Loan officers are still licking their wounds in the wake of the Federal Reserve's new (restrictive) loan officer compensation rules, but if anyone's celebrating it's the folks whose job is to actually hire LOs, and their wholesale counterparts, account executives.
"It's a fun time to be recruiting," said Lisa Schreiber, executive vice president in charge of wholesale lending for TMS Funding, Milford, Conn. "There are so many good account executives out there right now—with 20, 25 years of experience."
In other words, Schreiber is sitting in the catbird seat. Her job is to hire experienced AEs, that is, executives whose job is to gather product from loan brokers. Of late, TMS has had the pick of the lot—not only because of the ramifications of the LO rule, but because of a slowdown in industrywide originations and wholesale lending.
When volumes fall AEs lose their jobs, which results in a buyer's market for senior sales executives. Earlier this month TMS issued a press release touting the fact that it hired six new AEs. The firms these sales managers formerly worked for read like a "Who's Who" of wholesale lending: AmTrust, Bank of America, Chase, Countrywide, U.S. Bank and Wachovia, to name a few. But even more revealing is the number of years the six AEs have been in the business: 30, 28, 20, 20, 19 and 16.
If anything, the lesson learned here might be: Only the very experienced should apply.
Paul Hindman, managing director of Management Advisors International, a recruiting firm, notes that lenders far and wide are assessing their hiring needs like never before. He believes that because volumes will decline this year it's all about evaluating and hiring the very best of LOs. "Companies can no longer afford to hire just the warm body...the right hire is critical," he said.
In particular, those warm bodies better have major ties to Realtors because the market this year will be driven by home purchases—not refinancings, said Bill Dallas, chairman and CEO of Skyline Financial, Agoura Hills, Calif.
"Oh, my God—the resumes I've seen," said Dallas, an industry veteran who's headed both prime and subprime shops. "Right now there's a lot of LOs out there looking for homes," he said.
Skyline's origination volume is about even where it was this time a year ago. The firm employs about 135 LOs, but its mix of production has shifted from 25% purchase-money loans in the fourth quarter to 65% in the first quarter. "The purchase business is the environment we've wanted," said Dallas. "We think we can compete better against the big banks."
Indeed, there has always been a perception in the industry that nonbank lenders are more adept at gathering purchase money loans than most of the nation's megabanks—with Wells Fargo being an exception to the rule. Wells, traditionally, has always cultivated strong ties to Realtors and homebuilders, though the latter isn't much of a player these days because the new-home market is in depression. (Wells, according to figures compiled by NMN, is always the perennial market leader in retail home finance.)
But banks, especially publicly traded ones that answer to shareholders, are quick to cut staff in a downturn, creating an opportunity for nonbank players. (Note: Wells is in the process of cutting 1,900 mortgage workers, though it claims very few of those are LOs.)
One firm that is picking up talent from depositories is the privately held Mortgage Master of Walpole, Mass. "We're picking up LOs from both bankers and brokers," said chief operating officer Paul Anastos.
Although the firm has been hiring the past two months, it's uncertain about what it may do the next two months. Last year Mortgage Master funded $6 billion in loans and was one of the largest retail lenders in all of New England. When asked about what it may fund this year, company CEO Leif Thomson was noncommittal. "We'll gain market share, that's all I can say right now," he said.
