That giant sucking sound you hear may be the sound of mortgage loan officers from the large national commercial banks moving to small and midsize regional players.

What's driving the trend? As the industry shifts from a refinance-driven market to one emphasizing purchase loans, there's a greater urgency for lenders to close loans when borrowers and their loan officers demand, not when it's convenient for the lender. Smaller firms say they are better able to do that since they don't have far-flung operations around the country that handle one piece of the loan at a time, but instead do everything at a centralized location close to the borrower's intended property.

"People who used to work at small banks and brokers before the meltdown, then went to the big banks as a safe haven, are now coming back to the smaller places for the control and service aspects," says John Walsh, president of Total Mortgage Services in Milford, Conn. "The refi business is going to come to an end and if you're going to do purchase business the service levels are going to have to be there. Closing a purchase loan in 120 days is not going to cut it anymore. Loan officers value their relationships and they're tired of getting burned with horrible turnaround times. The loan officers are going to places that can deliver."

Walsh says his firm can close purchase loans in as little as 15 to 20 days and is planning to come out with a 30-day purchase loan guarantee when customers are pre-approved for a loan from Total. "What's going to win the day is our ability to turn around loans quickly," Walsh says.

"Where the banks fail is they don't meet purchase dates," agrees Paul Anastos, president of Mortgage Master in Walpole, Mass., which has offices in 10 states and is licensed in 25. "Big banks have big mentalities. They don't worry about individual customers. We worry more about every single individual loan than I think a big bank does. We're a lot more emotionally and financially invested in each individual transaction than maybe a big bank is. If you need to, we can close in 10 days or less. That's just not going to happen at a big bank."

Recently the company had 20 people at a new-employee orientation, which Anastos says was a "pretty good size" recruiting class. It recently opened an office in Chicago to handle the Midwest and is now looking to expand in California.

Willie A. Newman, president of Cole Taylor Mortgage in Ann Arbor, Mich., a unit of Chicago-based Cole Taylor Bank, said he's seen a movement recently of loan officers to companies like his, although he stopped short of calling it a flood. Cole Taylor recently added a group of loan originators in New York from a "very large bank that is very active in the mortgage market" and is talking to another group in a state where the company is currently not licensed.

Newman says the driver has been a change of emphasis at the large banks to centralized offices away from "street" loan officers, especially for refinances.

But Newman says the flow of loan officers is moving not just "downstream" from the big banks to midsize regionals but also "upstream" from smaller banks that don't have access to the secondary market.

Drew Waterhouse, managing director and CEO at Hammerhouse LLC, a mortgage sales recruiting firm in Mission Viejo, Calif., says compensation is often better at smaller firms than it is at the large banks.

"A lot of the very big banks put so much value on their own brand and their LOs get business because of their brands, they pay themselves more and their LOs less," he says. "Compensation at a smaller regional might be 100 to 150 basis points per loan while at a big bank it could be 65 to 100 basis points. That's a significant difference."

But loan officers are looking for more than just compensation, Waterhouse says. They're also asking, "Will the company support me over the long term?"

Specifically, smaller firms are willing to invest more in their loan officers to help them close more loans—and thus make more money—than big banks are. These firms are willing to provide technology solutions, marketing assistance and business planning to help their loan officers close more loans.

"Smaller and regional companies are taking the time to build solutions that will continue to maintain the sustainability of their employees," he says. "They are making sure they are providing a value proposition to their loan officers."

"Most loan officers want to be self-sufficient, so they're going to companies who can help them build, develop and grow their business," Waterhouse says. "That's where we're seeing the advantage happening right now."

George Yacik has been covering the residential mortgage business for more than 20 years and writes frequently for industry publications. He can be reached at