California Lenders Score Higher Ratings with Local Agents

California Lenders Score Higher Ratings with Local Agents

Residential News » Los Angeles Edition | By WPJ Staff | April 21, 2015 9:35 AM ET

According to findings from the latest Lender Satisfaction Survey conducted by the California Association of Realtors, a significant drop in distressed home sales and resulting smoother transactions in recent years moved the needle considerably in Realtors' satisfaction level with local lenders. 
At a current index of 66, the survey's Lender Performance Index (LPI) has increased consistently since the survey began in 2010, suggesting a continuous improvement in the lending process due primarily to an improving housing market.  The index improved only negligibly between 2010 and 2011, when distressed transactions made up more than half of total home sales.  During that time period, the index inched up from 31 to 33 but increased from 41 in 2012 to 56 in 2013 and at the end of 2014 stood at 66.
Overall satisfaction rating

For all transactions - which includes distressed and traditional equity sales - on a scale of 1 to 5, with 1 being "very dissatisfied" and 5 being "very satisfied," Realtors' average overall satisfaction with lenders was 3.7 in 2014, up from 3.2 in 2013, 2.7 in 2012, and 1.9 in 2011.  While lenders have made progress since 2011, there is still room for improvement.
Underwriting process

Even as the lending environment has shown improvement in recent years, the Underwriting Standards Index (USI) provides evidence that there still remains difficulty in equitable access to financing for consumers.  Like the LPI, the USI measures the satisfaction Realtors have with lenders/servicers based on their most recent home sale transaction with specific focus on underwriting in the lending process. The USI is a separate index that draws upon the answers to the question, "How did underwriting standards for the loan origination in the current or previous month compare to 12 months ago?"  The underwriting standards index of 23 suggests an improvement in the lending process when compared to the prior year, when the index was at 17. Much of this improvement can be attributed to fewer reporting that underwriting standards have tightened (41% in 2014 versus 49% in 2013). Even though some steps were made forward, there still remains much room for opening up the credit box for well-qualified, responsible home buyers.
Ease of closing
One of the lending processes that has improved is ease of closing a transaction, most likely due to a shift in the market from distressed sales to non-distressed transactions over the past few years rather than a true improvement in lender performance.  In 2011, nearly half (49 percent) rated the ease of closing a transaction as "extremely difficult." That figure has dropped to one in five (20 percent).  Those rating closing a transaction as "extremely easy" increased from 8 percent in 2011 to 27 percent in 2014.

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