Despite a seemingly lackluster origination market, many mortgage lenders are keen on hiring loan originators.
Companies like
From the outside, this trend seems puzzling, especially when looking at a list of companies that have opted to go out of business,
But there are a number of developments happening right now that justify hiring, recruiters and mortgage lenders argue.
On the one hand, lenders are trying to bring in volume and signaling from the Federal Reserve has most betting
Recruiting is currently competitive, which is demonstrated by the fact that some loan officers are getting calls from different people within the same organization with job offers, one recruiter said.
"The loan officers and branch managers are getting called on by multiple regionals and multiple recruiters from the same company," said Tripp Castell, a veteran recruiter. "I think some of the companies are just trying to hire as many people as they can to try to make money and they're betting that the market really turns, which will unlock the inventory out there to get people moving and buying again."
New American Funding's LO hiring activity has been motivated by the possibility of increasing immediate volumes, but also preparing for future volume when rates fall, according to Chief Production Officer Patrick Bolan.
"We want to bring in volume, but also build our future," said Bolan. "NAF is very focused on becoming a top-five independent mortgage banker, that's our goal."
"We're going on a 15-month stretch of massive growth and part of that is because volumes are down and loan originators have choices and they move around. Now is a good time, as pipelines are low," he added. "There are so many companies out there that are really struggling financially, and the value proposition for loan originators is being taken away by a lot of companies, so they're out there searching for companies that still offer very strong value."
Bolan added that NAF passed on 20 acquisition opportunities and unless
Bill Cosgrove, CEO of Union Home Mortgage, said his company's aggressive growth, buoyed by its $22 billion servicing portfolio, has also been helped by the fact that a lot of originators are looking for a stable place to call home.
"I think a lot of the loan officers are feeling weakness from their current organization," Cosgrove posits. "Even after two and a half years of a downturn, there's still an overcapacity. I think in the end, we have positioned Union Home to be growing revenue. We're incredibly stable and it's a very attractive package for a lot of loan officers today that may be concerned about the direction of their current company."
"Over five to six months we've changed our hiring strategies and now we are looking for experienced LOs with multi-state licenses so you have a lower base for compensation and higher incentive comp, so you're adding variable costs… If they do well, they can make money, but there's not a lot of fixed costs associated with that," he added.
Smith noted that by the end 2024, Better hopes to double its LO headcount to about 200 sponsored loan originators.
Shane Stanton, senior vice president of retail development at Loandepot, similarly said the success of the company's
"[We can expand headcount] in a profitable and responsible way and serve the market where it wants to be served," said Stanton. "For us it's just about serving the consumers better where they want to be served, and increasing our market share as we do that."
Stanton said Loandepot is seeing an increased interest in prospective originators looking to come over to the mortgage shop because the company is "built to last and is financially stable." Former Loandepot LOs are also making their way back to the organization, he added.
"Originators are being drawn to the stability of the organization, knowing that we're not only surviving through the cycle but that we're also going to come out the other end really aggressive," Stanton said.
Compared to LO hiring during the refinance boom, sign-on bonuses are smaller, ranging from 20 basis points on previous production to 75 basis points on previous production. This is compared to 100 to 200 basis points that were being paid out in 2020 and 2021, which one recruiter called "absolutely insane."
NAF has sign-on bonuses in the 20 to 40 basis point range, while Better does not offer sign-on bonuses at all, instead opting to "have ramp guarantees."
Though the bonuses are more conservative in size, some stakeholders say that they still make no sense because "you're basically renting talent."
"It's very common for an LO who took a sign-on bonus to regret the fact that they moved somewhere because what they perceived and what they got at their employer ended up being different," said a recruiter who asked to be anonymous. "If you signed a two-year clawback and you're in your fourth month, you got 20 months left, right? How happy are you going to be? You're probably looking for your next job."
In evaluating who gets hired, mortgage lenders currently rely on a number of technology platforms that track production, including Modex, Mobility Market Intelligence and InGenuis.
These platforms give mortgage companies a snapshot of an LO's production in the past six to 12 months. However, some companies, such as Union Home Mortgage, are open to looking even further into the past.
Cosgrove says depending on the originator and "how they approach their business," the company can even look 18 months back. "We just want to hire world-class people that happen to be really good mortgage bankers, that's our motto," the company's founder said.
Paul Hindman, veteran industry consultant, added that what we're observing now is "not really a hiring spree because you're hiring the same people."
"Don't forget, we're just playing musical chairs," Hindman said. "There's no new people coming in."
Lenders should rehire operations folks instead of hiring loan officers, he said.
"Have the production people you have get you through the refinance boom, if that's what it's going to be, and let them make the money and the volume that they lost during the contraction," Hindman said. "And if you need to hire somebody, hire the ops people that are long term unemployed. Don't steal them from somebody else."
