This piece originally appeared in the October 2022 edition of MReport magazine, online now.
As the market continues to turn and loan volumes retreat from the historic highs the industry saw last year, some lenders are trimming staff in response to excess capacity. But one group of employees no lender wants to lose is productive mortgage loan originators (MLOs).
MLOs with the experience and the skills to keep business coming in even as the market retracts are still in high demand. Companies that have great producers on staff don’t want to lose them, and holding onto them can be challenging for some lenders.
There are several reasons loan officers may consider moving to another company. Understanding them will position your shop to hold on to its best MLOs during these challenging times. Here are five reasons MLOs may decide to move to a new company.
Reason 1: The Lender Makes Home Loans Affordable
Affordability is a real challenge for today’s homebuyers. Even with home prices softening, interest rates are still relatively high. Monoline lenders or those who only earn revenue from a single origination channel can be forced to raise rates and fees to realize a profit.
Diversified lenders with multiple channels or a profitable servicing operation have more flexibility to keep margins low, increasing the MLOs’ business. The difference can be 75 bps or better. That’s hard for a loan officer to ignore.
Reason 2: Products Attuned to Today’s Real Estate Market
On some level, loan programs are similar across lenders, especially those that only sell to the GSEs. But in today’s market, homebuyers, home sellers, and new home builders need niche products.
Homebuyers have always benefitted from state and local down payment assistance and closing cost programs. With rates rising, they’ll also want to use one-time close (OTC) construction mortgages.
Buydown loans, whether 2/1 or 1/1, appeal to new home builders and home sellers who don’t want to lower their prices.
In high-cost areas, solid jumbo offerings matter, and MLOs need jumbos, non-QMs, and alternative options in all markets. Where affordability is a challenge, offering manufactured home loans and renovation mortgages can help borrowers take that first step into homeownership.
Lenders that anticipate (or at least quickly respond to) market changes by rolling out new products will attract the best MLOs.
Reason 3: Speed From Lead to Close
In a purchase-money market, MLOs live or die by their ability to never miss a closing date. With the real estate market still very hot in many areas, agents are advising their clients to be aggressive and close quickly. That puts pressure on lenders who don’t have streamlined origination processes in place to remove friction.
When a loan officer sees a company staffed with great underwriting teams, using modern technology, they know they can get loans closed in about 21 days, allowing them to hit the closing date and earn higher borrower satisfaction and more agent referrals.
Planet Home Lending targets home sellers with a guaranteed closing product, called Cash4Homes, and with bridge loans. Cash4Homes enables home buyers to compete with all-cash buyers in markets where investors are active. We can offer that program because we’re a well-funded, multichannel firm with the expertise and capital to purchase and resell any property that doesn’t close on time.
Reason 4: The Lender Has Invested in a Solid Tech Stack
Professional MLOs know how powerful the right technology can be for building their business. If they see a lender trying to keep pace with an old LOS and few other tools, they’ll quickly begin to look elsewhere for employment.
Even more important than new technology is MLO choice. If they have achieved success in the past with a certain tech stack, they’ll want to stick with it. Giving them the ability to affordably build (or rebuild) their own tech stack with different options—as many as 10 or more—is a sure way to get their attention.
Reason 5: The Lender Offers the MLO Marketing Support
The industry’s best MLOs know how to find their own business. They are experts at prospecting within their communities and have the connections to keep their pipelines full. But a little help is always appreciated.
Marketing technology is key to winning customers in today’s market and MLOs will seek out lenders who understand this. A lender that offers individual loan officers a full scope of marketing support, including personnel who can help them build, manage, and enhance their online reputation will be the first to attract new MLOs, because they know this will win them more business.
Pricing, service levels, marketing support, tech stack excellence, and product variety grow ever more critical during challenging markets. Understanding these five issues and taking the actions that deliver them will do a lot to get MLOs who are considering a change of employment to consider your firm.
The views and opinions expressed in this article are those of the author and do not necessarily reflect or represent the views, policy, or position of Planet Home Lending.