Every real estate professional knows the importance of attending the closing along with his or her buyer and sometimes seller-clients. But it’s just as crucial for the buyer’s lender to be there, too, according to the latest research by the Stratmor Group.
According to the Colorado-based mortgage industry consulting firm, borrower satisfaction plummets when a problem crops up at settlement, as they sometimes do, and the loan officer isn’t present to make things right — or at least to explain just why the issue occurred.
And when borrowers are caught off guard because their financing doesn’t close at the rate and fees they expected, they tend to blame everyone in the room — not just the lender but their real estate agent as well, especially if the agent just happened to recommend the lender in the first place.
“If you’re a loan officer — and by extension, the real estate agent — you’ll likely be blamed for everything bad that happens at closing if you’re not there,” says Mike Seminari, who runs Stratmor’s MortgageSAT real-time borrower satisfaction measurement tool. MortgageSAT is said to be the largest on-going industry benchmark study with more than 100,000 responses annually.
Or course, loan officers aren’t required to be present at settlement. After all, it’s the closing agent’s job to carry out the lender’s instructions.
But what if those instructions are ambiguous? Or another problem or two arises? Most lending officers promise to be only a phone call away if they are needed. But no matter what they promise, they aren’t always at the other end of the line or the receiving end of a text or e-mail. And that’s when things can really go sideways.
According to Stratmor’s latest count, when the loan fails to close at the anticipated rate and fees, borrower satisfaction slides 20 points on a 100-point scale. That’s a 20 percent drop, one that might possibly be avoided if only the loan officer was in attendance at settlement.
Even when nothing changes at the rate or fees the borrower expects, the satisfaction rate dips by 11 points when there is no LO in sight. “That’s a loss to the lender of 11 potential referrals out of every 100 borrowers,” Seminari writes in Stratmor’s latest blog on the oft-debated topic of whether loan officers should attend closings.
Unhappy customers who let their feelings be known can be extremely damaging, says Garth Graham, managing director for the company’s marketing and sales practice. “Our experience surveying tens of thousands of mortgage borrowers tells us that when consumers are not happy, they tell people about it,” he said in an earlier MortgageSAT post.
Previous research by the Greenwood Village-based company has found that borrowers who leave the closing table with low satisfaction “provide three times as much commentary” as those who are satisfied, Graham reports. About the lender, about the real estate agent, about everybody and anybody who was involved.
Based on its surveys, two-thirds of borrowers will comment on customer satisfaction if asked. Only 8 percent rated their experience at 6 or less on a 10-point scale, but 80 of those folks will post a negative comment online.
As Seminari sees it, the damage incurred at the closing table is more about how a problem is resolved than about the problem itself. “Borrower perception is king,” he writes in his monthly blog.
As every agent knows, issues with rates and fees are only the tip of the iceberg when it comes to the things that can go haywire with financing. Settlement is often delayed, pushed back not only for a few hours but sometimes by days at a time, causing a lot of anxiety, not to mention dismay. Last-minute changes pop up all the time, even though they’re not supposed to, resulting in confusion.
So it bears repeating: By extension, the borrower/buyer’s consternation reaches not just his real estate agent and the seller’s but also their lawyers, if they have one, and the closing agents. If there are issues and they are not resolved to the client’s satisfaction, none of these people are likely to get a referral.
On the other hand, if the loan officer is present and fixes any problem that occurs, there’s a good possibility a recommendation will be forthcoming for everyone gathered around the table.
That’s why it’s always a good idea for real estate agents to refer clients who ask for a recommendation to loan officers who attend closings. Or to at least advise their clients to look for lenders who will be by their side.
Lew Sichelman’s weekly column, “The Housing Scene,” is syndicated to newspapers throughout the country.