I am having a bit of a debate with those who run this firm. I am a high-producing branch manager who would like to limit the number of loan officers I hire to higher-quality and consistent producing loan officers. Others want to hire “numbers,” no matter how little they produce or how much trouble they cause. It seems to me that five loan officers producing six loans each month is much better than 15 each producing two. And if one of the five is causing an issue with every loan—I would rather go without the production. What is your opinion? Branch Manager from Delaware
I had to shorten this question a bit—and the fact that your question was so detailed tells me a lot about your frustrations.
When I entered the industry over 30 years ago—it was a full-time profession for 99.0% of those in the industry. We were dominated by banks and savings and loans —not by brokers. The good loan officers looked “down” upon many Realtors—because many were part-time. Times have changed. As the brokerage industry has grown, the residential lending industry has come closer to the real estate industry from a personnel standpoint — especially during the real estate boom more than ten years ago. It has returned closer to its original state during the financial recovery, but there is still a strong broker segment. Most traditional lenders operate in accordance to the “older traditions,” but there are many others that operate under the “numbers” concept you have just described.
It is true that some companies in the past tried to hire 1,000 loan officers and put them in their homes with minimal training. If they get a loan from half of them each month—they had a winning business model. What the consumer got was 1,000 untrained and unprofessional loan officers—and the potential for predatory lending including fraud. And this contributed to the financial crisis and the rules that followed–including licensing requirements.
So there are two models. In one, a manager hires numbers and hopes each hire brings in a few loans. In the second model, the manager hires fewer originators, but tries to make each hire a quality producer. My vote is for the second model. Why?
First, because of profitability. Some managers would argue that an extra loan officer who is on 100% commission does not cost the company anything. I beg to differ. There are many costs. These costs include support—no matter how little support you give to each loan officer. Even answering questions uses precious resources. For example, if you provide processing, the efficiency of that processor falls significantly if they have to deal with many untrained loan officers. And, of course, the numbers game prevents you from providing quality support and advancing these loan officers. So turnover increases and it becomes a vicious cycle. There is nothing which is more expensive and detrimental to the bottom line than turnover.
Second, because of quality. Think from a customer’s prospective (this is called empathy). What kind of experience is it for them when they deal with an untrained, unsupported and probably part-time originator? Is this how they should be supported in the most important financial decision they will ever make? What kind of experience do you want your company to be known for? And that is the good scenario. In the “bad” scenario—unsupported loan officers commit fraud — sometimes just out of ignorance.
Finally, quality attracts quality. No quality originator wants to be surrounded by a company of originators that don’t know what they are doing and have the potential to hurt the quality name the originator brings to the organization. Top originators want to be challenged—not only by their boss, but by their peers. In this case, the strong get stronger. Dave
Dave Hershman is Senior VP of Sales of Weichert Financial and the top author in the mortgage industry. Dave has published seven books, as well as hundreds of articles and is the founder of the OriginationPro Marketing System and Mortgage School – the online choice for expert mortgage learning and marketing content. His site is www.OriginationPro.comand he can be reached at firstname.lastname@example.org