The LO Down - 5 Reasons I Hear for Change in This Market

On average, I make about 55 calls a day to Mortgage Loan Officers.?I send roughly 40 text messages.?I post 3-5 times a day on LinkedIn.?I do all of this so I can have about 5-7 conversations a day.

Most of the time, the Originators I talk to are “happy where they are” or “wouldn’t want to make a move in this market.”

And I tell them, “That’s fantastic.?I had zero expectation of you wanting to make a move, and quite honestly, if you are getting 90% of your needs fulfilled, you shouldn’t even think about it.”

Why 90%??

Well, it is my belief that most Lenders will automatically fulfill 80% of your needs.?These are the “price of admission” attributes.?Close your loans on time, offer Conventional, FHA, and VA products, a Marketing department to create flyers, the basics.?

The next 10% includes things like additional products, expanded credit box, bells and whistles in the tech stack to help you be a better service provider and partner, overlays (or lack thereof), enhanced marketing, data at your fingertips to help you target your audience and fine tune your prospecting, sales support, and strong leadership.

If you are not getting a few of the above, and you’re living at 80% with just the basics, then you may want to ask yourself “What would be different for me if I had more?”

I’m getting a little off topic, the point is, there have been some trends in my conversations for why folks have made changes recently.

These are the top 5 reasons for why Originators are making moves in this market:

1.??????Layoffs – First let me say that it is unfortunate that this industry continues to go through this cycle of mass hires and mass layoffs as the market ebbs and flows. ?That said, it's not the layoffs exclusively that have led to change, but the impact they have created.?Layoffs create fear, they mix up relationships, they can cause support challenges and be disruptive to service.?Some Originators have seen turn times increase, have lost someone they have worked with and trusted for years, are having to spend more time in their files than they would like, etc.?Some have adjusted better than others, but this disruption has led many Originators to look for a fresh start with concerns of “how can the company support my business when we get busy again?”

2.??????Leadership and Culture are Lacking – Someone told me that their manager’s idea of motivation was to ask them, “Why did you suck so bad last month?”?My jaw hit the floor.?Another told me that they left for another company because they felt the BM at the new company was helping them more than the BM they were working for.?This is a tough market, and Originators are facing uphill battles, be the one cheering them on, not the one pushing them back down the hill.?Our most successful branch in the country in terms of hiring new Loan Officers is one that has an excellent culture.?Team lunches every day, everyone in the office, collaboration taking place, encouragement, friendly competition and accountability.?COVID damaged office culture and many of us got comfortable working from home.?Whether you work from home or not, it is important for leaders to find ways to build a sense of “team.”

3.??????P&L Smoke and Mirrors – The industry has a flaw.?There isn’t a lot of succession planning for top LO’s other than “produce more.”?But the P&L model has been introduced as a way for them to make even more money and be in charge of their own destiny.?While this is true in a sense, there is a major problem that has occurred.?Some companies have started asking profitable P&L Owners to make cuts to support staff on their team for the “greater good” of the company.?They have started taking more BPs from the top line, they have packed additional “fees” into the P&L and they don’t always share the P&L in a transparent, always available way.?

4.??????Underwriting is getting more conservative – This one is a little above my pay grade to explain, but I’ll try my best.?Earlier this year, the agencies lowered their “Critical Error Rate” (error tolerance on issues in a loan, ex: calculating income) from 4.5% to 1.5%.?That’s a big drop.?Imagine being an UW that has to sign their name to the loan, in this market, knowing that there is less room for error.?This has led to a tendency to add conditions.?No fault of the UW, they are doing their part to protect the company, but this might be why you’re seeing more conditions.?

5.??????Show Me the Money – While this is becoming less of a thing, there are still big offers to be made, and for some that couldn’t come at a better time.?Refer to Edition # 5 of The LO Down to review the different types of offers out there and the strings that could be attached.?It’s important to know what you’re getting into, but I get it.?Sometimes hitting the rest button with some cash to help you through the transition period is what you need.

If you are experiencing any of the troubles above and would like to talk more about solutions, give me a call and let's take some time to chat.