BY RICH SWERBINSKY, PRESIDENT & COO OF THE MORTGAGE COLLABORATIVE
Established in 2013, The Mortgage Collaborative (TMC) is a national cooperative network comprised of 238 best-in-class mortgage lending institutions across America. 59% of our member companies are independent mortgage bankers, 41% are banks or credit-unions. We hand-selected 598 key leaders from our lender member network and surveyed them on the current state of the mortgage lending industry.
We took what we felt were the 40 most pressing issues facing mortgage lenders and asked the survey respondents to tell us how important each issue was to them in their role with their company - not very important, somewhat important, very important, or critically important.
Being an organization that serves our lender members by helping them grow their companies and operate more profitably, the results of the survey are of great interest to our team. Coming in as the overall most critically important issue to our members was an issue we expected to rank high, but not atop the list: retention of their existing staff.
Outside of a pandemic pause, we’ve been conducting this survey bi-annually for about the last five years. In that time, retention of existing staff has never been a top five issue, and only cracked the top ten twice. Needless to say, COVID-19 had a huge impact on mortgage lending. Fueled by record-low interest rates and a massive refinance boom, the industry funded over $4 trillion in mortgage origination volume, a record-high. And lenders were forced to move to a remote work environment in mid-March at next to no advanced notice.
Embracing a remote workforce was building momentum pre-pandemic but still wasn’t commonplace. I remember co-leading an in-person session at TMC’s Winter Conference in New Orleans in February 2020 (just before all hell broke loose with the pandemic) titled “Remote Work: Does It Work For The Mortgage Industry?”. We had about 80 leaders from our member companies in the room for an interactive discussion on the issue. After polling the room at the outset of the session, we found that the nearly all the lenders in the room were in the same boat. Outside of some underwriters and loan originators that worked remote, the vast majority of their staffs were coming into the office every day. Remote work seemed to make sense to them but they’d yet to pull the trigger.
A couple months later, those same lenders were praising remote work and kicking themselves for not embracing it earlier. The data from TMC Benchmark (data benchmarking tool our lenders can use as part of membership) backed them up – May was a record month for our lenders in nearly every area of operational efficiency and productivity the tool measures.
Thus, the remote work spawned in the mortgage lending industry. Efficiency waned as record volumes burned out employees and stay at home requirements loosened. Lenders are now grappling with to what degree they should allow remote work and how often (if at all) employees are required to come into the office. But remote work is here to stay. As is a completely changed recruiting and retention dynamic.
Mortgage lenders started to figure it out late last summer as refinance applications continued to climb and pipelines swelled. They no longer were restricted to just hiring operational employees that lived an hour or less from their brick-and-mortar office(s). Our lenders in California and New York bragged about hiring employees in Kentucky and Indiana for $10K-$20K less annually. They were able to recruit nationally, using LinkedIn and professional recruiters as aids.
Then something else started happening – their employees started getting recruited by lenders across America. Focused on the crush of volume and satiating the need to add staff, many lenders lost focus on how happy their own people were and lost focus on boosting employee morale and creating great company culture. The largest lenders in America were in some cases going public, raising Wall Street dollars to scale their businesses. Non-public large lenders were making truckloads of profits, using some of those returns to give new staff they were recruiting a hefty signing bonus.
When the dust settled and volume began to subside (a little, not much) in the fall, mortgage lenders across America became consumed with taking care of their burnt-out staff through gifts, meals, virtual happy hours, and a number of other creative solutions. Based on lender demand for it, our team at TMC began conducting networking sessions amongst our members on how to create and foster outstanding company culture with remote staff. It’s a much tougher task, to be sure. There’s no secret sauce to it. And it’s the most critical issue mortgage lenders face today according to 598 key decision-making leaders in the industry as we head into the heart of 2021.
Losing a couple of top producing loan originators or key operational leaders can be crippling and potentially infectious to a mortgage lending institution. And now mortgage lenders top-performing employees can be recruited away by a vastly larger number of competitors. All of whom have been cranking out record volume at lofty profit margins for 15 months now.
The issue is certainly one to keep an eye on as mortgage lenders assess in-person versus remote work policies. Survey after survey has shown that for many employees, return to the office is a non-starter for them. While work from home has proven to work for the mortgage industry if managed properly, many lenders have anecdotally said that productivity is higher for remote staff when times are busy, but lower when pipelines are smaller. Managers are contending with if they should monitor work from home employee’s productivity, to what level, and if they should be transparent about it. As all this is happening, lenders are also expressing a desire to bring in new, younger talent that will have a lower cost-basis and who will play nicer with the next-level automation technology now starting to really work its way into the loan manufacturing process.
How lenders and managers deal with these emerging issues will play a huge role in determining which lenders are able to retain their best people, recruit new ones, and grow market share as we head into 2022 and beyond.
TMC - Chief Operating Officer