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Residential Mortgage Lending - US - September 2011

  • What are the current satisfaction levels of consumers with mortgage lenders?
  • What is driving the mortgage lending market?
  • How can lenders improve service with consumers?
  • How can lenders rebuild trust with Hispanic borrowers?
  • What consumers present valuable opportunity for mortgage lenders and how can communications with this group be improved?

This report builds on the analysis presented in Mintel's reports “HELOCs and Other Lines of Credit – U.S., October 2009” and “Residential Mortgages and HELOCs – U.S., August 2008.”

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Table of contents

  1. Scope and Themes

      • What you need to know
        • Data sources
          • Consumer survey data
            • VMS
              • Abbreviations and terms
                • Terms
                  • Companies mentioned in this report:
                  • Executive Summary

                    • Industry overview
                      • Marketing strategies
                        • Who are the innovators?
                          • Customer satisfaction with the industry
                            • Drivers of customer satisfaction
                              • Consumer perception of the housing market
                              • Insights and Opportunities

                                  • Key points
                                    • Lenders can improve service by helping worthy customers refinance
                                      • Lenders need to rebuild trust with Hispanic borrowers
                                        • Mortgage lenders need to court women customers
                                        • Inspire Insights

                                            • Experience is all
                                              • What we've seen
                                                • Specifics
                                                  • Implications
                                                    • Implications
                                                      • Key action items
                                                      • Market Size

                                                        • Key points
                                                          • Originations drop 20% in 2010, down nearly 50% in five years
                                                            • Residential mortgage originations, 2000-10
                                                              • Figure 1: Residential mortgage originations, 2000-10
                                                            • Originations forecasts call for weaker 2011 & 2012, slight rebound in 2013
                                                                • Figure 2: Mortgage originations market size and forecasts, 2010-13
                                                              • Mortgage outstandings remain stubbornly high at more than $10.5 trillion
                                                                • Figure 3: U.S. 1-4 family mortgages outstanding, 2006-10
                                                            • Competitive Context

                                                              • Key points
                                                                • Mortgage market is both highly concentrated yet widely fragmented
                                                                  • Figure 4: Top residential mortgage originators, 2010
                                                                • Top lenders get production from three marketing channels
                                                                  • Top 10 servicers control two thirds of the market
                                                                      • Figure 5: Top residential mortgage servicers, Q1 2011
                                                                  • Segment Performance

                                                                    • Key points
                                                                      • Mortgage banking remains deeply unprofitable for big players
                                                                        • Figure 6: Financial results at large residential mortgage lenders, first half 2011
                                                                      • MBA mortgage banker survey: Q1 2011 profit drops nearly 70%
                                                                        • Fannie and Freddie continue to lose lots of money
                                                                          • Figure 7: Earnings at government-sponsored secondary market agencies, Q1 2011
                                                                          • Figure 8: Net losses at government-sponsored secondary market agencies, 2007-10
                                                                        • Mortgage profitability drivers
                                                                          • Credit quality: Improving but still weak
                                                                            • Figure 9: Mortgage delinquency rates, Q1 2002-Q1 2011
                                                                          • Originations volume remains weak despite record-low interest rates
                                                                            • Figure 10: Quarterly mortgage originations, Q1 2009-Q1 2011
                                                                          • “Legacy” servicing issues hang over the largest servicers
                                                                              • Figure 11: Investor lawsuits against mortgage companies
                                                                          • Marketing Channels

                                                                            • Key points
                                                                              • Broker share of market plunges to single digits
                                                                                • Figure 12: Residential mortgage marketing channel share, 2006-Q1 2011
                                                                              • Brokers have taken the biggest hit
                                                                                • BofA exiting correspondent channel, too
                                                                                  • Mortgage direct mail volume increases
                                                                                  • Market Drivers

                                                                                    • Key points
                                                                                      • The U.S. mortgage industry faces years of hardship ahead
                                                                                        • Weak home prices
                                                                                          • Figure 13: U.S. home prices – Case Shiller Index, Q1 1987 thru Q1 2011
                                                                                        • Heavy mortgage debt and shrinking homeowner equity
                                                                                            • Figure 14: U.S. residential real estate values, mortgage debt and homeowner equity, 2005-Q1 2011
                                                                                          • The drop in equity means many people can’t get new loans
                                                                                            • Falling home ownership rate
                                                                                              • Unemployment remains high
                                                                                                • Several other variables could have a negative effect on housing
                                                                                                • Leading Companies

