Clancy, executive director of the banking and mortgage practice at J.D. Power and Associates.

"When USAA makes commitments to their customers, they meet those commitments," said Clancy. "Customers will often forgive mistakes, but they tend not to forgive broken promises. Problems are inevitable, but having a proper approach to those issues can speak volumes."

The study found that nearly one-half, or 45 percent, of mortgages do not remain with the originator for servicing at some point after the loan is closed. On average, customer satisfaction scores are 32 index points lower among customers whose mortgage is passed on to a different company for servicing.

"While this is common practice in the industry, removing the homeowner from the decision to sell the mortgage to a different company for servicing can create confusion and a sense of betrayal among customers," said Clancy.

"Removing the customer from the decision making in such a big part of the mortgage process takes away some of their sense of empowerment. Customers want stability and consistency with their home loans, and lenders who can deliver those are rewarded with customers who are not only more satisfied and loyal, but also have twice as many additional products with the lender."

The study also found that nearly 50 percent of customers now pay their mortgage bill electronically, compared with just 34 percent two years ago. Electronic payments, whether they are automatically deducted from a customer's bank account or made online, result in higher customer satisfaction levels overall.

"The more billing and payment of mortgages is automated or conducted online, the more consistent and accurate loan servicing becomes, ultimately leading to higher levels of customer satisfaction," said Clancy. "The bottom line is that satisfied customers require less contact with their servicer's customer-service department, resulting in lower servicing costs for the lender."

Furthermore, mortgage servicers that are successful in satisfying their customers can expect greater revenue as a result of customers recommending the company to others more often and obtaining additional non-mortgage services from the lender, said Clancy.

J.D. Power's 2006 Primary Mortgage Servicer Study was based on responses from 12,799 homeowners regarding their experiences with their primary mortgage servicer. The study was fielded in March and April 2006.

Figure 1 J.D. Power and Associates Overall Primary Mortgage Servicer
Satisfaction Rankings

Mortgage Servicer          Ranking

USAA FSB                   897
BB & T Corporation         861
Citizens Bank              844
GMAC Mortgage Group        841
Wells Fargo Home Mortgage  840
Bank of America            836
First Horizon Home Loans   834
CitiMortgage               830
SunTrust Mortgage          827
Fifth Third Bank           822
Washington Mutual          820
Countrywide Home Loans     820
Chase                      820
World Savings              814
Wachovia                   813
Regions Mortgage           811
National City Mortgage     811
ABN AMRO                   811
Industry Average           810

* Based on a 1,000-point scale
SOURCE: J.D. POWER AND ASSOCIATES 2006 PRIMARY MORTGAGE SERVICER STUDY