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Hammerhouse LLC: Model Matching—The Key to Hiring and Retaining High-Quality Human Capital in the Mortgage Industry

Dec 13, 2010

The following is an interview with Drew Waterhouse, managing director of Hammerhouse LLC, an expanding national recruiting and strategic growth firm for the financial services industry with mortgage sales and leadership placement at its core. National Mortgage Professional Magazine recently named Drew as one of the 40 Most Influential Mortgage Professionals in 2010. The Hammerhouse senior team, which in addition to Drew Waterhouse, includes Eric Levin, Eric Petersen and Steve Rennie, has been providing strategic growth services to the mortgage industry for over a decade by partnering with clients to source, attract, model match, hire and retain revenue-generating human capital at all levels of an organization—from production to executive leadership. Hammerhouse’s unique model-matching process helps clients expand revenue by adding experienced mortgage professionals who focus on purchase business and transferable relationships with referral partners and past customers. Hammerhouse currently supports expansion for clients, which includes private equity firms entering and expanding in the market, as well as traditional mortgage bankers and depositories, with a focus on model matching and effecting high levels of retention. For more information about Hammerhouse, please visit National Mortgage Professional Magazine sat down with Drew Waterhouse in early December 2010 to get a briefing on Hammerhouse and the current state of the mortgage marketplace. NMP: Drew, thank you for taking the time to speak with National Mortgage Professional. Could we start our discussion today by you giving our readers some background on Hammerhouse? Drew: Hammerhouse was founded in July 2008 as a national recruiting firm with mortgage sales and leadership at its core. Our clients include national and regional depositories and non-depositories looking to grow their production teams and branch networks in existing and strategic growth markets. When we formed Hammerhouse, our primary goal was to create a world-class search firm for the financial services sector. We wanted to leverage our past experience to help clients to source, attract, hire, acclimate and retain model-matching professionals for their organizations. Our team has been involved in growing our clients from single locations to national market coverage by building out sales and executive leadership, as well as production teams in retail, wholesale and correspondent mortgage banking channels. Our value proposition from day one has been to make inaccessible, passive model-match candidates accessible to our clients. NMP: What motivated you to form Hammerhouse? Drew: Earlier in the decade, I was one of the first to bring a nationwide recruiting search model in-house at a leading mortgage lender and rapidly scale it across the organization. In 2007, I was managing a 50-person internal recruiting department at a top-10 mortgage originator, which offered a very structured recruiting process from initial contact of a candidate through the first 90 days of a new hire at our company. This was a stand-alone department with direct reporting to the heads of the retail, wholesale and correspondent channels. In July 2008, as our industry was facing many challenges, this presented me with an opportunity to start a nationwide search company for the financial services industry with mortgage sales and leadership placement at its core. I jumped at this opportunity as I knew that I, along with my partners, would be able to successfully leverage our years of experience as internal recruiters on behalf of clients to help them build a bigger and more profitable business. NMP: How long have you and your partners, Eric Levin, Eric Petersen and Steve Rennie, been involved in recruiting and consulting within the mortgage industry? Drew: Our leadership team has been working in the mortgage recruiting space for over eight years and in traditional recruiting for over 15 years. Some of our team members, including myself, began as an internal headhunting team for a national mortgage banker and then a depository. For over seven years we focused on organic nationwide expansion of retail, wholesale and correspondent lending channels. NMP: What makes Hammerhouse different than other recruiting firms in the mortgage industry? Drew: Our internal experience has exposed us to a 360-degree view of the mortgage business, which has given us very relevant insight into the day-to-day workings of the mortgage business. This has helped us work with our clients—and the candidates we represent — by being objective consultants during the process to thoroughly model match on both sides in great detail, as well as offering dual accountability. We focus on clearly aligning objectives in order to positively impact retention and ultimately the goals of growth and profitability for both a client and a candidate. NMP: Could you explain to our readers how the Hammerhouse recruiting process works? Drew: At the start of a working relationship with a new client, we spend a significant amount of time defining what are the best model-matching characteristics of a candidate for their business. From that point, we identify the market(s) we will be focusing our search efforts on and we begin to have detailed conversations with candidates who have meaningful market share and/or are well known in the mortgage community for their credibility and quality of work. During this process, we blanket the market and identify the best model matches, while at the same time learning about candidates’ type and source of business, the culture of the company they are currently working with, philosophy, leadership, operational model, origination platforms and overall personal and professional goals. When a clear model match is identified, we coordinate an initial meeting and a debriefing to facilitate future relationship-building meetings until it results in moving forward or not. NMP: Your model-matching process sounds very interesting. Could you explain this unique methodology in greater detail? Drew: Our model-matching process was originally developed to enhance retention. We take the needs and wants of our candidates and match that with our client’s value propositions and culture to find the best possible model match. Our goal is to minimize risk for both the hiring company and candidate in order to establish a long-term, mutually beneficial working relationship. NMP: What type of organization is your typical client? Drew: Our typical client is a mortgage banker or depository with a tenured leadership team that is developing or has established a well-developed platform and value proposition. We have learned a lot about how to underwrite clients, from their culture, to their financial stability, operational fulfillment, sales platform, leadership channels, technology advantages and many other aspects related to our involvement. We look to work with financially sound companies that understand the return of an investment in growth and want to build a long-term, sustainable and profitable business. NMP: Tell us about your business model? Drew: There are two sides to that question. For both our clients and the candidates we represent, the core of our business model is to align with the long-term success of the relationship, not the short-term placement of just getting a hire in the door or a one-time fee. It is built on the foundation of the power of the right relationship. NMP: How many search professionals comprise the Hammerhouse team? Drew: Today, Hammerhouse has 12 employees and we are currently expanding in our two locations: Orange County, Calif., and the Greater Charlotte, N.C., area. We are also exploring expansion into similar markets on a selective and strategic basis to better support our clients