                                                                                                  • Key points
                                                                                                    • Wells Fargo
                                                                                                      • Bank of America
                                                                                                        • J.P. Morgan Chase
                                                                                                          • Citigroup
                                                                                                            • U.S. Bancorp
                                                                                                              • Ally Financial/GMAC Mortgage
                                                                                                                • PHH Mortgage
                                                                                                                  • Quicken Loans
                                                                                                                    • MetLife Home Loans
                                                                                                                      • PNC Financial Services
                                                                                                                      • Innovation and Innovators

                                                                                                                        • Key points
                                                                                                                          • Quicken Loans launches mobile mortgage application app
                                                                                                                            • Smartphone apps help home buyers find properties easier
                                                                                                                              • Zillow app offers mobile loan quotes
                                                                                                                                • MBA offers mobile app to help prospective homebuyers
                                                                                                                                  • Subprime servicer offers shared appreciation mortgage mod plan
                                                                                                                                    • FICO helps lenders to spot borrowers at most risk of strategic default
                                                                                                                                      • Bank of America enhances program to help distressed military members
                                                                                                                                        • Utah CU to offer online electronic mortgage closings
                                                                                                                                          • Quicken Loans pays off customer’s mortgage in contest
                                                                                                                                            • Fifth Third offers interest rate incentives to new homebuyers
                                                                                                                                              • Fifth Third credit, debit cards help borrowers pay down their mortgages
                                                                                                                                                • PenFed teams with USAA to offer complementary financial products
                                                                                                                                                  • MetLife to provide reverse mortgages to credit union members
                                                                                                                                                    • Wells Fargo joins with mayors group to promote housing initiatives
                                                                                                                                                      • Divorce is a lucrative business for lawyers – and mortgage originators, too
                                                                                                                                                      • Marketing Strategies

                                                                                                                                                        • Key points
                                                                                                                                                          • Overview
                                                                                                                                                            • Representative direct and electronic mail advertising
                                                                                                                                                              • Mortgage Loan from LendingTree
                                                                                                                                                                • Figure 15: LendingTree electronic mail ad, July 2011
                                                                                                                                                              • Mortgage Refinance Loan from Quicken Loans
                                                                                                                                                                • Figure 16: Quicken Loans direct mail ad, June 2011
                                                                                                                                                              • Mortgage Refinance Loan from Bank of America
                                                                                                                                                                • Figure 17: Bank of America direct mail ad, June 2011
                                                                                                                                                              • Biweekly Advantage Plan from Citibank
                                                                                                                                                                • Figure 18: Citibank direct mail ad, June 2011
                                                                                                                                                              • Mortgage Refinance Loan from Chase
                                                                                                                                                                • Figure 19: Chase direct mail ad, June 2011
                                                                                                                                                              • Mortgage Loan from ING
                                                                                                                                                                • Figure 20: ING DirectElectronic mail ad, June 2011
                                                                                                                                                              • Mortgage Refinance from GMAC
                                                                                                                                                                • Figure 21: GMAC Mortgage direct mail ad, June 2011
                                                                                                                                                              • Home Affordable Refinance Program from Wells Fargo
                                                                                                                                                                • Figure 22: Wells Fargo direct mail ad, June 2011
                                                                                                                                                              • Mortgage Loan from Lending Tree
                                                                                                                                                                • Figure 23: LendingTree electronic mail ad, June 2011
                                                                                                                                                              • FHA Streamline Refinance from New American Funding
                                                                                                                                                                • Figure 24: New American Funding direct mail ad, may 2011
                                                                                                                                                              • Television advertising
                                                                                                                                                                • Figure 25: Wells Fargo Home Mortgage, 2011
                                                                                                                                                                • Figure 26: Quicken Loans, 2010
                                                                                                                                                                • Figure 27: Quicken Loans, 2010
                                                                                                                                                                • Figure 28: National Mortgage Help Center, 2011
                                                                                                                                                                • Figure 29: Making Home Affordable, 2010
                                                                                                                                                                • Figure 30: Mortgage Advisory Group, 2010
                                                                                                                                                                • Figure 31: Lending Tree, 2011
                                                                                                                                                                • Figure 32: Directors Mortgage, 2011
                                                                                                                                                                • Figure 33: Citi Mortgage, 2011
                                                                                                                                                            • The Consumer—Homeownership and Mortgage Trends

