Consumers More Satisfied With Home Equity Loan Process, Survey Shows

RTTNews) - In the face of the worst housing slump since the Great Depression, a sliver of bright light was released Thursday. J.D. Power and Associates released their 2008 Home Equity Line/Loan Study for 2008, revealing a boost in consumer satisfaction from last year, increasing by 14 points to 780/1,000 from 2007's 766/1,000.

However, it may not be that service has actually improved so much as expectations have been lowered, Tim Ryan, a senior research director with J.D. Power explained. The rise in prominence of the housing crisis lowered consumer expectations, he said, leading many consumers to think that applying for a loan would be a negative experience.

"As a result, customers who obtained a home equity product report being more satisfied with the process in 2008, compared with 2007, even though measures of service-such as the average length of time for application approval-have remained consistent during the past year," Ryan said.

Ryan urged consumers to shop lenders to get the most competitive rate. Bank of America (BAC) was ranked as the best for consumer satisfaction when seeking a home equity, followed by Sun Trust (STI) and Wachovia (WB).

"Bank of America, SunTrust and Wachovia all perform well in specific areas that are important to customers, including having problem incidence rates and application approval times that are better than the industry average," Ryan said. "With high levels of service provided by these and other lenders who have performed well at fulfilling customer expectations, now may be an opportune time for homeowners who qualify to apply for a home equity product."

The fallout from the subprime crisis will likely impact both homeowners with lower credit scores and those who live in areas with lower property value, Ryan said.

"Homeowners with lower credit scores or who are in an area where property values have declined may have a more difficult time qualifying for a home equity product under the current circumstances," he said There are five key performance indicators that customers considered important, the study showed. They are listed as approving applications and providing customers with access to their funds quickly; setting and meeting expectations during the application approval process; avoiding surprising the customer during the origination process; being versatile and flexible in the location of the closing; and being mindful of the pitfalls of using a mortgage broker. The survey is based on responses from 3,176 customers who originated a home equity line/loan between February 2007 and January 2008. The study was fielded in February and March 2008.