The last time residential lenders and vendors were hiring nearly “across the board” was during the pandemic when mortgage rates were falling and business had increased. Everyone was tired of the shifts they had to make in their personal and professional lives, but clients needed home loans. Professional lives shifted, Zoom and Teams calls (and “Zoom Fatigue”) became the norm, and it was not uncommon to find bosses who had never met people they’d hired and employed for months. It is helpful, with the prospect of lower rates in the fourth quarter of 2024 and into 2025, to revisit hiring lessons from four years ago, and rethink hiring strategies since adding staff may quickly become important.
Throughout 2020 and 2021 — thanks in large part to technology (namely meeting software such as Zoom or Teams) — recruiting new staff did not come to a halt as many had feared it would. In the past, owners and recruiters would travel to the city where they wanted to open a branch and meet new market leaders and their teams. Those who are hiring are now able to do that virtually and still meet eye to eye and share ideas over the internet, never leaving the comfort of their homes while still adding new markets.
People always have, and always will, change jobs. COVID did not stop that. Mortgage Loan Originators (MLOs) working for companies still became disgruntled with operational inefficiency resulting in delays in underwriting, pricing problems or overlays, a lender being too big or too small, layers of management, or a shift in culture or personnel.
Production has always been about the right people — despite interest rate climates, pandemics, or workload. On the origination side of the roster, adding production staff is easier to do in states where a lender is licensed, but most shops are open to talking to those in other states and begin the licensing process. And often, those in sales come to a vendor or lender through word of mouth. Turnover is watched, as no lender wants to be known for “renting LOs.” Technology and dashboard tools make decision making more analytical than ever before.
On the operations side of the org chart, those hiring in 2020 saw much success recruiting outside of a lender’s footprint. Given technological advancements, a talented underwriter can be two miles from your corporate office or two thousand miles away. For some lenders, returning to the corporate office wasn’t mandatory and still isn’t in 2024. There is more talent outside a commute’s distance to a branch or headquarters, and ops staff may be less expensive outside of an existing footprint.
Anecdotally, the best recruiting source for operations comes through word-of-mouth referrals through a lender’s existing staff of sales and operations. Managers believe that retention and work quality on those hires is vastly superior. Lenders have been forced to offer increased hiring bonuses and employee referral pay outs for talent due to the competitive recruiting environment.
Lenders are increasingly turning to recruiters to find qualified operations staff, along with hiring college grads and motivated, non-mortgage people interested in entering residential lending. To survive, most lenders have “right sized” their operations staff levels to match the drop in production.
On the production side, lenders are trying their best to shift to recruiting MLOs who have more purchase experience. Sign on bonuses have quieted down, or are only used to cover the first month’s salary or insurance benefits. As pipelines leveled off or shrank in the last several months, producers don’t have a huge pipeline to leave behind and may be more open to a move. Tactics for “mature” regions vary from new regions: Sales hires in a lender or vendor’s mature regions are opportunistic and/or are backfilling positions that are vacant. For new regions, sales managers and internal recruiters work hand-in-hand. Seasoned outside AEs, who can bring relationships with them, are at a premium. In 2024 and 2025, MLO production mix could prove to be a make-or-break condition, in that the refi versus purchase mix is very important. But still, “Will the person fit?”
Owners and managers plan on using technology more and more to continue enhancing their recruitment strategy. Don’t want to fly to Bangor, Maine to meet a promising underwriter? Do a Zoom call before lunch today.
Recruitment focus will be dictated by volume changes in our industry. Anyone with more than a couple years under their belt knows that residential lenders are always in a state of having either too many loans, or not enough loans. With the pandemic we saw record low rates and corresponding high volume leading to high demand for operational staffing levels. Companies were desperate for staffing, and paid record level salaries, retention and signing bonuses, overtime, and production bonuses.
Many hiring managers believe that the biggest difference in recruiting is the use of video, and that will continue, at least in the first round of interviews. Recruitment is a relationship building process, and virtual meetings enable relationship building more quickly and with a broader set of team members in the hiring company and with the originator. Virtual meetings appear to have remained in place despite the meeting world “opening up” where people can again network and attend educational and marketing events. Recruiters continue using them to get “top-of-the-funnel” recruits in and then use phone and meeting software to continue to move the candidates through the hiring process.
Compensation, of course, has changed in the last several years. One way to conduct market research is through word of mouth on what the competition is paying. However, lenders are increasingly turning to STRATMOR’s Compensation Survey. STRATMOR’s Compensation Connection® Survey provides valuable insights into what mortgage lenders are paying for critical positions and how compensation is structured. Through the Compensation Connection Study, participating lenders provide compensation data for key positions in mortgage banking including loan officers, processors, underwriters, and key executives.
Sales recruitment will continue to be competitive with bonuses and guaranties at record levels as industry players strive to keep their sales levels up and have money to spend. Unfortunately, little of this bodes well for bringing pure new talent into the industry. We can expect to see the increased hiring of talent as “permanent remote” employees due to the realities of the pandemic and realizing people can be just as productive, if not more so, working from home.
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