Lenders have long held out hope that investments in technology will create efficiencies that will allow them to reduce sales staff expenses. While some are certainly experimenting with self-service technologies, it's particularly tough in a purchase-driven market, where sales have historically been more often conducted face-to-face.
As a result, many lenders are investing in more staff, not less; and are equipping their production professionals with the kinds of technology borrowers prefer to use.
Automation has not only become more important in terms of its use by the sales team, lenders also need to have back office operations that can close loans within sales contract timelines if they want to maximize top producers' output.
Top loan officers generally don't leave a shop that consistently delivers quick turn times, but some lenders are nevertheless going even further to encourage retention, recruitment and development of employees who have a proven track record for bringing borrowers in the door.
"The competition for quality loan officers is more intense than I've ever seen it," said Justin Caplan, president of strategic growth at Atlantic Bay Mortgage in Virginia Beach, Va.
In addition to providing its originating mortgage bankers with operational and staff support conducive to efficient closings, Atlantic Bay spent a couple years developing a distinctive form of additional compensation for its top producing loan officers.
Atlantic Bay offers mortgage bankers who produce at least $14 million in a year a monthly bonus from the servicing-retained loans they originate.
The company will continue to pay the bonus on servicing-retained loans only as long as long as the individual who enrolls in the program stays with the company and maintains production of at least $10 million a year. Atlantic Bay has retained servicing on up to 65% of the loans it has funded.
Rules designed to prevent lenders from providing their loan officers with incentives to originate particular loan types generally have discouraged innovation around compensation. But Atlantic Bay's compliance department worked with law firm Ballard Spahr to ensure that its program was structured such that it was in line with mortgage banker compensation rules under the Truth in Lending Act, said Rebecca Cheney, a senior executive vice president at the company.
Mortgage bankers must continue originating at least $10 million annually in future years to keep receiving the bonus from the original year in which they qualify. They may get a lump sum payout in certain circumstances.
Mortgage bankers have to be employed by the company to receive the bonus. If they retire or pass away while employed, they or their family will receive the money for two years.
Since the decision as to whether to retain the servicing is determined after the loan is originated, Atlantic Bay's "Progressive Earnings Plan" compensation does not influence the type of loan the consumer receives.
The loan has to be current and remain in the servicing portfolio in order for the mortgage banker to continue receiving the income.
In this way, the plan is similar to programs that have experimented with tying originator compensation to servicing outcomes to appease regulators interested in aligning those interests. But the intent is different.
Atlantic Bay's plan was designed to help provide mortgage bankers with supplemental income that bolsters their retirement savings.
"The bonus is designed to give mortgage bankers a vehicle to have passive income," said Caplan.
Also, when long-term incentives are combined with a larger package of programs designed to make origination sales less of a grind, it makes mortgage banking look more attractive as a long-term career, Caplan said.
"This can give them [mortgage bankers] reprieve from the constant [financial] pressures of maintaining a pipeline," he said.
The program has been expensive to maintain, but has paid off in growth at the company, Caplan said.