​September was another record setting closing month for many of TMC's national network of best-in-class mortgage lenders that submit data to TMC Benchmark. Closed loan production (units) in September was nearly identical to August, making it five straight months of closings higher than we'd ever seen before from our network in the four-year history of our popular network data benchmarking tool. Our weary lender members may see a little operational relief in sight, as applications (units) were down 27.4% in September as compared to August. For some perspective, even with the drop-off, September application totals were still higher than any one single month in 2019. Operational efficiency stayed pretty flat for our network in September after reaching all-time highs in June, and slowly falling over the summer months.

As noted above, closed loan units were nearly identical month-over-month (-1.2% from August to September) as was the mix of conventional (76%) and government (19%) business. The purchase/refinance mix on closed loan units in September was 51%/49%. Let's take a look at that mix for the last five months::

May - 42% purchase, 58% refinance
June - 51% purchase, 49% refinance
July - 58% purchase, 42% refinance
August - 55% purchase, 45% refinance
September - 51% purchase, 49% refinance

Applications were down in September, but still strong. We've been seeing the % share of government loan applications slowly decline these past several months, topping out at 21% in June and falling to 17% for this latest month. The lagging closed loan data has followed this trend.

Operational productivity and efficiency stayed pretty consistent in September. On average, it took our members 3.3 days longer to close loans in September versus August, with the average "app date to clear to close date" time frame rising from 39.5 days to 42.8 days in the most recent month. It will be very interesting to see how operational efficiency holds up with lenders staffing up all summer and volume now starting to tail off a bit. Certainly efficiency will continue to drop as volume does, but how will efficiency this fall and winter compare with last fall and winter? We shall start to see in the coming months.

Here's the closed loan unit totals per FTE (full-time employee) for the last five months (May/June/July/August/September). While processor and closer efficiency stayed flat, underwriter efficiency fell off and LO productivity increased:

Processor - 16/17.2/16.8/15.2/15.1
Underwriter - 51.8/54.8/52.1/50.1/47.5
Closer - 63.8/64.8/62.7/61.8/61.8
Loan Originator - 7.0/8.1/8.2/8.1/8.6

The average LO comp on September closings came in at 97.5 bps, up 0.7 bps from August's 96.8 total. We've seen this number vacillate between 95-105 bps these first nine months of 2020. We saw increases in the average non-third party lender fees per loan our members charge their customers, with conventional loans coming in at $1,136 and government at $1,109.

On the compensation side, the average annual comp paid to underwriters fell for the fourth straight month to $88,419 after peaking in May at $94,767. Processor annual comp rose to $53,181 after declining each of the three months prior. Closer compensation has continued to increase all year, rising another $1,000/yr to $56,330 in September.

The average cost per closed loan our members paid for their loan origination system (LOS) fell from $95 to $93 per closed loan unit. We've continued to see the average cost of point-of-sale (POS) systems fall pretty precipitously all summer, with the September total at an all-time low of $42 per closed loan unit. The average cost our members pay for their CRM increased from $89 to $107 in September.

51% of companies that submitted September data to TMC Benchmark were independent mortgage bankers (IMB's) and 49% were depositories. 37% originate $500M or less annually, 22% originate between $500M-$1B, and 41% originate $1 billion per year or more in total volume.

Rich Swerbinsky
Chief Operating Officer - The Mortgage Collaborative
rswerbinsky@mtgcoop.com

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​As this year was more challenging overall, so too was the selection process for this year's HW Vanguards. Many of these top housing executives have fought through various hardships to get to where they are today, and it shows in the determination and diligence that they implement every day in their leadership roles. 

We were thrilled to see so many familiar names and faces from some of our most active Lender Members and Preferred Partners. Congratulations to everyone who was recognized as a HW 2020 Vanguard!

Lender Members:

Christy Bunce, Chief Operating Officer, New American Funding
Chris Cordry, Executive Vice President and Senior Director Capital Markets, PrimeLending
Sarah Gonzalez, Chief Operating Officer, First Guaranty Mortgage Corporation
Tawn Kelley, President, Taylor Morrison Home Funding
Suzy Lindblom, Chief Operating Officer, Planet Home Lending, LLC
Alex Rosenblum, CEO, Axia Home Loans

Preferred Partners:
​
Donna Corley, Executive Vice President and Head of the Single-Family Business, Freddie Mac
Richard Gagliano, President, Black Knight Origination Technologies, Black Knight, Inc.
Nima Ghamsari, Cofounder and CEO, Blend
Suzy Lindblom, Chief Operating Officer, Planet Home Lending, LLC
Bill Neville, CEO, LoanLogics
Brian Simons, President, Maxwell
Dave Stevenson, Chief Technology Officer, SimpleNexus
Joe Welu, CEO, Total Expert

Recruitment in the mortgage industry this year has been quite the adventure. Having spent most of last decade recruiting within the mortgage industry, I have not experienced anything like the current environment, and have heard similar sentiments from multiple mortgage lender clients in the industry far longer than myself. Operations talent is taking full advantage of their moment in the spotlight.
 
