December 8, 2023

The Haggler: At Quicken Loans, a Culture Geared to Customer Service

REMEMBER the recent column about DailyCandy, the e-mail service for discount deals, and the customer who sent e-mails for six maddening months, trying to get an $85 refund?

Well, after the matter was thoroughly investigated, we learned that an employee at Group Commerce, which handles DailyCandy’s order fulfillment, had marked the refund as paid, even though it wasn’t.

This explanation, of course, explains very little. What we still want to know is why so many companies, in similar circumstances, fail to deliver. Time and again, you get the sense that these companies are filled with employees who are trained to keep their heads down and keep stamping. Or perhaps communication has broken down. Or it’s always someone else’s job.

How did so much customer service become so wretched? It’s a mystery that hangs over nearly every one of these columns.

Not long ago, the Haggler got an idea of what is going wrong after a close look at a company that is getting it right. It was during a trip to Detroit where the Haggler — or, rather, his duller, windier alter ego — reported a story about Dan Gilbert, the founder of Quicken Loans, a privately held mortgage lender. The article looked at Mr. Gilbert’s efforts to revive downtown Detroit, but while there, the Haggler got a close look at a company that has thought seriously about how to keep customers happy.

The thinking has paid off. Quicken Loans was rated highest in customer satisfaction among mortgage originators in 2010, 2011 and 2012, according to J. D. Power Associates. The company has also been ranked in the top 30 of Fortune’s “100 Best Companies to Work For” for 10 consecutive years.

What is Quicken Loans doing to earn such accolades? It boils down to culture.

Mr. Gilbert and Bill Emerson, the chief executive, spend a lot of time and energy instilling a very particular work ethos into employees. For newcomers, this involves a daylong speech/indoctrination led by Mr. Gilbert, who, on the day the Haggler caught his act, spoke for eight hours, with a break for lunch, wearing a clip-on red bow tie. (Presenting the serious in the guise of the slightly comic, with plenty of punch lines, turns out to be one of his specialties.) The speech occurs once every five weeks or so and is delivered to recent hires, usually in a conference room of a hotel.

You can learn a lot about Quicken Loans from this presentation, which revolves around the company’s “isms,” a set of pithy summations of principles. Some, like “Responding with a sense of urgency is the ante to play,” are self-explanatory. Others, like “Every client. Every time. No exceptions. No excuses,” come with their own wittily phrased elaborations. (“Clients don’t care how much you know until they know how much you care.”)

And many, like “We’ll figure it out,” make sense only with elucidation: “Not everything comes with a set of instructions. The innovators of the world are often exploring uncharted territory.”

Let’s stipulate that none of these ideas are blazingly original, and some are so obvious that one wonders why it’s necessary to say them aloud. (“It’s not about who is right, it’s about what is right.”) But what Mr. Gilbert and Mr. Emerson have done is create a set of expectations as well as a sense of community and mission. Employees at Quicken Loans have it hammered into them: care about the customer, sweat every detail, improvise when you need to, always deliver.

These employees are also encouraged to enjoy their jobs; they work in an atmosphere so buoyant that the Haggler was not surprised to find a karaoke machine in a room filled with a few hundred mortgage bankers.

“If you don’t create a culture at your company, a culture will create itself,” Mr. Emerson said in a phone interview. “And it won’t be good. I sometimes hear people say ‘We don’t have a culture at our company.’ They have one. But if it hasn’t been nurtured, if no one has spent on any time on it, you can assume it’s the wrong culture.”

THE Haggler can think of a dozen problems brought to this column that it’s hard to imagine could have emerged from Quicken Loans. And here is just one small piece of evidence:

A few weeks back, when the Haggler was trying to get the attention of DailyCandy, he turned to Twitter. Using his Haggler account, he sent a post into the ether, asking someone at DailyCandy for a call. No one ever replied.

Last month, the same experiment was tried with Quicken Loans, though the Haggler raised the degree of difficulty a little. A post was sent from a Twitter account opened by the Haggler with a name that was not the Haggler’s — or that of anyone he knows. The post had no hashtag and was not sent to Quicken Loans’ Twitter account. The message read:

“I am not happy with Quicken Loans! And you can tell because I used an exclamation point.”

