How Much Do Borrowers Trust Mortgage Lenders?

It has been almost nine years since the darkest hour of the real estate crisis.  While the real estate and mortgage markets have improved significantly since 2008, many borrowers remain scarred from devastating events of that era.  Even if the the market collapse did not affect you directly, you probably know someone who experienced the traumatic impact of a foreclosure, short sale and bankruptcy.  Although no single party was responsible for the real estate implosion — banks, regulators and borrowers all share the blame — mortgage lenders attracted the most ire from borrowers and the general public.  

In light of the intense anger and frustration that was, and continues to be in some cases, directed at lenders, we wanted to use the FREEandCLEAR Mortgage Survey to understand how much borrowers trust mortgage lenders today.  How much faith do borrowers put in their lender? Or in other words, how much have the deep scars of the real estate crisis healed?

When asked how much do you trust your lender on a scale of 1 to 10, with 10 being the highest level of trust, a whopping 70% of survey respondents selected 7 or higher.  Additionally, the four highest rating options garnered the top four responses with a trust rating of 8 coming in on top with 21% of responses and the highest rating of 10 coming in second with 20% of responses. A lender trust rating of 9 out of 10 came in third, garnering 16% of responses.  

Borrowers trust mortgage lenders more than you would expect

We have to admit that these results surprised us as many borrowers continue to deal with the aftermath of the real estate collapse.  Although the deepest point of the crisis occurred almost a decade ago, borrowers continue to be impacted by the residual effects of impaired credit scores, toxic mortgages and to a lesser degree negative equity in their homes.

The unexpected FREEandCLEAR Mortgage Survey findings that show borrowers with a high level of trust in their lenders could be attributable to several factors.  First, prompted by new government regulations or on their own volition, a lot of lenders have cleaned up their act.  Some of the worst lenders and individual offenders involved in the mortgage market collapse have left the industry so there are fewer bad actors to mis-trust.  Additionally, many of the mortgage programs such as negatively amortizing option ARMs that produced so much borrower wreckage have been eliminated from the marketplace.  While both lenders and borrowers express dissatisfaction with increased mortgage regulations, there is little doubt that these reforms stabilized the mortgage market and in turn potentially helped restore borrowers’ trust in lenders.   

A second possible explanation for the positive responses to this question could be personal bias or blind spots.  Borrowers may not trust the mortgage industry on the whole or lenders in general but they trust their lender.  Put differently, your mortgage lender is shady but I trust mine.  After all, who wants to admit that they made a poor decision when they selected their lender?

Whatever the reason or rationale, borrowers trusting mortgage lenders is a positive development.  Getting a mortgage and buying a home remains the largest financial commitment for most borrowers so working with a lender that you trust to guide you through an overwhelming and sometimes confusing process is crucial.  Although mortgage lenders have a significant opportunity for improvement in both perception and practice, the findings of the FREEandCLEAR Mortgage Survey show that in the eyes of borrowers, the industry has come a long way since its darkest days, which we all can agree is a good thing. 

We will continue to provide a detailed analysis of each survey question on our blog in the coming weeks and you can review the full results from the FREEandCLEAR Mortgage Survey to better understand how borrowers think about and experience the mortgage process.