In today’s mortgage market, the rules regarding hiring and firing have been turned around. During the boom, most loan officers were productive. And, even if they were not, most companies were so profitable carrying a few extra bodies was no big deal.
As the market transitioned, companies were so flush with cash they immediately reacted by paying out huge bonuses for top producers whose volumes were pumped up by refinances. The goal was to stockpile producers so that the drop in production could be mitigated.
In reality, production has fallen so much that many of these “bonus-baby” recruits were overpaid, at least when considering the present environment. Of course, in the long run, this strategy may work out. But in the meantime, the cash positions of many companies have changed. Not only are they not paying these huge bonuses, but they are taking a closer look at those loan officers who are not productive. Non-productive loan officers have proliferated in this environment, which is not surprising.