Watch Who You Hire

In a diverse mortgage environment, MLO recruits are not one-size-fits-all

Insider

Contributing Writer

After a period of bloating the industry with loan officers and operations staff so that we could keep up with the refinance boom of all times during the pandemic, the industry has shrunk like an accordion in response to the “aftermath.” Interesting word “aftermath” used to describe what has happened in the past two years because of the root of the word — math.

After all, this is all about math. If you cut production by 65%, then you have no chance of making the math work with too many employees. Thus, the accordion analogy, only there was no music coming from shrinking production — only cries of pain.

Since I have been in the industry for over 40 years (yes, I started when I was seven years old) — I certainly have seen plenty of cycles. Following a refinance boom, we saw the bond market sell-off in 1987, as the 10-year Treasury rose to over 10.0% in short order. This led to Black Monday, a stock market crash in October. Plenty of ups and downs and euphoria and pain.

Even training for each of these models should vary as the way one would approach the business and what is acceptable will vary from model to model. Sitting in a bank branch is not the same as sitting on a builder site or serving it remotely.

I started in the industry inside a real estate office, and I have coached, hired, and supervised in-house loan officers in this model. It is amazing to me how this type of situation is viewed:

Loan officers coming in off the street think that it will be “easier” because the agents and managers will support them.
Managers hiring loan officers think that an average loan officer in another model will thrive in this model because they will have access to real estate agents.

Outside of the aforementioned loan officer with “all the traits of a great producer” — nothing could be further from the truth. That is why I am dedicating the remainder of this year, 2024, to be the year that I deliver the truth to the industry. Sitting in a real estate office or serving a real estate office remotely is not the same job as any other loan officer position in the industry. From a management perspective, the hiring, training, and support will need to be targeted toward what these loan officers do for a living.

In other words, we have to stop painting with a broad brush. This article will be the first in a series of articles that will share the name of my newest training course — Inside the Glass House.

The majority of call center loan officers were not a match for street mortgage companies.

I can’t predict the future, but I do see plenty of chances for a refinance boom coming back, as well as the real estate market rebounding somewhat. It likely won’t be like the sub 3.0% pandemic days, but people will be able to get out of those 7.5% mortgages. Production will increase enough that we will start hiring again. And this time, we will hopefully be a bit more cautious.

To that I say — watch who you hire. Think of the refinance call centers shutting down and candidates flooding mortgage companies with applications. Yet, the majority of call center loan officers were not a match for street mortgage companies. Many left banks that were deemphasizing mortgage companies to find that going on the street in a major slump was not such a good idea as well.

There are so many different types of mortgage companies:

Call centers
Banks and credit unions
Builder-owned or affiliated companies
Real estate-owned or affiliated companies.
Financial services companies
Independent/correspondent mortgage bankers
Mortgage brokers

Each does business in a different way, especially with regard to attracting production. And the profile of someone who will fit their model does not necessarily fit another model. Mind you, someone who has all the tools and makeup of a top producer is likely to succeed in any model. But even in this case, there can be conflicts. Someone with a very independent small mortgage broker is not likely to fit in a large formal banking environment.