In conversations with our clients, they are experiencing similar frustrations. From being ghosted by candidates (even after they sign an offer letter), to losing valuable time when candidates no-show for scheduled interviews, to losing talent to competing offers that are insanely high (from a retention and recruiting standpoint), and an overall the lack of professionalism from many candidates in demand right now, lenders are struggling to bring onboard top ops talent.
 
On the flip side, for candidates, operations talent has been HEAVILY recruited by pretty much every lender and recruiter out there. Recruiting efforts have become white noise to many candidates and when approached by a company or recruiter, efforts are simply not as effective as typically seen in a “normal” market cycle. In addition, top candidates, those typically employed and not necessarily looking for a new role, are busy as hell trying to support their own pipelines. Finding time to manage multiple interviews is a challenge in and of itself right now. I advise candidates how worthwhile and lucrative it can be for them to carve out time for interviews, as offers to ops staff have inflated up to 30% or more in just the last 6 months. 
 
Another challenge recruiters face is that top ops talent who would typically be receptive to recruiting efforts and potentially open to making a move have already done so or have moved off the market due to creative retention efforts from their existing employer. Operations staff who will follow the money and drive up overall compensation figures, have already taken advantage of the market and made their move leaving recruiters and lenders with a smaller available talent pool.

August was another spectacular volume month for TMC's national network of best-in-class mortgage lenders that submit data to TMC Benchmark. We saw a pretty substantial drop-off in efficiency and productivity during the month, most likely due to operational staff vacation time and general burn-out - so there are no stops in sight for The Volume Train as we emerge from the dog days of summer and head into the fall months. Better problems to have than the problems of two winters ago, but problems lenders are faced with nonetheless as we enter the latter part of a year that looks like it could be the biggest production year ever for the mortgage industry.

Starting with closed loan production, August was a strikingly similar month to July. Closed loan units were nearly identical (-0.05%) as was the mix of conventional (75%) and government (21%) business. The purchase/refinance mix on closed loan units in August was 55%/45%. Let's take a look at that mix for the last four months, which have been the four biggest closing months we've seen in the four-year history of TMC Benchmark:

May - 42% purchase, 58% refinance
June - 51% purchase, 49% refinance
July - 58% purchase, 42% refinance
August - 55% purchase, 45% refinance

Like with the closed loan data, new applications taken were also nearly identical in August to the prior month (-1.7%), as was the production mix - 77% conventional, 19% government, 4% other.

What was not consistent from July to August was operational productivity and efficiency. On average, it took our members 2.3 days longer to close loans in August versus July, with the average "app date to clear to close date" time frame rising from 37.2 days to 39.5 days in the most recent month. And after seeing all-time highs in operational employee efficiency in June, we saw our second straight month of decline in August.

Here's the closed loan unit totals per FTE (full-time employee) for the last four months (May/June/July/August):

Processor - 16/17.2/16.8/15.2
Underwriter - 51.8/54.8/52.1/50.1
Closer - 63.8/64.8/62.7/61.8
Loan Originator - 7.0/8.1/8.2/8.1

The average LO comp on August closings came in at 96.8 bps, down 5.1 bps from July's 101.9 total but in line with the 97.1 total two months prior on June closings. We've seen this number vacillate between 95-105 bps these first eight months of 2020. We saw decreases in the average non-third party lender fees per loan our members charge their customers, with conventional loans coming in at $1,119 and government at $1,072.

On the compensation side, we saw fairly steep drop offs in processor and underwriter average annual compensation but an increase in closer compensation most likely due to lenders using more outsourcing services for processing and underwriting functions. Processor average annual comp fell from $56,790 in July to $52,992 (-6.8%) this past month while underwriter average annual comp fell from $94,294 in July to $89,104 (-5.5%). Closer comp increased from $54,212 to $55,376 (+2.1%).

The average cost per closed loan our members paid for their LOS ($95), POS ($51), and their CRM ($89) was remarkably consistent with the prior month and the monthly averages for 2020. 

53% of companies that submitted August data to TMC Benchmark were depositories and 47% were IMB's. 35% originate $500M or less annually, 26% originate between $500M-$1B, and 39% originate $1 billion per year or more in total volume.

Rich Swerbinsky
Chief Operating Officer - The Mortgage Collaborative
rswerbinsky@mtgcoop.com

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