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I believe the biggest challenge facing lenders today is not complying with the upcoming TRID changes or anything in the regulatory area, but how and by whom they originate business in the future.
We are an industry dominated by production, with a constant drive for more and more business. Look at job boards and postings and you’ll find the vast majority of ads are for experienced loan originators and branches. You’ll see an occasional ad for operational staff, but these are far outweighed by the drive for more people to originate more business.
Is there a vast untapped pool of experienced loan originators out there somewhere? I don’t think so. In fact, as we know, the average age of a mortgage loan originator is increasing, meaning that we are not attracting new talent into this arena.
Where are all these experienced loan originators going to come from? I’ll tell you. For now, they come from the existing pool of originators. It’s not like we have a minor league system of inexperienced originators practicing and being trained in mortgage lending, just awaiting their shot at the big time. For the most part, lenders are pillaging sales people from each other. Is that such a good idea?
What might a lender get? Why would a successful loan originator leave their current company? Maybe more money, but for the most part loan originators create their own income. If they’re doing well at their current company, with an existing pipeline, why leave? Maybe they leave for better products and/or service? Could be, but if they’re successful with their current company’s products and services, why would they take the chance with a new company? Odds are, most good experienced, successful loan originators will not move to a new company unless something drastic happens with their current company. Some might, but at what cost to the new lender?
As Groucho Marx once said, “I wouldn’t be a member of any club that would have me as a member”. Said a little differently, “I wouldn’t hire a loan originator who would leave a successful job with another company”. Well, not exactly the same but I think you get the picture.
What’s left? Experienced (or so they say), unsuccessful loan originators. These are the folks who continue to bounce around from lender to lender producing a few loans here and there and working on draws and/or signing bonus. They are bottom 20% who get cut and then move on to a new lender. Some might catch on with the new company. But, odds are they’ll continue to bump along at the bottom, costing more money than they bring in.
It’s time for a cultural change. Mortgage lenders need to start training their originators, developing their own talent. It’s a challenge and change in philosophy but one that can be easily overcome.
With college graduates finding it difficult to find good paying jobs and careers now it is a great time to start. Fresh out of college, they haven’t yet developed bad habits or a bad attitude. Marketing majors can be brought in at a small base salary with a training plan in place to get them originating loans in as little as 90 days.
While in training, these employees can be used to assist existing originators, processors and underwriters to help offset the cost of their salary. This will also provide them with valuable insights and a good foundation for understanding the business and its processes (and help keep operational costs down). As a bonus, these new employees will also bring new ideas for serving the “digital” generation through the use of technology and social media.
The lenders who train their own originators, can provide them with technology and an automated origination process, and develop a quality culture will be the lenders who don’t need to compete with everyone else for the so called experienced loan originators. They will develop their own. In doing so, they just might attract some of those real experienced originators who are noticing that they are losing business to this new breed. That puts the lender back in the driver’s seat.
Where do you think the loan originators of tomorrow will come from? Is it worth it to train your own or compete with everyone else for a shrinking pool of experienced sales people? Is it time for a change?
