Clueless

Always In Demand

Just because someone has a license to originate mortgages doesn’t mean he or she knows the first thing about originating mortgages. Tony Zerwas, an originator for Edge Home Finance, didn’t know anything when he first received his license. But he was lucky enough to have a personal mentor to help him and a company-wide forum for answering questions.

“You can read a guideline and interpret it one way,” Zerwas said, referring to the Fannie Mae Selling Guide handbook often thrown at new originators. “That doesn’t mean that’s how the underwriter’s gonna interpret it. So, we have a private forum of Edge employees who are available to help answer those questions.”

Lucky is the key word, considering how few companies offer or, at least, advertise loan officer training in their job postings.

When Schlotthauer began forming his “Complete Loan Officer Training” series, he didn’t think beating his competitors would be this easy.

“Not a lot of companies out there that do what I’m doing. I counted about five or six,” Schlotthauer said. “Every single one of them is way more expensive than me.”

One of the most widely used and top-recommended training programs for originators is Core Training, in which members must make a 12-month commitment and pay $750 per month — $9,000 a year – just to try out level one of their program. On the other hand, some of Schlotthauer’s courses are priced at $30 per month.

“What these companies are doing is offering higher commissions,” Schlotthauer said. “And I was thinking about that. If I’m a new loan officer, or if I’m coming off this 3% rate environment, making a higher commission split on no loans doesn’t work for me.”

That puts new originators in a tough spot since it can sometimes take months to close their first loan, and many are paid commission-only. Newly licensed originators have little choice but to fork over the money for training. Otherwise, their introduction to the industry is more like baptism by fire. The reason is they haven’t received any training on how to do their actual job. As for the SAFE courses and exam, Schlotthauer said, “That allows you to maintain a license and keep you compliant, but it doesn’t teach you how to sell.”

Brady Sweet, Florida-based sales manager for First Class Mortgage, said during the refinance boom from 2020 to mid-2022, new originators didn’t need to know much about loan structure or lead generation. They came in, closed a ton of refis, and left when rates went up.

Plus, more originators are switching channels, going from retail to broker, for example, or re-entering the industry, as experts predict interest rates will drop in 2024 or 2025. That’s why originator training may be in higher demand now than it was two years ago, Sweet said.

“It’s all purchases now, and that will primarily come from Realtors,” Sweet said. “But if you fumble or seem like you don’t have a grasp on the process, or the product, or the programs, you’re dead in the water.”

Watch it on The Interest: Light At The End Of The Tunnel

Training Is A Differentiator

However, there may be a right time and wrong time to start investing in a training program, which could have a significant impact on its success. Martinez planned ahead for this investment because he wanted his onboarding and training program to be the main differentiator between his company and others.

“Our distinguisher was gonna be the experience we provide to the LO,” Martinez said. “So loan officers can feel respected, feel wanted, feel like they’re being attended to, you know, like you’re walking into a five-star hotel [and] getting that personalized service.”

Martinez achieved this because he avoided a frequent mistake he said other companies make, which is not investing money back into their infrastructure. Towards the end of the major outbreak of COVID-19, Martinez and his team were confident enough in their infrastructure to start recruiting heavily. At first, they didn’t have the bandwidth to train brand-new originators, so they started with more experienced ones.

“With the LOs we had, we were originating enough loans to really stand out,” Martinez said, also noting how Equity Smart Home Loans had become one of UWM’s top 10 brokers in California and were ranked 20th among the nation’s top 100 mortgage brokers in Scotsman Guide for 2022.

But once the refinance market began to dwindle, Martinez knew that his company would lose volume. That eventually became evident when he looked at the number of credit pulls each originator was doing. However, he went against conventional wisdom and began hiring more staff instead of conducting layoffs.

“I thought rather than shed anybody or do anything like that, let’s start heavily recruiting because we can make up for the loss of volume through having more loan officers,” Martinez said. “I’m glad that we did that because that actually was our saving grace.”

Martinez hired a talented marketing professional and paid him a high salary, which he said most would think is a bad idea during a market downturn. But his new hire, along with the professional videos they made to recruit new talent on Instagram and Facebook, helped Equity Smart gain up to 15 recruits per month.

“These videos showcase what our culture and what our people look like, and we get a lot of people interested,’ Martinez said.

The Equity Smart Home Loans Instagram page features motivational videos of Martinez talking about his company, how to reach goals, and recent changes in the market. There are also a fair amount of funny and relatable videos that attract originators to the page and convey an easy-going company culture.

“I believe we’re doing it in an ethical, responsible way,” Martinez said. “They decide whether they want to give their information to us [while] other companies are trying to poach and purposely go after your loan officers, which I think is wrong.”

Customized Training

As mentioned, not every originator that needs training is brand new to the industry, so the program needs to have courses that accommodate varying levels of experience. Then, when evaluating each new recruit’s performance, expectations are adjusted to skill level.

“Julian Yuen is the latest review. He’s only been in the business [for] three months (as of December). He already closed his first loan, and he got his first five-star review with us,” Martinez said.

Martinez’s company creates a profile for each originator that specifies knowledge levels and areas for growth and improvement.

“Do they know how to run [a loan prospector]? Do they know how to structure loans? Then we have someone following up with them to make sure that they’re working on those areas,” Martinez said.

