Wachovia Scores Big with Customers

Wachovia Corp. (WB) ranks highest among home equity loan servicers in satisfying customers, according to a study by J.D. Power and Associates, released Tuesday. Wachovia received a score of 746 on a 1,000-point scale, performing particularly well in the billing and payment factor measured by the well-known customer service research firm. Bank of America Corp. (BAC) followed Wachovia closely with a score of 743 and performed particularly well in the area of funds, J.D. Powers said in statement. SunTrust Bank ranked third overall with a score of 741. Some of the worst-rated home equity servicers included various units of Citigroup, Inc. (C), Countrywide, and HSBC Mortgage Corp. — which received the worst rating from consumers. The study found that demonstrating greater flexibility and understanding toward late-paying customers lead to increased satisfaction, retention and loyalty for lenders — especially during times like these. Among those late-paying customers who rated their lender particularly high for willingness to work with them, satisfaction scores averaged 812. Conversely, among late payers who rated their lender particularly low in this area, satisfaction scores averaged only 544. “Generally, customers are willing to accept responsibility for their delinquency, and treating them with respect and dignity during a difficult time can result in higher satisfaction levels,” said David Lo, director of financial services at J.D. Power and Associates. Sixty-two percent of late payers who reported that their lender made special payment arrangements for their circumstances indicated they “definitely will” or “probably will” choose the lender for their next home equity line or loan. “Highly satisfied customers can yield tremendous financial benefits for lenders,” said Lo. “For instance, customers of Wachovia are particularly loyal, with only 5 percent saying they would ‘definitely’ or ‘probably’ switch lenders in the next 12 months compared with 11 percent for the industry average.” Lo said that a six percentage point drop in attrition rates can translate into $134 million in ‘saved’ balances for every 100,000 borrowers, further emphasizing the importance of satisfying customers. The study found that overall satisfaction across the industry has declined from 721 in 2007 to 716 in 2008. The challenging economic market played a key role in the decline, with actions taken by lenders to reduce risk — such as tightening credit availability and terms, extending fewer credit limit increases and offering less flexibility for locking rates — contributed to the decrease, according to J.D. Power and Associates. “In 2008, we saw an increase in problems and poorer problem resolution, primarily as a result of many lenders not providing customers with timeframes for solving issues or not following up with customers in a thorough and timely manner,” said Lo. While lenders may adopt a ‘bunker mentality’ in tough economic times, Lo believes “now is the time for lenders to differentiate themselves from competitors by providing a superior experience for their customers.” Write to Kelly Curran at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.