Who’s Getting Hired In Mortgage Banking?

by Drew Waterhouse
on January 08, 2013 No Comments
Categories : E-Features

For all the change that has occurred in the mortgage industry over the past several years and will, most assuredly, continue into 2013, much of what will happen in our industry represents a continuation of trends that have been developing and playing out for some time. The last five years have seen the virtual death and re-birth of our industry.

What was, at its height, a sales-first industry characterized by maximized production and short-term thinking has evolved into a quality-first industry characterized by risk management and longer-term thinking.

Of course, this change did not occur by choice but, rather, was necessitated by the errors of the past. Nevertheless, the survival and, frankly, the strengthening of the mortgage industry over the past few years is a testament to the professionals who have endured the pain, adjusted their vision and strategies, and fought for the future.
As a result, I see four significant trends that will impact mortgage industry hiring decisions in 2013. These trends are as follows:

1. A New Market Environment Ascends. While the advent of higher rates has been forecast for some time, along with the corresponding move away from a refinance-transaction orientation to a purchase-transaction orientation, 2013 is the year for it to occur. While the Federal Reserve has pledged to keep its fund rates low into 2015 or until certain economic targets are reached, the central bank cannot control market rates.

Consequently, based on an improving economy, I believe rates will rise meaningfully by the end of the year, and may keep an upward trajectory for years to come. Even if rates do not rise as I suspect, refinancing has entered a period of diminishing returns as it relates to potential lending volume. The pool of those willing and able to refinance continues to grow smaller.

The impact of that change will be industry altering. Not only does the source of business change, but the business development strategy necessary to attract the new business must change. Moreover, overall origination volume will likely drop by 25%, according to the Mortgage Bankers Association. There will be fewer people and companies needed in such an environment.

Time is short for firms currently not properly structured for the new market dynamics, but there is still limited opportunity to make the changes necessary to thrive in the future mortgage market. The first step is to have the right people in the organization who see the challenges and the opportunities and are prepared to act quickly.
2. Consolidation of Firms Will Accelerate. With less volume comes the need for fewer and more efficient resources to generate production. In 2013, there will be a consolidation among independent mortgage producers. Some will simply find it too difficult to maintain their independence in the new market environment. Those that were too dependent on refinances will either merge or disappear.

In addition, the growth among independent retail mortgage bankers will be continued growth in brokerage ranks. Assuming there are no new regulatory changes that impede the process, the move of originators out of the banks and to regional retail and brokerage shops will accelerate. The flexibility, freedom and financial benefits available for top producers will continue the move away from big bank mortgage operations.

3. ‘Highly Valued’ Originators Will Be Rewarded. Certain types of originators will be in high demand in 2013. In particular, those with transferable, balanced, referral-based books of business will be in high demand.

There is simply no better type of originator for a mortgage company than one who has consistently produced at high levels. Originators meeting this standard will find that they have significant leverage with existing or new potential employers.

One related trend that will continue into 2013 is that these highly valued originators will find their employers willing and even eager to provide value-added benefits. Some of these benefits include work-life balance flexibility, administrative and marketing support, and professional development and training. Keeping top producers happy and motivated is crucial in a business that will depend more and more on per originator production, quality control and efficiency.

4. The Continued Pursuit of a Youthful Renaissance. Another developing trend is what I call the ‘youth movement’ in origination. While older, more experienced and proven originators are the hottest commodity in the industry, a move to recruit and develop younger talent is under way and will grow in 2013.

One of the consequences of the housing sector collapse was a loss of younger and mid-career originators. Those without established referral sources found it difficult or impossible to continue in the industry.

Now, with the market preparing to move to a purchase orientation, the need for younger originators to provide the hustle needed to succeed with Realtors and to target younger, first-time buyers is readily apparent.

A related emerging trend is the beginning of ‘transition planning’ for older originators hoping to chart a path to retirement. Look for the development of initiatives by lenders to support the natural transition of older, successful originators that also preserves the valuable books of business they have developed over the years.

This year will see the mortgage industry continue to evolve and the job of originators continue to become more professional. The industry will continue to stabilize, and the companies that are properly structured (strong leaders, quality-focused, balanced production, technologically advanced, geographically oriented and financially strong) will find 2013 to be the year they excel versus their peers.

