Brokers, servicers must navigate customer frustration as their daily budgets get tighter
A recent report from JD Power, which detailed a drop in servicer satisfaction, uncovered another underlying reason for customers' frustrations.
Rising escrow costs, or in some cases, miscalculated escrow costs, combined with general affordability issues, are leaving mortgage customers more irritated at servicers.
Bruce Gehrke (pictured top), senior director of lending intelligence at JD Power, said the frustration starts with the portion of the mortgage payment that covers property taxes and insurance.
“For this study, we were at just about 16,000 completed responses for this one, but we have 57% of that population who had an escrow payment increase over last year,” Gehrke told Mortgage Professional America. “Another 10% had a decrease. So, what you're also seeing is that those decreases are probably a result of miscalculation, because insurance rates and taxes are increasing.
“Some of them have increased dramatically, so servicers, in those formulas that they use to try to calculate how much they have to take on a monthly basis, they can get out of whack fairly easily.”
Payment frustrations
Mortgage payments have been declining slightly, according to Redfin. The latest report showed the median mortgage payment at $2,679, its lowest level in nearly five months.
But the constant fluctuations, at a time when home budgets are tighter than ever, are a particular point of frustration for homeowners. Gehrke said servicers have to do a better job of getting that number right, and that’s not easy.
“The challenge there is really trying to fine-tune that process, and then communicate that back to the customer,” he said. “Two-thirds of customers are seeing their payment change every year. When we have 88% to 90% of the folks in this study who are on a fixed-rate mortgage, that is not a happy experience.”
Steve Marks, President and CEO of Ohana Mortgage Solutions in Hawaii, highlights that the state already faces severe housing affordability issues, with residents spending the highest percentage of their income on housing nationwide. https://t.co/oN9s441lmh
— Mortgage Professional America Magazine (@MPAMagazineUS) July 30, 2025
Insurance premiums and property taxes have been on the increase nationwide. Mortgage servicers are trying to keep up to avoid hitting homeowners with sticker shock from a massive payment increase.
“You get used to, ‘Well, here's my budget. I know what I need to pay,’ Gehrke said. “Now all of a sudden, I've got to reshuffle the deck. Some parts of the country have seen significant increases in insurance premiums. So, yeah, that's definitely had an impact that we're seeing here.”
Financially vulnerable borrowers
Looking into the numbers further shows deeper financial concerns. Rising costs are squeezing household budgets, even before increases in escrow payments.
These trends are showing up in consumer debt. According to Equifax’s second-quarter Market Pulse report, consumer debt increased to $17.86 trillion in June 2025, a 2% increase year-over-year.
Subprime borrowers hold 22.1% of all bankcard debt, a 3.5% increase from 2024 and a 50.9% jump from the pandemic low of 14.7% in May 2021.
Gehrke said they’re seeing the same trends at JD Power in their surveys.
“It's really what's going on outside in the broader economy for homeowners,” he said. “And a key metric that we measure in this study over the last four years is financial health. There's a segment in there called ‘financially vulnerable.’ And there's a series of nine questions that respondents answer. How they answer those questions determines where they fall into four different categories.
“The lowest category, financially vulnerable, that number has increased 50% over the last four years. We have 34% overall in our sample that's considered financially vulnerable, and that's up from 22%. So that's increased 50% overall.”
The financially vulnerable customers are the ones most at risk of credit delinquencies. As interest rates remain high, many individuals may struggle to qualify for a refinance to rework high-interest consumer debt. Those factors contribute to their overall frustration, Gehrke said.
“One out of three borrowers in the study now is considered financially vulnerable,” he said. “That to me stands out significantly. That group has more concerns, looks for different sorts of elements in the relationship, is less happy about it, and is less satisfied because they're more stressed in their everyday life. And that, at a high level, is one of the major factors we see here, impacting scores across all brands, but in general, across the industry.”
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