New Blood Needed in Mortgage Sales

JAN 25, 2013 2:31pm ET
Comments (3)

Let’s face facts; this industry isn’t getting any younger. As I travel across the country speaking to mortgage associations and teams of loan originators, it’s evident that we are an “aging trade.” The reasons are obvious.
Since the mortgage meltdown (a term I am learning to loathe) of 2007-2008, most banks and lenders have ceased their hiring of “rookies” and shuttered their loan officer university-style training programs. “It’s hard enough for an experienced veteran to make it in this business today,” one sales manager recently told me, “let alone someone brand new. We’re just not willing to take that chance.”
To survive, this industry must grow. Recycling the same battle-worn veterans from one lender to the next over and over again is not the answer—that creates movement but no net growth. As more and more older originators retire and exit the business every year (or cash out and bolt the minute this current refinance market ends) the mortgage industry gets increasingly smaller, making growth and recruiting for managers increasingly harder.
What’s fascinating about all of this is that nearly every bank and mortgage company I talk with today wants to grow and add more originators to their sales teams. (One client of mine plans to add 200 more originators this year alone.) What most are finding is either fewer seasoned originators are willing to move right now because they are happy and well paid where they are or there’s just not that big a talent pool to fish from anymore. So, what’s one possible solution to this dilemma? You guessed it; grow your own.
If you are a business owner or mortgage branch manager and expansion is on your radar screen this year, here are five recommendations to strongly consider:
1. Wholesale reps. The wholesale mortgage industry has contracted over the past 12 months as major players have exited this channel of business. There are many (and I mean many) top-quality wholesale account executives in the job market right now. They know the business and understand the guidelines and products. Best of all, they are well-versed in making sales calls, delivering presentations, working up loan scenarios, and providing attentive service to build long-term relationships. (Question: Isn’t that what you want in a good retail originator?)
2. Apprenticeships. Under an apprenticeship structure, you hire hard-working, seemingly bright and talented people who want to break into the mortgage industry but lack the skills and knowledge to take the leap of faith. The apprentice works under an experienced originator for a period of time (typically 12 months) and learns the business and the role of a loan originator first-hand. They are paid an agreed-upon salary during their apprenticeship and often serve as their tutor’s “gopher” while learning the ropes. After 12 months of being mentored, they get their license, are placed on full commission, and start originating on their own.
3. Junior loan officers. Somewhat similar to an apprenticeship, a JLO is hired to work under an existing originator, but on a more permanent basis. The JLO becomes an extension of the originator’s team, and is given duties like taking telephone loan applications, chasing down conditions, marketing the database and following up on leads. Some loan processors morph into JLOs, as do others who enjoy the lending aspects of the business but lack the desire or skills to sell.  Most JLOs are paid on a commission scale based on what the lead originator produces each month. Using this option, mortgage managers grow their teams and increase the capacity to write more loans without having to recruit, hire and train new originators.
4. Industry connections. The home financing industry is directly connected to a lot of other businesses and businesspeople. These include real estate agents, appraisers, title company reps, real estate attorneys, mortgage insurance reps, and so on. Bringing on board one of these types to work as a loan originator means the learning curve is less steep, since they already have experience and a general exposure to the housing industry. Added to that, it’s likely that local connections and contacts are already established, allowing the new originator to get his or her business up and running faster.
5. Sharp sales people. Above everything else, as a hiring manager remember that the role of a loan originator is essentially a commissioned sales job. I have met hundreds (probably thousands) of smart, technically proficient originators over the years who failed miserably for one big reason: they could not sell or did not want to sell. There are scores of talented sales professionals in the job market today looking for a place to practice their craft. They bring their A-type personalities, a commissioned-based income-earning history and a “hunter” spirit to your team. Yes, they have to learn the mortgage products and procedures and all that. But knowledge is easy to teach; talent is not. Keep your antennae up for these people. A driven, sales-oriented, “rainmaker” may be turn out to be the best hire you ever made.
Maybe you are looking to grow your sales team in 2013. If so, you have basically two options: Hire experienced loan originators away from your competitors or hire new people into the business. Yes, there’s a risk in hiring newbies and yes, getting licensed takes time and can be a pain. But it may be you best choice overall or at least worth strong consideration. And if you think all new hires are destined to fail, think about this: Weren’t we all new to this business once?

Comments (3)
Doug - excellent ideas, esp #2. Make it a 6month deal, and during that time the "apprentice" gets his/her license, and have the company reimburse them for the expense if they stay at least another 6 months. I, for one as a seasoned originator, would be happy to mentor an apprentice and I believe others like me would as well. Hadn't heard from you in a while and glad to see this piece. "MM"
Posted by Mike K | Monday, January 28 2013 at 1:17PM ET
Good article and an interesting POV. Especially the part about Wholesale Reps like me.
Posted by arthur a | Tuesday, February 05 2013 at 10:09PM ET
Doug...what a great article. This is so very true our company is small and has been looking for MLO for several months. The MLO's I have talk too don't want to move because the like current job. I have even contact schools in our area that show they have classes to get licensed to help us. The schools are no longer giving classes because of low attendence. This article was very helpful to take to my broker to explain why we need find someone who will be new to this business.
Posted by | Friday, March 22 2013 at 2:16PM ET
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