Several trends are combining to heighten recruiting efforts for quality loan originators (LOs), but LOs beware: While it may be tempting to change companies when things aren’t going as well as you’d like, recruiters are turned off by job-hopping.
Several factors at work in the marketplace have combined to create extreme competition for talented LOs. First, rising interest rates have slammed the brakes on the refi business, so only LOs who hustle for purchase business are going to make money. The average LO is in their mid-50s, and they aren’t being quickly replaced as they retire. Lastly, lenders with no significant Greater Boston footprint are eager to move into town and capitalize on the Boston real estate boom.
The increase in recruiting is also partially driven by smaller lenders feeling pressure to make more money. The warehouse institutions that temporarily fund loans before they are sold on the secondary market demand a certain volume from the companies they do business with.
“People are recruiting LOs more than ever,” said David Lazowski, regional senior vice president at Fairway Independent Mortgage. “If you’re only doing $1 [billion] to $2 billion in business, you’re in a tough spot. The warehouse banks control everything and if they see your numbers going down they get nervous. Bringing on additional LOs brings in more business.”
Each of the mortgage professionals interviewed for this story said they’re the subject of daily recruiting efforts trying to lure them away from their current employer.
“I get phone calls every day,” said Shant Banosian, broker and branch manager for Guaranteed Rate. As the perennial top-producer in Greater Boston, he is both recruiter and recruited. “There are a lot of new banks and mortgage companies interested in the Massachusetts mortgage market. It’s not an easy place to get established, so recruiting an established person adds instant credibility. And all the lenders have access to loan originator reports like The Warren Group’s. We can all see how much business everyone is doing.”
Paying More for Experience
LOs are typically offered a signing bonus or accelerated earnings for the first year or two as an incentive to jump ship – but that’s not necessarily a successful long-term strategy, said Julian Hebron, senior vice president of corporate affairs for LoanDepot.com.
“It’s true that the war for loan officer talent heats up as rates rise because loan officers with deep connections with local Realtors win more home purchase loan business than refinance specialists trying to pivot,” he said. “But paying lofty signing bonuses is not a growth strategy. Investing in infrastructure that makes purchase-specialist loan officers successful is the only strategy that works through full market cycles.”
The bonuses are in part because training new LOs is exceedingly expensive, said industry veteran Amy Tierce, vice president of sales and marketing with Mortgage Equity Partners.
“Nobody has figured out how to train people well,” she said. “One-on-one works great with the support of the company. We can only bring in about one or two green people a year. But I’d like to grow by 10 or 15 loan originators per year.”
When recruiting for Fairway, Lazowski says he focuses on LOs who do a lot of business and don’t feel supported by their current employer.
“When people are happy, they stay,” he said. “We support our people. We employ more support staff per employee than anyone in the industry. It’s because we’re private and employee-owned. We’re not trying to go public or get acquired. Every company you look at around us, that’s what they have going on.”
The current market shift toward consolidations and acquisitions also creates recruiting opportunities for companies, but can challenge the individual LO, Tierce added.
“Either a company gets acquired or a VC partner comes in and starts pulling the levers,” she said. “I would be personally really concerned. Suddenly the company goes from a local family culture to the guy who is running things from 2,000 miles away and you don’t know if he understands your market or has your best interest at heart.”
On the other hand, “LOs have fewer choices because the market has consolidated more,” Tierce said. “I recently hired a guy who had interviewed with all the national companies doing business in Massachusetts and he came back to me. He and said they were all the same and he wanted a local employer. That’s become my unique selling proposition. We’re here. We’ve been in this market their entire lives.”
Change Employers for a Reason, But Not too Often
Mortgage loan originators are well known for changing companies frequently, but Banosian said he doesn’t like to see a lot of job changes on an applicant’s résumé.
“I’ve only worked at only two companies in my career,” he said. “There is a certain degree of success you get when you master the system you’re working in. People often think the grass is greener somewhere else. Too many people move around chasing a bonus. They can’t maximize production that way. There are also good reasons for moving, like a management change. If I were an LO and my company couldn’t keep up with the technology requirements, I’d be thinking about moving. LOs are starting to realize how important that is. To me, the platform of a company and the people are much more important than a signing bonus, which is temporary.”
If an LO has moved too many times in their career, they become “almost unemployable,” Tierce said.
“At some point your database doesn’t know where you are and your Realtors have forgotten you,” she said. “I ask people why they left their old job and they usually say it was because the company was terrible. Well, how many times do you get away with saying that before it becomes clear that it’s you and not the company?”