Anxiety grips LOs as layoffs sweep the industry

LOs expect shops with consumer direct models are more likely to have layoffs in the months to come

If you take the temperature of how loan officers are feeling ahead of the holiday season, the scale would likely read “uneasy.”

They have good reason to feel anxious. Numerous shops, including, Interfirst Mortgage, and Freedom Mortgage have announced layoffs in the past few weeks, and some LOs worry their jobs may also be on the chopping block.

According to Fahad Janvekar, a loan officer at Fairway Independent Mortgage, “there is definitely some concern” about layoffs in the industry. But he feels confident that being a part of a more traditional shop, rather than a fintech, is a more stable option.

“I think the fear always exists in our heads, being in the sales game you try to project positivity, but of course there is fear,” Janvekar said. “Better and Interfirst hired a huge number of LOs, and it made sense because of the refi boom, but what is the sustainability there?”

Meanwhile, Justin Woodward, a loan officer at American Pacific Mortgage and a newcomer to the mortgage industry, said that he anticipates cycles of boom and bust to impact the sector.

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“There was an expectation that the market will shift and it’s just waiting for the foot to fall,” said Woodward. “With newer folks, there definitely is more uncertainty because if there is a squeeze, am I good enough to survive? Someone with 10 years in the industry, they know the answer to the question—I don’t.”

In 2020, hiring in the mortgage industry surged. Some shops doubled their employee headcount to keep up with the refi boom, and some offered signing bonuses to lure talent. However, for months now, industry insiders have predicted that as margins start to compress, shops will move to shed employees.

Among half a dozen LOs interviewed by HousingWire, there was a common theme. They expect shops with a consumer direct model, which tend to be refi-heavy and rely on call centers for intake, will be more likely than retail shops to cut employees in the months to come.

“Retail people don’t get laid off as much because they own their book of business. As long as their realtors and partners are doing business, they’re doing business,” said Blake Bianchi, founder and CEO of mortgage start-up Discount. “Whereas with the consumer direct model, there will be less volume, so shops are probably way over staffed.”

“The thing is that the only way that they can keep people (LOs) fed is keeping rates low and they may not be able to do that,” added Bianchi.

And while less-experienced LOs will have to ramp up their networking to thrive in a purchase environment, high-performing loan origination sales talent will always have employment options, said Paul Hindman, managing director at Grid Origination Services.

“However, when every mortgage lending forecaster, economist and expert analyst is predicting less volume and margin contraction, leaders must react,” he said.

Regarding cost-cutting measures that lenders might take, Hindman reasons that companies will “deploy thoughtfully measured fixed expense management initiatives”. Examples might include cutting or restructuring salaries and benefits, or trimming technology expenses.

Hindman added, “Most companies go to great lengths safeguarding their core expert talent, so they will explore every possible sales expansion strategy to retain these value creating resources. Companies must invest in the core talent they want to retain. So highly productive, quality minded Loan Originators should not be worried about their employment.”

Rather than await the pink slip — or Zoom announcement, as the case may be — loan officers may want to brush up on their skills and expertise.

Seasoned loan officers advise “sharpening your tools and getting good at your craft,” Woodward said. “It’s easy when it’s a lead generated business to not understand how to survive in the business.”

To stay afloat in a purchase-heavy market, he advised getting referrals from clients and making inroads with referral partners.

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