Originators Operating In New World Must Evolve With Environment

“Everybody says it, and what everybody says must be true” -James Fenimore Cooper (American Novelist 1789 – 1851)
 
James Cooper’s most famous literary works were his novels, "Leatherstocking Tales" and "The Last of the Mohicans". Cooper was one of the most prolific writers of his time. He published political pieces as well as novels throughout the course of his life. 

The quote shared above jumped out at me for a funny reason.  It oddly relates to comments I've been hearing recently from the owner/operators of mortgage banking loan shops.

A month ago I visited a client in Las Vegas, the epicenter of the mortgage and real estate malaise. During my interviews, the owner of the operation informed me that in the peak of mortgage activity in 2006, there were roughly 24,000 licensed originators in the state of Nevada.  Today there are 2,400. 

This reflects a growing phenomenon around the country. Everybody says it’s hard to make a living today as loan officer.

The mortgage bank owner I was meeting with shared a story with me about one of their loan officers. I feel this story puts the "originator environment" in perspective. 

This L.O was very successful in 2004-2006. In fact they performed so well that they were able to take a hiatus from the business between 2007 and 2009. Call it “Ring Rust” or an inability to adapt, but when this loan officer returned to work in the past year, they failed to match their previous production record. Nothing seemed to go right for this originator. Things got so bad that they became a disruptive presence to the routine hardened support staff. This originator went as far as far as engaging in a verbal temper tantrum with processors and closers. 

After much deliberation, the owner of this operation came to the conclusion that this L.O. did not have the DNA to survive in the "new world" because they refused give due diligence to the new process of writing, processing, underwriting, and closing loans. This loan officer was "let go".

The days of grabbing a few loans from a local Realtor, quickly assembling the files and hurriedly submitting them to a processor so you can hit the street again are a thing of the past. Remember when appraisals were just a formality?

The mortgage industry has entered a new era and it ain’t easy being a loan officer in it! Nowadays the pressures on a L.O to perform their designated responsibilities are far greater than this era of L.O.s has experienced (there are some vets out there who know what its like to sit in a gym to refinance VA loans). This is not unexpected given the broad based regulatory face lift(s) we've undergone (which were necessary to an extent). Not to mention the complete overhaul of credit standards and industry practices and procedures.

Whats the silver lining?  The pie might be smaller, commission margins are contracting, deals take more time and effort to get to the table....but there are opportunities. There are fantastic opportunities out there for originators who can adopt to change. The mortgage industry is not going away. Yes the times are tough, but there will be ample business for those left who are able to embrace change and evolve with the market.