Nonbank mortgage hiring picks up as lenders prep for homebuying season

Seasonal hiring gave employment among nonbank mortgage lenders and brokers a boost in April and partially reversed an earlier decline despite growing signs of consolidation in the industry.

Nondepository origination firms employed 338,100 workers during the month, according to the Bureau of Labor Statistics. That improves on an upwardly revised 337,400 jobs in March but is still below higher employment levels in February, BLS estimates show. In April 2017, there were 332,100 full-time workers in the nonbank mortgage industry.

The spring buying season generally bolsters purchase mortgage volume and that, combined with fierce competition for talent in the current market, is making lenders reluctant to cut staff or cease hiring.

But higher rates and more limited refinancing opportunities are reducing the business' profitability at the same time companies are increasing their seasonal reliance on home purchase cycles. Many lenders took losses during the seasonally weak first quarter, making long-term spending on hiring unsustainable.

"Profit margins are razor thin and everything is purchase business," said Sue Woodard, chief customer officer at mortgage marketing technology provider Total Expert, in a recent interview about the market conditions lenders are facing.

Even though many mortgage lenders are cash-strapped, they may be willing to spend on marketing or hiring that could help them fund more home-purchase loans or get more out of their servicing, which generally increases in value in a higher-rate environment.

But with average net volumes and margins lower, a growing number of companies also are looking to reduce staff or explore other strategic alternatives in response to the more challenging market.

Movement Mortgage, for example, recently made plans to cut 100 back-office positions that represent a small percentage of its staff while continuing to expand its sales force. Citizens Financial Group is buying Franklin American Mortgage largely for its servicing platform, and First Direct Lending is no longer accepting new applications or funding new loans, according to a notice posted recently on its website.

The BLS industry-specific estimates lag the national jobs data by one month. Jobs overall increased by 223,000 in May. This was up from a downwardly revised 159,000 additional workers in April and an upwardly revised 155,000 additional workers in March. Unemployment was 3.8% in May, down from 3.9% in April.

"The ramp up in construction workers is a positive for housing supply, but with such strong total job growth, we expect new supply to struggle to keep up with strengthening demand," Fannie Mae Chief Economist Doug Duncan said in a statement.