Investments lenders have made to streamline the application process seem to be paying off, but surveys show borrowers are still tripped up by document collection and closings.

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Investments that mortgage lenders have made in technology and training to streamline the application process seem to be paying off in higher borrower satisfaction scores, but there’s room for improvement when it comes to document collection and closings.

That’s the big takeaway from surveys of more than 7,000 borrowers by mortgage industry advisory firm STRATMOR Group and tech provider Snapdocs.

The surveys of borrowers who have taken out mortgages in the last nine months found that while only one in five borrowers encountered an issue, the preclosing and closing process accounted for 70 percent of overall borrower satisfaction.

While rising mortgage rates have forced many lenders to downsize this year, others have been using technology and local ties to grow their national footprints. Atlanta-based direct mortgage lender Silverton Mortgage, a Snapdocs client, has added new branches in the Carolinas, Arkansas and Missouri over the past year.

Garth Graham

“Lenders need to find new ways to compete for business in this market,” said STRATMOR Group’s Garth Graham in a statement. “While one proven strategy is to create a best-in-class borrower experience, there’s no consensus on what ‘best-in-class’ means, much less how to measure it. This research provides a granular view into the key ‘moments that matter’ so that lenders can begin to build their CX strategies around empirical data.”

“Over the past decade, lenders have worked to minimize issues with the application process, and the study findings confirm this,” researchers said in a report published Tuesday documenting their findings.

Source: “The State of Borrower Experience,” STRATMOR Group

About two-thirds of borrowers (67 percent) said filling out the mortgage application was relatively easy, rating the ease at an eight or above on a 10-point scale.

Although 42 percent of borrowers said they needed help filling out their loan application, those who did ask for help were slightly more likely to recommend the lender, suggesting personal involvement from the loan officer creates a better experience, the report concluded.

Source: “The State of Borrower Experience,” STRATMOR Group

While most borrowers also found providing documents to be relatively easy, they were less likely to recommend lenders who made what they considered to be unreasonable document requests.

While only 9 percent of borrowers encountered what they considered to be unreasonable document requests that experience had a huge impact on their “Net Promoter Score” (NPS) — a measurement of customer loyalty on a scale of -100 to 100, based on how likely a customer is to recommend a product or service they’ve used.

The NPS for borrowers who said they received unreasonable document requests dropped by 70 points on average, while 36 percent of borrowers said they had repeated requests for documents they already provided, which caused an 11-point drop in their NPS.

Lenders often need to request documents more than once, because a borrower’s circumstances can change after they’re preapproved or fill out an application. A job change or gift, for example, might help a borrower get better loan terms.

The need for up-to-date documents is not a problem that’s easily addressed by technology, but lenders can provide more transparency about the process to borrowers so they’re not surprised by such requests, the report said.

“If lenders make document collection an efficient, well-communicated process for every borrower, they can significantly improve the borrower’s experience,” the report said.

Source: “The State of Borrower Experience,” STRATMOR Group

While 71 percent of borrowers rated their preparedness for closing an eight or above on a 10-point scale, the subset of borrowers that did not feel prepared had “a significant damaging impact” on the lender’s NPS.

If borrowers said they weren’t given an opportunity to preview their closing documents, the NPS dropped by 33 points. The scores dropped by an average of 55 points when borrowers felt they weren’t given enough time to preview their closing documents.

Nearly four out of 10 borrowers (38 percent) said there were surprises at the closing table, such as missing or inaccurate documents or an interest rate or fees they weren’t expecting.

Source: “The State of Borrower Experience,” STRATMOR Group

Among borrowers who experienced issues at the closing table, NPS dropped by 34 points, on average, with missing documents causing the most damage to NPS (-13 points), followed by an unexpected mortgage rate (-11 points) and inaccurate information on documents (-6 points).

With the closing phase having the biggest impact on overall borrower satisfaction, lenders “have the most opportunity to improve the borrower experience in the preclosing and closing phases of the loan journey, and may be able to realize a quicker return on investment with technology,” the report concluded.

According to STRATMOR Group data, just under half of lenders have already implemented digital closing and closing collaboration technology.

When lenders give borrowers the ability to preview documents, “they may be better prepared for the closing and catch any unresolved errors,” the report said. “Additionally, digital closing and closing collaboration tools provide lenders the ability to schedule the closing appointment and immediately route documents, thereby reducing delays, and may even automate [quality control] processes to further reduce errors.”

Snapdocs and STRATMOR are offering free diagnostic assessments “to help lenders understand how they rank against these industry benchmarks and create customized strategies to optimize their borrower experience.”

Get Inman’s Extra Credit Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.

Email Matt Carter

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