                                                                                                                                                              • Key points
                                                                                                                                                                • Homeownership and having a mortgage
                                                                                                                                                                    • Figure 34: Homeownership status and existence of home loans, by gender, June 2011
                                                                                                                                                                  • Older groups have a lot of mortgage debt
                                                                                                                                                                      • Figure 35: Homeownership status and existence of home loans, by age, June 2011
                                                                                                                                                                    • Homeownership tracks income
                                                                                                                                                                        • Figure 36: Homeownership status and existence of home loans, by household income, June 2011
                                                                                                                                                                      • Fewer high-income women own homes than men
                                                                                                                                                                        • Figure 37: Homeownership status and existence of home loans, by gender and household income, June 2011
                                                                                                                                                                      • Fewer blacks and Hispanics are homeowners
                                                                                                                                                                        • Figure 38: Homeownership status and existence of home loans, by race/Hispanic origin, June 2011
                                                                                                                                                                      • Homeownership is more prevalent in Midwest and South
                                                                                                                                                                        • Figure 39: Homeownership status and existence of home loans, by census region, June 2011
                                                                                                                                                                      • Fewer urban dwellers are homeowners
                                                                                                                                                                        • Figure 40: Homeownership status and existence of home loans, by area, June 2011
                                                                                                                                                                    • Most Consumers Don’t Know Their Credit Scores

                                                                                                                                                                      • Key points
                                                                                                                                                                        • One third of respondents say they have prime credit scores
                                                                                                                                                                            • Figure 41: Self-reported risk score, by gender, June 2011
                                                                                                                                                                          • Credit scores rise with age . . .
                                                                                                                                                                            • Figure 42: Self-reported risk score, by age, June 2011
                                                                                                                                                                          • . . . and income
                                                                                                                                                                            • Figure 43: Self-reported risk score, by household income, June 2011
                                                                                                                                                                          • High-income women say they have lower scores than men
                                                                                                                                                                              • Figure 44: Self-reported risk score, by gender and household income, June 2011
                                                                                                                                                                            • Blacks believe they have lower scores than other groups
                                                                                                                                                                                • Figure 45: Self-reported risk score, by race/Hispanic origin, June 2011
                                                                                                                                                                              • Suburbanites think their credit scores are the highest
                                                                                                                                                                                • Figure 46: Self-reported risk score, by area, June 2011
                                                                                                                                                                            • Recent Home Purchase and Refinance Activity

                                                                                                                                                                              • Key points
                                                                                                                                                                                • About one in four homeowners bought homes in past five years
                                                                                                                                                                                  • Figure 47: Purchased home or refinanced in last 5 years, by gender, June 2011
                                                                                                                                                                                • Young people dominate home buying and refinancing
                                                                                                                                                                                  • Figure 48: Purchased home or refinanced in last 5 years, by age, June 2011
                                                                                                                                                                                • Higher-income people are primary home buyers
                                                                                                                                                                                  • Figure 49: Purchased home or refinanced in last 5 years, by household income, June 2011
                                                                                                                                                                                • Blacks, Hispanics are most likely recent home buyers
                                                                                                                                                                                  • Figure 50: Purchased home or refinanced in last 5 years, by race/Hispanic origin, June 2011
                                                                                                                                                                                • Urban dwellers are most likely recent home buyers
                                                                                                                                                                                  • Figure 51: Purchased home or refinanced in last 5 years, by area, June 2011
                                                                                                                                                                              • Mortgage Application Denial and Approval

                                                                                                                                                                                • Key points
                                                                                                                                                                                  • Odds are still good that mortgage applications will be approved
                                                                                                                                                                                    • Figure 52: Incidence of applying and qualifying for a mortgage loan, by gender, June 2011
                                                                                                                                                                                  • Youngest group is most active, also most likely to be turned down
                                                                                                                                                                                    • Figure 53: Incidence of applying and qualifying for a mortgage loan, by age, June 2011
                                                                                                                                                                                  • Highest incomes are least likely to be rejected for a loan
                                                                                                                                                                                    • Figure 54: Incidence of applying and qualifying for a mortgage loan, June 2011
                                                                                                                                                                                  • Hispanics are more likely to apply and twice as likely to be turned down
                                                                                                                                                                                    • Figure 55: Incidence of applying and qualifying for a mortgage loan, by race/Hispanic origin, June 2011
                                                                                                                                                                                • Most Borrowers Express Satisfaction with Lenders

