What To Do After Firing A Loan Officer

Balancing company and customer needs.

A mortgage advisor being fired by his boss

Insider

Contributing Writer

It is bound to happen. All of our hires are not going to work out. Invariably you will be in a position to have to “let someone go.” This could be for lack of production or perhaps because their quality of production is not good. Unfortunately, many in our industry to not have a definitive recruiting plan. Our history of developing rational firing processes is even worse.

Actually, it can be a vicious cycle. We don’t spend the time necessary getting to know the person, set up expectations or monitor performance. The firing comes too late and is rushed. Then we spend time fighting fires and picking up the pieces. The time spent fighting fires prevents us from hiring in the right way. Then we start over again.

Certainly, the best course of action is to hire the right people. But even in the best of circumstances, you may be forced to terminate mistakes. At this juncture, we will forget about why the hire was a mistake. At this point, we will focus upon what to do after termination.

The First Decision

It is not uncommon within the industry to require that an employee – and especially a commissioned loan officer – be asked to separate the day of termination. Typically, the company is afraid that this loan officer will not act in the best interests of the company, and we certainly can understand this concern. Every separation is a risk in this regard and a termination is even more important because there are more likely to be hard feelings. So, the question is—are you going to ask them to stay and/or leave? And if they stay, what actions can they take on files?

Of course, it should be specified in the commission plan and/or employment agreement whether a terminated loan officer will be paid for a pipeline in process and for how long. It is not usual for the company to pay for closings or fundings that occur within thirty days of separation and this provision discourages the loan officer from trying to move their pipeline to their new company.

With a larger company, you should get the human resources department involved. You may need a record of written or verbal warnings before you take this action. It is best to document in writing all issues leading up to taking action. Yes, there may be a blow-up which causes a termination to happen, but most of the time, the process is gradual over time and should be documented carefully.

Customers Come First

Above all else, it is the customers who must be thought of first. Therefore, no matter whether the terminated employee leaves immediately or in a few weeks, and no matter whether the terminated employee is getting paid on the pipeline of existing loans or not, the customer must be contacted to let them know about the separation. This communication must include not only assurances that their file will be well taken care of, but also include new contact information. The communication can be in writing or via the phone or email, however, in cases in which the closing is coming up in a few days or weeks, the fastest mode of communication is preferable. Making the customer comfortable will not only alleviate some customer service disasters, it may avoid loss of a pipeline.

The Customer Is Always Right, But…

Expect that there will be some customers who may take advantage of the fact that their contact is no longer part of the company. It will not be unusual for a customer to “claim” that the loan officer promised something that they did not. Make sure you get both sides of the story before you make a decision on these situations. And, if the customer is right, you must support the claim even if it will cost you money. The first inclination would be to lower the loan officer’s commission (or eliminate it), but this again is why it should not be a unilateral decision. You may be opening yourself to employment claims otherwise.

Take Care Of The Little Things

Termination timing, pipeline management and getting the loans closed are all-important. However, there are many other details that must be taken care of. For example, keys and business cards should be collected. The email account and voice mail should be forwarded immediately. Access to the company “intra-net” should be turned off. There should be enough “little but important details” that it should make sense to have a Termination Checklist—especially for larger companies. There may be a significant amount of technology which needs to be turned off and/or transferred to others covering. This might include a CRM, mobile application, marketing software and more.

When you hire someone, an orientation is very important. In the case of firing, you will be doing a lot of unwinding.