There are also training videos within Equity Smart’s proprietary portal and a training calendar where different training topics are scheduled, covering everything originators need to know, such as analyzing income, reviewing appraisals, and understanding how the loan originator software system works. On top of all that, Martinez also makes time every Monday to do a six week cycle where he covers the entire loan process from beginning to end. On Wednesdays, the help desk is open so that originators can ask questions regarding any loan scenario.

But having those resources doesn’t mean anything unless originators actually use them. Even though Martinez said a vast majority of his sales team does use them, there are always a few that fall through the cracks. As a remote company, Martinez can’t monitor and ensure every single originator takes advantage of their available resources.

“So you get a mixture of different types of mentality,” Martinez said. “You have the LOs that are gung-ho, but they don’t participate in anything. They’re busy doing who knows what. And then you get the LOs that have one foot in and have one foot out. So they’re kind of mildly participating, but they want results, and they’re complaining. But they’re not doing the work that’s necessary.”

But he reiterated that most originators seem like Julien Yuen, taking advantage of the training that’s provided and excelling quickly.

Poaching Vs. Training

When trying to increase loan production among a sales team, company leaders may opt to persuade a top-producing loan originator to work for them rather than make their own top-producing originators from recruits.

“Going after the top producer, it’s a lot easier because if you’re able to convince them to join your firm, then you have someone that hits the ground running,” Martinez said. “Whereas if you hire someone that’s brand new, you don’t know what the outcome is gonna be.”

In terms of cost, it’s hard to say which strategy is cheaper. Spending money to create a great training program or to woo a top originator is a gamble. To persuade top-producing originators, Martinez said he has taken them out golfing and out to dinner, which costs money, of course.

It’s also not uncommon for them to request a fat signing bonus to seal the deal.

But company leaders should not underestimate the cost of those bonuses since the Wall Street Journal reported in October 2023 how a few lenders are now clawing them back, including Guaranteed Rate, which fired top producer David Siegal and demanded he return his $100,000 bonus, as they reportedly did to hundreds of other former employees.

According to Schlotthauer, it’s also not uncommon for top producers to expect special treatment from their employers and overstep their bounds.

“I don’t need a diva,” Schlotthauer said. “You know, they’re gonna come in and think they own the business and abuse your processors and all those things that I’ve heard about top producers.”

However, that wasn’t the case with Martinez’s recent recruitment. He caught the attention of a top-producing loan originator through the videos his team posts on social media. On the phone, she expressed her unhappiness with her current employer and told Martinez that the company owners had been rude to her in the past.

“They didn’t do any orientation like we do every month,” Martinez said. “We do an orientation for our LOs to get them acclimated, introduce them to everyone, and show them all the tools and resources. She even said, ‘I’ve never seen one like yours before. And the whole culture thing really got to me.’”

After that, Martinez only needed to get on the phone with her once to get this top producer with 20 years of experience to join his company, along with her entire branch.

Apparently, even the most experienced and exceptional originators like a personalized training and onboarding process.

‘You go fishing, and the majority of the time you’re gonna catch small fish. But as long as you’re fishing, once in a while, you’re gonna catch that big kahuna,” Martinez said.

Measuring ROI

Other than catching the attention of top producers in the industry or looking at performance levels for originators, there are other factors that can signify whether a training program is providing a sufficient return.

Turnover and retention are also important to consider since it’d be a shame to invest so much in training originators only to have them leave for another company. However, some training programs are built in a way that encourages turnover, so non-performing originators are filtered out like the NEXA Training Academy. On Facebook, tons of people include NEXA’s academy in their recommendations for new or experienced originators.

It may scare some new originators that NEXA Academy has a quota to fund one or two loans per month, or they’ll be let go. Especially since it usually takes months before originators can close their first loan. However, NEXA Academy Director Kristine Wake said there is some leeway for originators who are working hard but struggling to close on loans due to poor market conditions.

“Each trainee is assigned an instructor to evaluate their performance. If we see they are generating lots of business activities, such as going to open houses, calling Realtors, going to home buying seminars, and being active on social media, then the instructor will work with them on switching up strategies,” Wake said.

They also offer an accelerated program for originators returning to the industry or switching into the broker channel from retail. After completing six loans, those originators graduate from the program. The extended program is mainly for new LOs and includes a wide assortment of training content and team meetings with an instructor for personalized advice. After completing 12 loans, which Wake said takes six months, on average, those originators graduate.

Still, some originators on Facebook have expressed their dislike for giant Zoom calls with 40 or more people in them, but that’s a matter of preference. Anyone who thinks having to meet a quota is too much pressure as a new or returning originator would likely opt for Equity Smart’s approach, which aims to retain new recruits.

How does Martinez do that without losing money? He gets some help from his wholesale lender, United Wholesale Mortgage (UWM).

“If they haven’t closed a loan in a quarter, we let them know on the contract, we’re gonna remove you and put you on more free stuff,” Martinez said. “For example, we may remove them from Lending Pad and put them in Blink+, UWM’s [loan origination software] system, which doesn’t cost us anything.”

Overall, there’s no one-size-fits-all for training programs. Company leaders can follow the example set by Equity Smart Home Loans, NEXA, or even Schlotthauer’s newly developed training course called “The Complete Loan Officer” and use it as inspiration to build something new.

“We have enough to provide any loan officer a path or a blueprint to success if they want it. It’s up to them,” Martinez said. “We have actual loan officers that can attest to this and say, ‘Hey, I joined Equity Smart, and now I’m closing two, three, four loans a month.’ ”