                                                                                                                                                                                  • Key points
                                                                                                                                                                                    • Seventy percent say they’re satisfied with mortgage lenders and servicers
                                                                                                                                                                                      • Figure 56: Degree of satisfaction with lender, by gender, June 2011
                                                                                                                                                                                      • Figure 57: Degree of satisfaction with lender, by gender, June 2011
                                                                                                                                                                                    • Oldest respondents are most satisfied
                                                                                                                                                                                      • Figure 58: Degree of satisfaction with lender, by age, June 2011
                                                                                                                                                                                      • Figure 59: degree of satisfaction with lender, by age, June 2011
                                                                                                                                                                                    • Income correlates strongly with satisfaction
                                                                                                                                                                                      • Figure 60: degree of satisfaction with lender, by household income, June 2011
                                                                                                                                                                                      • Figure 61: Degree of satisfaction with lender, by household income, June 2011
                                                                                                                                                                                    • Hispanics show highest degree of dissatisfaction with their lenders
                                                                                                                                                                                      • Figure 62: degree of satisfaction with lender, by race/Hispanic origin, June 2011
                                                                                                                                                                                      • Figure 63: degree of satisfaction with lender, by race/Hispanic origin, June 2011
                                                                                                                                                                                    • Those with highest FICO scores are most satisfied with lenders
                                                                                                                                                                                      • Figure 64: degree of satisfaction with lender, by risk score, June 2011
                                                                                                                                                                                      • Figure 65: degree of satisfaction with lender, by risk score, June 2011
                                                                                                                                                                                  • Consumers Demand Good Service, Communication

                                                                                                                                                                                    • Key points
                                                                                                                                                                                      • Service, communications are most important elements in satisfaction
                                                                                                                                                                                          • Figure 66: Importance of satisfaction attributes, by gender, June 2011
                                                                                                                                                                                          • Figure 67: Importance of satisfaction attributes, mean of responses, by gender, June 2011
                                                                                                                                                                                        • Mobile phone account access is more important to youngest borrowers
                                                                                                                                                                                          • Figure 68: Importance of satisfaction attributes, mean of responses, by age, June 2011
                                                                                                                                                                                          • Figure 69: Importance of satisfaction attributes, mean of responses, by age, June 2011
                                                                                                                                                                                        • Mobile access is also more important to highest earners
                                                                                                                                                                                          • Figure 70: Importance of satisfaction attributes, by gender, June 2011
                                                                                                                                                                                          • Figure 71: Importance of satisfaction attributes, mean of responses, by household income, June 2011
                                                                                                                                                                                        • Consumers with low risk scores also value mobile access
                                                                                                                                                                                            • Figure 72: Importance of satisfaction attributes, by risk score, June 2011
                                                                                                                                                                                            • Figure 73: Importance of satisfaction attributes, mean of responses, by risk score, June 2011
                                                                                                                                                                                        • How Consumers Find Their Mortgage Lenders

                                                                                                                                                                                          • Key points
                                                                                                                                                                                            • Brokers, family & friends are leading source of referrals for lenders
                                                                                                                                                                                                • Figure 74: Method of finding current mortgage lender, by gender, June 2011
                                                                                                                                                                                              • Youngest borrowers rely most on personal referrals
                                                                                                                                                                                                  • Figure 75: Method of finding current mortgage lender, by age, June 2011
                                                                                                                                                                                                • Many blacks, urban dwellers found their lenders on TV
                                                                                                                                                                                                  • Figure 76: Method of finding current mortgage lender, by race/Hispanic origin, June 2011
                                                                                                                                                                                                  • Figure 77: Method of finding current mortgage lender, by area, June 2011
                                                                                                                                                                                              • The Consumer—Future Home Buying Intentions

                                                                                                                                                                                                • Key points
                                                                                                                                                                                                    • Figure 78: Intentions concerning purchasing a home in the next five years, by gender, June 2011
                                                                                                                                                                                                  • Youngest people are most keen to buy a home
                                                                                                                                                                                                    • Figure 79: Intentions concerning purchasing a home in the next five years, by age, June 2011
                                                                                                                                                                                                  • Only the highest-income groups intend to buy a home soon
                                                                                                                                                                                                      • Figure 80: Intentions concerning purchasing a home in the next five years, by household income, June 2011
                                                                                                                                                                                                    • Blacks, Hispanics are most interested in buying a home
                                                                                                                                                                                                      • Figure 81: Intentions concerning purchasing a home in the next five years, by race/Hispanic origin, June 2011
                                                                                                                                                                                                  • Consumer Expectations Concerning Home Prices

                                                                                                                                                                                                    • Key points
                                                                                                                                                                                                      • Twice as many consumers think prices will rise than fall
                                                                                                                                                                                                          • Figure 82: Expectations for home price increase/decrease over next five years, by gender, June 2011
                                                                                                                                                                                                        • Oldest consumers are most optimistic about home values
                                                                                                                                                                                                          • Figure 83: Expectations for home price increase/decrease over next five years, by age, June 2011
                                                                                                                                                                                                        • Higher-income consumers are most bullish on home prices
                                                                                                                                                                                                          • Figure 84: Expectations for home price increase/decrease over next five years, by household income, June 2011
                                                                                                                                                                                                        • Whites, Asians are most optimistic about future home values
                                                                                                                                                                                                          • Figure 85: Expectations for home price increase/decrease over next five years, by race/Hispanic origin, June 2011
                                                                                                                                                                                                        • Suburbanites are most bullish on home prices
                                                                                                                                                                                                          • Figure 86: Expectations for home price increase/decrease over next five years, by area, June 2011
                                                                                                                                                                                                      • Estimates of “Underwater” Homeowners Vary