nationally as we build our franchise in the years to come. NMP: What is the profile of a successful originator in today’s marketplace? Drew: That is a great question. Today, we have a new and constantly evolving mortgage market. A successful originator or leader today must be well versed technically and have great communication skills for the long detailed process associated with providing a mortgage to a customer. Their skills need to be focused on product, fulfillment, customer service and integrity. That said, they also need to be fully aware of the tools and resources available to them from the company they are with. The implementation of those tools can mean the difference between being “employed” as an originator and having a successful origination “business”, in which they are able to provide ultimate value to their referral partners and customers. The business today has become distinctly divided between mortgage banking platforms that focus specifically on providing value to the originator, who in turn can use that value to support a successful referral based business, and banks that provide mortgages among other financial services with that value spread out among various divisions. Loan originators who know exactly how they fit into the business today and align themselves with the tools that can best support their specific model are consistently having the greatest success. NMP: What is the profile of a successful candidate relationship? Drew: We search for high-quality people who see value in long-term relationships for the purpose of objectively evaluating if the company they work with truly creates value for their business. In addition, we look for technically proficient and sales-driven mortgage professionals who can succeed in any economic environment and have transferable relationships of referral partners and past customers. It is also very important they have sound technical sales skills, a track record of producing quality loans and are committed to long-term education to continuously improve these skills. Finally, we are looking for professionals who want to be part of reestablishing the credibility and responsibility associated with lending in the overall mortgage industry. NMP: How many searches will Hammerhouse complete in 2010? Drew: We work on many searches at one time for multiple clients. The best way to answer this question is that we have helped our clients bring on board what equates to approximately $6.5 billion in annualized production volume since starting our business in late 2008. We expect this number to increase significantly in the next 24 months as a result of the opportunities we are working on nationally with our existing clients. NMP: Can you talk to us about how Hammerhouse supports mortgage professionals during the search process and after the professional has been placed in a new organization? Drew: During the model-matching process we define the wants and needs of a mortgage professional with the value proposition of our clients. Once there is a strong match, we set up introductory meetings and provide post-meeting consultation, as well as consultation for follow-up meetings. The process itself is thorough. We look to make sure individuals are fully educated about our clients and how they conduct business so that our candidates can be in a place to make a very well-informed decision when the time comes. By default, we work with companies we have also done thorough due diligence on in regards to their long-term sustainability and ability to retain people we help them bring on board. We want candidates to be there for years because it is their best option. Our primary objective is to make introductions to like-minded, model-matched clients and candidates, as well as manage the process from introduction through end result—whether that be creating an opportunity to work together, keeping an open dialogue for the future or coming to a conclusion that there is not a fit. After a candidate has been placed, we continue an open dialogue and act as a resource to positively impact retention. NMP: With 2011 expected to be a difficult year for overall mortgage originations in the U.S., what is Hammerhouse’s view of the 2011 hiring environment? Drew: There is a significant opportunity for top producers and well-respected leaders to be heavily recruited in 2011 and well into the future. We are very optimistic about our industry and the opportunity it presents to our clients and the types of mortgage professionals we spend time developing relationships with. The MBA is projecting a shrinking overall market. That said, we believe it will create an opportunity for high-quality mortgage professionals (and organizations) to increase market share and stand out in a very competitive market. The mortgage business will continue to be heavily regulated, with an emphasis on loan quality, as well as the performance of an individual producer’s loans. We are also expecting increased M&A activity as many smaller firms align with larger ones to leverage economies of scale. In this environment, we believe traditional recruiting will play an even larger role as companies continue to look for and add quality loan originators and sales leaders. NMP: With all the changes and new regulations impacting the mortgage industry, are you finding it difficult to get quality originators to move from their current position even if it is to a better long-term opportunity? Drew: Long term there is no concern. I believe the biggest problem is lack of education. Some companies are ahead of the curve and keeping their sales and leadership teams up to speed with the new regulations. There are still many out there in a ‘wait and see’ mode as a result of their company not being as involved in communicating what will be changing and how they will need to change with it. Short term, there is hesitancy until certain things are more clearly defined, such as compensation for LOs and managers, but over the long term we all need to adjust to the new normal in our industry. NMP: What are the top challenges that origination professionals need to be prepared for in 2011? Drew: There are a number of challenges our industry will face, originators in particular. Licensing will be in full effect in 2011 and compensation changes need to be followed closely. In addition, being with a well-capitalized company that has excellent relationships with their investors will be very important. Also working with an experienced leadership team that can impact where the business goes when the best opportunities present themselves. We feel strongly that every professional in our business needs to be flexible and prepared for all the changes that will occur in our industry. NMP: Does the mortgage broker have a place in the origination process of the future? Drew: Yes, we feel there should always be options for consumers in our business. We have been contacted by a number of brokers over the past few years. Many have been contacted by or have explored aligning their business with a mortgage bank or depository versus staying independent. Over the past year, many new and exciting wholesale companies have entered the TPO market, which has created more stability than what existed a year ago. It will be interesting to see what the landscape looks like a year from now, but many of these people do good quality loans and prefer to stay independent.] NMP: Who does a potential candidate contact at Hammerhouse to discuss opportunities? Drew: They can contact our director of client Relations, Cara Hopkins, by calling (949) 655-0385, x129 or e-mailing [email protected] or by visiting our Web site and clicking on the "Contact Us" page. NMP: Drew, thank you for taking the time to speak with National Mortgage Professional. Next time you are in New York, please make the time to stop by and give our readers an update on Hammerhouse’s new developments.  
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