Drew Waterhouse is the managing director at Mission Viejo, Calif.-based Hammerhouse LLC, a national recruiting and strategic growth firm for the financial services industry. He can be reached at drew.waterhouse@teamhammerhouse.com.

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Who’s Getting Hired In Mortgage Banking?

by George Yacik
on October 02, 2012 No Comments
Categories : E-Features

Recent economic statistics suggest the housing market may finally be on an upswing after nearly five years of depression. That improvement is now starting to show up in the employment market for residential mortgage industry professionals.

Yes, many companies are hiring again. But if you've been out of the mortgage business since the bubble burst and are now looking to get back in, you may be out of luck. The mortgage market has changed so radically since the crash that yesterday's skill set often doesn't sell in today's job market.

Mortgage companies today are looking for people with experience in dealing with government-insured mortgages and distressed loans – relatively tiny niches five years ago, but now a huge part of the market. As a result, companies looking to hire skilled employees in those areas are poaching people from competitors in order to fill positions.
‘So much change has occurred, and the pace of change is at warp speed,’ says Rick Glass, head of R.T. Glass & Associates in Carmichael, Calif., who adds that people with ‘fresh’ experience have an edge. ‘If you're not part of that change, it doesn't mean you can't do it, but it makes it much more difficult.’

Glass, who specializes in placing C-level executives, finds that most often, he has to go to a competing company to find the right person for the job. Today, he finds that demand is high for people with experience in dealing with ‘high-touch default’ situations, as well as risk control and regulatory compliance.

‘Default risk management is seen less as an expense now and more as an investment,’ he says.

Also keeping busy in the placement of mortgage banking executives is Drew Waterhouse, managing director and CEO of Hammerhouse LLC, a headhunter firm in Mission Viejo, Calif.
‘The industry is back to business,’ says Waterhouse, noting there has been a big upsurge in hiring in the past 60 days. Waterhouse traces the increase in hiring back to last year, when interest rates fell below 4% and mortgage activity increased. As a result, he believes more companies are emboldened to expand their staffing.

‘There is not as much fear that the industry and [your individual] company will not be able to survive,’ he says.

Waterhouse points out that many of the people who left the mortgage business after the bubble burst have found other jobs in other industries and aren't coming back. But those looking to return may not have the skills that today's industry requires. Even worse, companies are not eager to teach veteran mortgage bankers these new skills, preferring instead to hire experienced people who can do the job as soon as they walk in the door.

‘If you don't have current experience, you're at a disadvantage,’ Waterhouse says, adding that there is a need for people experienced in dealing with government-backed Federal Housing Administration loans, which accounted for a single-digit share before the recession began. ‘The people who were laid off or left the business in 2005 don't have that experience.’

Nonetheless, mortgage bankers with the proper skill set in place are not finding problems getting hired. Badri Narrayen, chief human resources officer and head of the human capital solutions unit at Melbourne, Fla.-based ISGN, observes a ‘fair amount’ of demand for people with specialized skills – specifically underwriting – due to the increase in refinancing of distressed loans. There is also good demand for mortgage processors and due diligence professionals.
‘We see a fairly big demand there and expect it to trend upward for the next 18 months,’ he says. ‘There is a big pipeline of defaulted loans.’

Narrayen is also noticing more demand from smaller, independent non-bank mortgage companies, as well as an uptick in hiring at mid-sized banks. These institutions have been taking market share from the big banks, which have been withdrawing from the mortgage space.

‘This is an exciting time in the housing business,’ Narrayen declares. ‘The evidence I see is a positive change. The business is coming back.’

As far as salaries go, Waterhouse says mortgage industry employees are now concerned about quality of work issues rather than making as much money as possible. He says his firm's six core components of ‘model matching’ an employee to a firm – leadership, culture, business, operation, technology and geography – are now more important than salary and a big signing bonus.

‘The day when this business was all about money is over,’ he says.

George Yacik is a Stratford, Conn.-based financial writer. He can be reached at gyacik@yahoo.com.

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