Given the market contraction and numerous layoffs in the industry, it may be surprising to think that loan officer recruitment and retention could be a focus for some lenders and independent mortgage banks right now.
But due to the reduction of volume, it’s extremely important for lenders and IMBs to be able to replace that lost volume – and the quickest way to do so is to bring money in through revenue. Rather than cutting costs and reducing expenses, some shops are instead choosing to grow.
The battle for LO talent is even more prevalent among IMBs, as mortgage is their single revenue stream.
“Yes, there is a war for top talent,” said Robert Lipston, EVP of Loan Production at Evergreen. “We’re not looking for everyone – we’re looking for the right ones.”
Why do LOs move shops?
In an environment laden with rate changes and layoffs, you’d think LOs would stick with their current shop and hope to come out of the storm intact. But that’s not necessarily true.
Loan officers tend to move shops for one of two primary reasons: pain or gain.
“LOs seem to start looking when they struggle to effectively close loans,” said Dianne Crosby, Regional Manager/SVP of Mortgage Lending at Guaranteed Rate. “LOs who are happy do not want to take on the hurdle of a transition even if there might be better rates or a wider array of loan programs with the new employer.”
Those struggles can be attributed to a few factors. One that’s often cited is a lack of tools, product mix or support.
“So many companies have done so many layoffs that some of the pain is they don’t have enough staff to support the existing talent they have today,” said Ryan Hills, Regional Director at Movement Mortgage. “It’s hard for [LOs] to produce when they’re stuck in the office because they don’t have support.”
LOs may also look to transition to a new shop if they fall out of alignment with their current leadership. A big part of why some LOs are leaving their current shops today is because the leaders of those companies – and to be fair, the LOs themselves – are operating from a place of fear.
Hills called it a security or longevity play – lenders want to make sure that they’re on a safe ship to “weather the storm.”
“They get the sense that with all of the organizations struggling through this, ‘maybe my organization won’t make it through, I need to find a plan B,’” he said.
Some companies aren’t seeking opportunities in the market; instead, they’re having the “knee-jerk reaction” of “cutting bottom-line expenses,” Lipston said.
“A lot of loan officers today are moving because companies are in a fear base and they’re not using this as an opportunity; they’re shrinking down and making their companies smaller to try to navigate through the storm versus adding good talent and good people,” he said.
On the flip side, some LOs are motivated to move to a new shop, rather than away from their current organization. These LOs see an opportunity to “gain” by working with lenders that are willing to lean into the market, find opportunity among adversity and create products for LOs and their customers to win with.
What are LOs looking for in a new shop?
“To upset your current system and agree to leave people you know and an organization that has been basically working for you, there has to be a compelling reason,” Crosby said.
Many people would cite products, pricing and compensation. But those aren’t always the deciding factor, according to Hills.
“They’re very comparable, if you stacked us all up, and most people aren’t honest enough to say, the comp is very comparable, the pricing and the rates are very comparable,” Hills said. “We all kind of have very similar offerings in that.”
He said these are important factors, but, “it does come down to the culture and the value alignment of the leadership and the team that you’re working with.”
“I believe that people work for people first, organizations second,” Hills said.
That leadership factor is crucial, and often what drives the culture at a shop.
“Culture is the No. 1 stickiness that you provide your team to win every day,” Lipston said. “Culture is not a word; it’s a tangible executive strategy that allows your company to set itself apart.”
Technology does play its own role in LO recruitment and retention, however.
One way shops can retain LOs is by leveraging tech to help them build, manage and pull more loans out of their pipelines. Some tech now can even predict when a borrower is getting ready to refinance or move, adding value to an LO’s existing pipeline.
“If you can, arm your loan officers with that technology,” Hills said. “That will obviously help the retention because they’re not going to want to leave if the organization is helping them retain their business and even growing it.”
What should leadership be focused on for LO retention?
Lender shop leadership should be offering opportunities to add volume to their salesforce, including creative products, additional marketing opportunities and investing in their LOs with new ideas and tips on how to win more business.
“You better have a force field around your people today, because if you don’t take care of them, they’re exiting your company,” Lipston said.
Leadership should also be transparent with their LOs and offer support. Many LOs are dealing with low morale after two good years of volume amid a pandemic, followed by a huge drop in volume.
“One of the ways that you can keep people positive is addressing that every week, every month, having your CEO come on board and speak to that,” Hills said. “And also giving them vision, being transparent with the financials, letting them know they’re on the strong ship right now.”
And leadership can always turn to LOs to ask what they can provide.
“Ask the talent what they need, carve out resources and follow up to make sure they feel supported, valued and heard,” Crosby said.
Ultimately, investing in your LOs is an investment in your company’s future.
“We’re planting seeds for the next market, for the next year, for the next year after that,” Lipston said. “It’s all about looking forward and vision, and getting the right people on the team today to build the winning platform for the future.”