The task would be difficult in any market. But McNaught faces the added obstacle of a fiercely competitive hiring environment driven by the anticipation of a refinance wave that –truth be told– hasn’t really materialized. As a result, bidding wars are back and putting pressure on compensation packages, which places some companies in a difficult position, industry experts told HousingWire.
“I always feel compensation is one of those sticky conversations,” McNaught said in an interview. “This time, compensation is anywhere between 40 to 70 basis points. But, on average, some [lenders] are still doing the 70 basis points of the last 12 or 24 months of volume.”
Mortgage companies are competing for a shrinking pool of talent. Some estimates show that the number of active LOs (those who closed at least one mortgage in the past year) dropped to 217,000 in 2024 from 288,000 in 2022. There are only about 40,000 LOs in America doing the kind of transaction volume worth wooing. And all the lenders know who they are.
LOs are now weighing whether it’s time to pivot or stay the course.
“There are cycles in the business where people jump ship and when they stay put,” said Alan Pezeshkian, president of California-based HouseAmerica Financial. “When there’s a lot of business going around and everybody’s busy, changing companies tends to be more difficult because LOs have larger pipelines.”
In turn, it’s better to make a change when business is not at its peak, just right now, Pezeshkian said. According to Pezeshkian, tight inventory has made purchase business difficult to secure, and interest rates remain too high to support traditional rate-and-term refinances. The only refi activity gaining traction, he said, comes from debt consolidation.
“It’s an absolute war out there”
Timing is critical—not just for LOs, but for the mortgage lenders trying to recruit them. Many lenders ramped up hiring in 2024 and earlier this year, betting that refinancing volume would have rebound at this point. So far, that bet hasn’t paid off entirely.
A vice president at a top-25 independent mortgage bank said that after a relatively strong February and March, some lenders staffed up in anticipation of a spring surge. But with rates hovering around 7%, the volume didn’t follow. April, May and June will “be really bad” for a lot of companies, he said.
Lenders operating on a strict profit-and-loss (P&L) model are especially vulnerable, he argued, because they put staff back expecting refis to spur growth. “It’s an absolute war out there, the margins and the spreads are not there at all,” he added.
According to the executive, it’s common to offer 30 basis points on the trailing 12 months of production. But competition for top talent is heating up. Some lenders are now offering as much as 70 basis points to land $25 million producers—an aggressive tactic that echoes what McNaught is seeing in the field.
LOs who haven’t moved yet are finally realizing that their company is not going to make it through this. “They’re looking to leave. Bidding wars are back on these LOs again.”
McNaught agrees, noting that many LOs are in a financial crunch. Some are still in that “final financial bind and just need a win to get them out of this cycle,” she said. “No one predicted that it would last as long as it did.”
She also suspects that some firms offering generous compensation may be positioning themselves for a sale. “I don’t know why anyone else would want to write big checks like that, outside of just trying to just add volume. I’m not sure that that’s the best strategy, but to some, it’s because they need to position themselves.”
Who’s on a hiring spree?
While large lenders may have the financial cushion to support aggressive hiring and expansion, smaller players operating with $500 million in annual production face tighter constraints.
Among eight publicly-traded mortgage lenders—Better Home & Finance, Guild Holding, loanDepot, Mr. Cooper Group, Pennymac Financial Services, Rithm Capital, Rocket Mortgage and United Wholesale Mortgage (UWM)—all companies had a workforce increase in the past year, except for Rocket. As a group, the number of employees rose by 13%, from about 46,500 in 2023 to 52,400 in 2024. (The data includes employees at parent companies and subsidiaries, in mortgage lending, servicing and other activities.)
UWM, for instance, has been on a hiring spree—but with a clear long-term focus. The company’s salaries, commissions and benefits increased 25% year over year in the first quarter to $192.8 million. The wholesale lender’s workforce is now higher than during the Covid-19 years: it went from 8,000 employees in 2021 to 6,000 in 2022 but increased to 6,700 staffers in 2023 and 9,100 in 2024.
During the first quarter’s earnings call, Mat Ishbia, chairman, CEO and president, said that “Our expenses, as you will say, are up 25% from last year’s first quarter. Our volume is up 17%. So there’s an 8% delta. I think that’s pretty good, to be honest with you, based on the amount of investments and stuff that we’ve been working on.” .
“If I was focused on expenses as my primary thing, we would not be prepared to dominate as we are right now. And so when that domination continues, I mean, we’ve been dominating for three, four years now, as you guys have seen, but it’s a whole other level of what you’ll see in the near future.”
UWM ended the first quarter with $2.4 billion in available liquidity. Other lenders do not have the same cushion. According to the Mortgage Bankers Association (MBA), IMBs as a group had a 10 bps pre-tax net production income in 2024 but for those with annual production volume of less than $500 million, losses continued for the third consecutive year.
Putting the cart before the horse
Pezeshkian, from House America Financial, says he avoids using the prospect of future refinancing as a recruiting pitch. His reasoning is simple: When a refinance opportunity arises, it will find the loan officer—regardless of which company they work for. The real question is when that opportunity will come.
“I’m not sure whether it will be a tsunami or a slow thing because the market is just so uncertain right now,” Pezeshkian said. “We thought we had it a few months ago, and overnight that went away. We’ve seen this probably two or three times in the last year: just when we’re about to see potential for some refi business, rates pop for one reason or another.”
At Planet Home Lending, McNaught says the company has taken a structured approach to refis by using a dedicated retention team. When the company sees an overflow of refis, it shares that back with its retail LOs. Then, loan officers licensed in multiple states can support the retention team by handling those loans.
Craig Ungaro, COO at AnnieMac, takes a more cautious stance. He says hiring in anticipation of a refinance boom is to “put the cart before the horse, so to speak.” The company is investing in infrastructure instead—processes, technology, databases. “Right now, we do a lot of communication with our borrowers,” he added. In the long term, AnnieMac, which currently employs 350 loan officers, aims to double that figure over the next two years.
Amid different lender strategies, Pezeshkian says “mortgage companies who have found ways to maneuver through the last three or four years are true survivors.” One alert: “That said, I don’t believe that the dust has completely settled; we’re all hoping for volume to come.”
James Kleimann contributed to this article.