A response arrived within hours. “How can I help?” wrote a Quicken Loans employee, identified as Bianca. “Please send me an e-mail,” she added, providing her e-mail address.

This turned out to be Bianca Mutti, part of a team that monitors the Twittersphere for Quicken Loans-related comments. The Haggler sent her an e-mail last week, from his Haggler e-mail account, and explained: “That tweet was a test. And you passed.”

“Thanks for solving this mystery for us!” she wrote back. “I mean it, and you can tell because I used an exclamation point.”

E-mail: Keep it brief and family-friendly, include your hometown and go easy on the caps-lock key. Letters may be edited for clarity and length.

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Mortgages: Dealing With Higher Costs of F.H.A. Loans

A home buyer with a down payment of less than 20 percent generally has to pay up in some other way to ensure that lenders are protected against default. (This requirement slipped during the housing boom; see “financial crisis.”)

The most popular low-down-payment loans have been those insured by the Federal Housing Administration. Borrowers can make down payments as low as 3.5 percent; they pay an upfront fee (often rolled into the loan) and a monthly premium. An alternative is private mortgage insurance, or P.M.I., available to those who put down at least 5 percent.

As the name implies, the insurance is provided by a private company rather than the government. Premiums can be paid up front, each month, or in a mix. The amount of the premium drops as the size of the down payment rises. Use of these loans has fallen off sharply in recent years as the P.M.I. companies tightened standards and F.H.A. gained popularity.

Effective on April 18, F.H.A.’s annual premium on a 30-year loan rose to 1.1 or 1.15 percent of the loan value, up from 0.85 or 0.9 percent. (The higher rates are for down payments below 5 percent.) On a $400,000 loan with the minimum down payment, that’s $83 more per month.

The monthly fee is in addition to the up-front premium, equal to 1 percent of the loan value. Which loan to go with may depend on the answer to a question: “how long is it going to take to recoup that 1 percent up front?” said Matt Hackett, an underwriting manager at Equity Now, a direct mortgage lender based in New York.

In the first quarter, 17.7 percent of new loans were F.H.A., according to Inside Mortgage Finance, an industry data provider, while P.M.I. had a 5.4 percent market share. Applications for F.H.A. loans jumped 20 percent in the month preceding the price increase, then tumbled when it went into effect, according to the Mortgage Bankers Association.

In addition to lower minimum down-payment requirements, F.H.A. has laxer rules for credit scores and debt-to-income ratios. Right now, it also has lower interest rates, said Thatcher Zuse, the president of Sound Mortgage, a lender and broker in Guilford, Conn. “Almost as a rule, as the rates stand right now, the less equity you’re putting down, the better the F.H.A. deal becomes.”

Mr. Zuse ran the numbers for two buyers able to put 5 percent down. For a buyer with a 780 credit score, the cost difference between F.H.A. and P.M.I. was negligible, but a buyer with a 650 score could save about $200 a month on a $400,000 F.H.A. loan.

There are circumstances peculiar to the New York area that could push a borrower to F.H.A., said Robert Donovan, a Bank of America senior vice president and regional sales executive. For one thing, the region has a high concentration of two- to four-unit homes, popular with buyers who want to live in one apartment while renting out another. Loans in such cases are treated much more liberally by F.H.A., he said.

The same goes for new-construction condominiums of any size: until more than half a project is sold, conventional loans may not be an option. F.H.A.-backed loans are available even if as little as 30 percent of the project is sold, Mr. Donovan said.

In the broadest terms, for someone with no special circumstances, great credit and a more-than-minimum down payment — say, 10 or 15 percent — P.M.I. may turn out to be the better deal. Someone with weaker credit or less cash may find F.H.A. works better.

To generalize, “if you qualify for P.M.I.,” Mr. Hackett said, “you should usually choose the P.M.I., because it is going to be less.”

Circumstances vary, though, so ask any lender to produce a written comparison, said Michael Moskowitz, the president of Equity Now, “just to keep the lender honest.”

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