Even in today’s challenging market, high-producing loan officers remain in high demand, according to mortgage advisory firm Stratmor Group. Recruiting them often comes down to the quality of the offer a lender can make. In its July Insights Report, Stratmor Group Senior Partner Jim Cameron analyzes the industry’s approach to signing bonuses, offering insight into why some lenders pay and others do not. His article, entitled “To Pay or Not to Pay: The Question of Signing Bonuses,” explores how signing bonuses are structured, and how new data and tools can help lenders understand more about the potential of the loan officers they are hiring.
“It’s no secret that our industry is experiencing a very challenging market right now. We are seeing layoff announcements practically every day, and there are already a handful of companies shutting down,” Cameron writes in his article. “M&A activity has exploded as the industry begins to consolidate. We are in a classic downcycle with too many lenders chasing too few loans.”
Despite all of this, lenders still need and want high-producing, purchased-focused loan officers (LOs). Recruiting them will depend, in part, upon compensation. For high producers, signing bonuses have been a big part of the story.
Cameron says that will continue, but more for some lenders than others. For example, independent mortgage bankers (IMBs), and especially large IMBs, are more likely to pay signing bonuses to retail loan officers for several reasons. Signing bonuses do not match up well with the typical bank culture.
“In our experience, IMBs are more likely to ramp up and down aggressively as market conditions ebb and flow,” Cameron says. “They must — it’s a matter of survival. But banks don’t like to operate with an easy come, easy go, hire and fire mentality. It is well documented that banks have lost market share to IMBs and there are many reasons for this. The lack of willingness to pay top dollar for high producers is one of them.”