UWM, however, brings in people with no prior mortgage experience and provides extensive in-house training, according to chief strategy officer Alex Elezaj. This strategy requires careful planning, as hires are made months in advance to align with the company’s long-term needs. The wholesale lender’s workforce went from 8,000 employees in 2021 to 6,000 in 2022 but increased to 6,700 staffers in 2023.
“Most mortgage companies hire fast and fire fast based on the cyclicality of the business,” Elezaj said. “We’ve been hiring people over the past couple of years, so it’s not anything we are doing right now because people are talking about a rate cut. We’ve been hiring, training and developing our people. We’re overstaffed by design, and we never let sales get ahead of operations.”
What if the refi wave doesn’t materialize?
Unlike the previous cycle, mortgage companies are approaching hiring with greater caution this time around. After the hiring frenzy of 2020 and 2021, which was followed by widespread layoffs, lenders are now more conservative in bringing on people. According to the latest InGenius data, the number of active LOs in the country plummeted from 181,656 in Q3 2021 to 89,094 in Q2 2023.
Another factor is these companies’ weakened financial health after three years of declining originations. The share of retail lenders reporting pre-tax net income dropped from 92% in Q3 2021 to a low of 25% in Q4 2022, though it has since rebounded to 78% by Q2 2024, according to Mortgage Bankers Association (MBA) data.
“In 2020 and 2021, I had every lender I was working with coming to me and saying they needed a high number of underwriters and processors as soon as possible. It was too much for their internal recruiting teams to handle, so they needed our services,” recruiter John McKenna, founder and president of the Emerald Group Consultants, said. “Nobody was prepared for 2020 and how the rates dropped.”
McKenna continued, “We work with probably eight of the top 15 independent mortgage banks out there, and the large ones are going to be hiring. If rates are down quickly, they will certainly have to do it in a quicker manner. That’s when they use services like ours. But I don’t think this [general hiring movement] has started yet.”
Rebecca Richardson, an LO at One Real Mortgage, echoed this perception: “I don’t see a ton of hiring in the way that a refi boom is coming.” She added, “There’s the awareness that it’s going to be a refi wave. However, lenders and loan officers are more focused on optimizing systems and processes and making sure you have the right people, but not necessarily a big staff up. The concern is: and if the refi wave doesn’t happen?”
According to the MBA estimate, refinancings will reach $591 million in 2025 amid lower rates, almost three times the volume in 2023. However, if materialized, this production will be 78% lower than the $2.6 trillion in 2021.
During second-quarter earnings calls, top mortgage executives emphasized that while hiring continues, it’s at a measured pace. The focus is now on scaling the technology deployed in recent years.
“We’re still hiring, but we’re not hiring extremely high numbers because we’ve got our team, we’ve got our technology,” Mat Ishbia, CEO at UWM, said. “We’ve got our systems, and we feel really good about where we’re at. So the focus right now is on growth, scale and being prepared, and we are.”
loanDepot CEO Frank Martell said that over the past six months loanDepot has been investing in origination capabilities by boosting the number of loan officers and operational staff.
However, he added, “We’re leaning into the anticipation that the market will continue to rebound and rates will moderate. And as I mentioned, I think that’s an increasing likelihood. So, we believe that we have the capacity to pick up incremental volume. But I think also the automation to pick up the operating leverage associated with that. So, it’s not as people-intensive as it might have been in the past.”
MBA data indicates that the mortgage industry, particularly in the retail channel, has seen a recovery in productivity over the past year. The number of loans closed per production employee rose to 2.2 in Q2 2024 from 1.7 in Q2 2023. During this period, expenses related to sales personnel dropped to 93.2 basis points from 96.4 basis points, reflecting fewer LOs and lower compensation.
For some companies, improving productivity meant streamlining operations and cutting job positions, particularly among regional managers. In some cases, these managers now oversee a larger number of LOs; in others, their roles have been eliminated entirely.
“Those are the ones that, over the last couple years, have gotten squeezed by the elimination of layers because there’s a lot of non-producing managers who are fixed costs that, when margins go down, they get cut. I talked to many of them on a daily and weekly basis that are very talented, but they may just not have that team with them anymore,” Mckenna said.
“They deserve transition packages. That doesn’t mean infinite.”
As the hiring landscape in the mortgage industry evolves, so does compensation packages.
Negotiations for operations professionals are taking longer, sources said. Lenders have fewer financial resources than in the past, while candidates still push for the boom years’ salaries and grapple with inflation. However, with a larger pool of candidates available, many are ultimately accepting lower compensation packages.
“When I post those jobs, I get hundreds [applications] within a couple of days. Our recruiters get bombarded with applications, and honestly, most of them are qualified. It’s up to us to filter, find the best ones and not rush to hire,” Danna, from loanDepot, said. “They’re willing to take a little bit less, but they can’t survive on much less than what they were making in the last couple of years. So, I think operations is the biggest challenge in the industry. There’s a significant oversaturation of talent.”
In the case of LOs, the industry has had to get more creative. During the last refi boom, companies routinely offered large incentives to attract top producers—a strategy that is less feasible now. In some instances, this approach backfired, leading to legal disputes between lenders and producers that can drag on for years.
“We’ve seen too many organizations for the last three years: they grow, they explode, they go away,” Shane Stanton, loanDepot’s senior vice president of talent acquisition for the retail channel, said. “We’ve always been built to add value to originations and, from a strategy perspective, now what we’re focusing on is continuing to hire as many quality originations that are going to be responsible for growth as we possibly can.”
According to Stanton, “when the biggest boom happened, the industry got sideways in its priorities,” with the companies that grew the most being those that “wrote the biggest checks,” despite having “nothing powerful about their platforms.” Currently, originations recognize that “chasing that check damages their business” and seek for organizations that allow them to scale their time to do more business.
“They deserve transition packages. That doesn’t mean infinite. It hasn’t gone away. But less of these fiscally irresponsible decisions are happening,” Stanton added.
Glen Lemeshev, chief revenue officer at CrossCountry Mortgage, said that in terms of compensation, “Generally speaking, loan officers have embraced the fact that in a market that has overall fewer transactions and more competition, in order for them to be competitive and to be able to retain business in the long term, they have accepted being able to work and produce at a high level but at a more reasonable compensation than years back.”
Lemeshev added, “They would prefer stability and access to great products and terms with a slight trade-off of slightly lower loan officer compensation.”
McKenna, of Emerald Group Consultants, observed that companies have learned from past cycles and are approaching compensation more strategically. Instead of simply offering large upfront checks, some incentivize producers with added basis points when they close a certain number of loans after a specified period, such as six months or a year.
Smith from Better pointed to other compensation strategies, such as increasing marketing expenses or providing more leads over time. To attract more experienced professionals and improve its financials, Better is also shifting from fixed to variable compensation for LOs and some operational staff.
“I haven’t seen it yet, but my sense is that [compensation] it’s going to get more competitive,” Smith noted.
