WE’RE HEARING that in a post-crisis world, mortgage companies are looking for some new traits in their c-level executive suite.
While rising rates and declining foreclosure workloads have led to staff cutbacks in both loan origination and servicing shops recently, searches for top-level executives remain relatively strong, according to mortgage industry recruiter Rick Glass of RT Glass & Associates. His firm typically does 15 to 20 searches for senior-level executives each year, as well as a number of midlevel roles. He said today companies are looking for top executives with a focus on project management and change implementation skills. And, of course, they are more concerned with risk management expertise than in the past.
Companies know they will be audited by regulators, so there is a new focus on transparency and record keeping.
“The paper trail is a bold line now,” he said.
There has been a lot of chaos in the mortgage business in recent years, and new regulatory framework means the uncertainty will persist for some time to come. That means companies need top executives who have a track record of managing change in a chaotic environment.
“I want to see what they’ve implemented operationally; what changes have they made,” Glass said. “There has been demand for high performance, for a high level of talent that has demonstrated an ability to execute in this environment and make real changes.”
That means the bar has been raised higher in terms of the operational leadership skills. And, especially on the servicing side of the equation, companies want demonstrated risk-management skills. Even with the housing market starting to stabilize, default management experience is a big plus today.
“That hasn’t ended,” Glass said. “We’ve been pretty busy in the risk area.”
Regulatory compliance expertise is also in demand, with new mortgage regulations slated to take effect early next year. And servicing shops have had to deal with many new default management requirements in the wake of regulatory and compliance actions that have forced servicers to make significant changes to their foreclosure practices. Companies want to see how executive prospects have implemented, monitored and measured changes that have been made.
“In a lot of cases with the largest servicers, you are moving a big tanker at a pretty sharp turn,” Glass said.
And risk management is moving up in the organizational chart, with many companies promoting or hiring new chief risk officers.
While large megabanks have been “right sizing” there servicing operations, midsize players have been adding to their servicing portfolios, creating a need to bring on more senior servicing executives. In some cases, cutbacks at the mega-banks have created hiring opportunities for smaller players who find themselves needing operational leaders, often as chief operating officers.
“I’m seeing some of the midsize players pick up some of that slack from the mega servicers,” Glass said. “We’re seeing some activity from midsize players that are actively seeking operators.”
Glass said this year started off very strong in the first and second quarter in terms of searches for top executives. The quantity has fallen off a little bit more recently.
At this time of year, companies often take inventory of their current executive leadership with an eye toward preparing for next year. And with a new regulatory regime taking effect in 2014, mortgage lenders may find they need to beef up staffing. The requirements and transparency required under the new regulations could be daunting and costly for many mortgage firms, he said. In response, they may reevaluate their executive leadership needs. A lull in volume that accompanies rising interest rates also creates an opportunity for firms to shore up their leadership ranks with a view toward next year, Glass said.
“At this time of year, we’re starting to see companies kind of look at what they’ve got and think about upgrading.”
In terms of skill areas that are in high demand today, he said that default management and asset disposition remain popular areas of expertise. Also, he’s seen an increase in demand for executives with Ginnie Mae experience during the past year.
While senior executives may continue to find job prospects, the rank and file mortgage employee is likely to see a more difficult job market in the year ahead. Many large companies have announced cutbacks in staffing for both their servicing and origination sectors recently.
While industry employment held up well during the summer, remaining largely unchanged between June and July at 295,000, many expect the industry employment level to dip as rising rates cut back origination volume, particularly on the refinancing side of the business.
Bank of America Merrill Lynch analysts said in a recent report that they expect industry employment to hit new lows in the coming year. Those staffing cutbacks could create a “feedback loop” that further tightens mortgage credit availability, the analysts said. The analysts are not alone in thinking that rising rates and job cutbacks could have negative ramifications for the economy.
Ted Cornwell has covered the mortgage markets since 1990. He is a former editor of both Mortgage Servicing News and Mortgage Technology.