                                                                                                                                                                                                        • Key points
                                                                                                                                                                                                          • Homeowners may be in denial about the value of their homes
                                                                                                                                                                                                            • Figure 87: Opinions about home equity and mortgage payment behavior, by gender, June 2011
                                                                                                                                                                                                          • Older homeowners have less home equity than others
                                                                                                                                                                                                            • Figure 88: Opinions about home equity and mortgage payment behavior, by age, June 2011
                                                                                                                                                                                                          • Biggest earners think they have the most home equity
                                                                                                                                                                                                            • Figure 89: Opinions about home equity and mortgage payment behavior, by household income, June 2011
                                                                                                                                                                                                          • Hispanics are twice as likely to be underwater on their mortgages
                                                                                                                                                                                                            • Figure 90: Opinions about home equity and mortgage payment behavior, by race/Hispanic group, June 2011
                                                                                                                                                                                                          • Northeasterners are most confident about home equity
                                                                                                                                                                                                            • Figure 91: Opinions about home equity and mortgage payment behavior, by census region, June 2011
                                                                                                                                                                                                        • Cluster Analysis

                                                                                                                                                                                                            • Cluster 1: Dissatisfied, high-risk pessimists
                                                                                                                                                                                                              • Characteristics
                                                                                                                                                                                                                • Demographics
                                                                                                                                                                                                                  • Opportunity
                                                                                                                                                                                                                    • Cluster 2: High-rated optimists
                                                                                                                                                                                                                      • Characteristics
                                                                                                                                                                                                                        • Demographics
                                                                                                                                                                                                                          • Opportunity
                                                                                                                                                                                                                            • Cluster 3: Inactive borrowers
                                                                                                                                                                                                                              • Characteristics
                                                                                                                                                                                                                                  • Figure 92: Residential mortgage clusters, May 2011
                                                                                                                                                                                                                                  • Figure 93: Risk score by residential mortgage clusters, May 2011
                                                                                                                                                                                                                                  • Figure 94: Have or Have not had trouble obtaining a loan in the last year, by residential mortgage clusters, May 2011
                                                                                                                                                                                                                                  • Figure 95: Degree of satisfaction with mortgage lender by residential mortgage clusters, May 2011
                                                                                                                                                                                                                                  • Figure 96: Most important factors in determining satisfaction with mortgage lender, by residential mortgage clusters, May 2011
                                                                                                                                                                                                                                  • Figure 97: Expectations for home prices over the next 5 years, by residential mortgage clusters, May 2011
                                                                                                                                                                                                                                  • Figure 98: Attitudes about residential real estate, by residential mortgage clusters, May 2011
                                                                                                                                                                                                                                  • Figure 99: Residential mortgage clusters, by gender, May 2011
                                                                                                                                                                                                                                  • Figure 100: Residential mortgage clusters, by age, May 2011
                                                                                                                                                                                                                                  • Figure 101: Residential mortgage clusters, by household income, May 2011
                                                                                                                                                                                                                                  • Figure 102: Residential mortgage clusters, by race, May 2011
                                                                                                                                                                                                                                  • Figure 103: Residential mortgage clusters, by Hispanic origin, May 2011
                                                                                                                                                                                                                              • Appendix—Trade Associations

                                                                                                                                                                                                                                Companies Covered

                                                                                                                                                                                                                                • Ally Financial Inc.
                                                                                                                                                                                                                                • Bank of America Corporation
                                                                                                                                                                                                                                • Citigroup Inc.
                                                                                                                                                                                                                                • Fannie Mae
                                                                                                                                                                                                                                • Fiserv, Inc.
                                                                                                                                                                                                                                • Freddie Mac
                                                                                                                                                                                                                                • J.D. Power and Associates
                                                                                                                                                                                                                                • JPMorgan Chase & Co
                                                                                                                                                                                                                                • Morgan Stanley
                                                                                                                                                                                                                                • PHH Mortgage Corporation
                                                                                                                                                                                                                                • USAA
                                                                                                                                                                                                                                • Wachovia Corporation
                                                                                                                                                                                                                                • Wells Fargo & Company

                                                                                                                                                                                                                                Residential Mortgage Lending - US - September 2011

                                                                                                                                                                                                                                £2,684.63 (Excl.Tax)