This past May, The Mortgage Collaborative released the results of its latest Pulse of the Mortgage Industry survey. Founded in 2013, the collaborative is a nationwide, cooperative network of 228 member institutions. Nearly 60% are independent mortgage banks while the rest are federally or state-chartered banks and credit unions.
President and chief operating officer Rich Swerbinsky says that the organization began conducting this survey a few years ago but skipped it last year because “lenders were so inundated, so busy.” This year, nearly 600 industry executives addressed 40 key issues and their responses were ranked by importance.
A significant takeaway is that many of the most immediate issues, according to respondents, are tied to the recruitment, retention and development of high-quality employees. Retention of existing staff, in fact, topped the list of concerns. Although the work-from-home movement has been largely embraced by lenders of all shapes and sizes, company executives are aware that this flexible environment is making it easier for their most talented employees to be lured by competitors.
Steven J. Ramirez, CEO of Beyond the Arc — a San Francisco-based digital marketing and fintech company — believes that this trend represents a “generational shift” driven by younger millennials and Generation Z.
“I think that they have a different set of priorities in life and in the workplace,” Ramirez says. “All of those elements kind of combine to a mismatch between the way that some companies have been run historically, and the way that this current and next generation of employees want to interact at work.”
Paul Gigliotti, COO of California-based Pinnacle Home Loans, uses the term “authentic alignment” when discussing how the values of company leadership are tied to an employee’s satisfaction and productivity levels. Mortgage company executives, he says, should focus on creating a “whole-self approach” that allows employees to properly balance their home and work lives.
“If there’s something we need to work through together, then I’ll provide you tools, and those tools could very well be taken back home if there’s something that you need to work on at home,” Gigliotti says.
The task of hiring young talent is “an unending quest for mortgage lending institutions,” according to the survey. Although this issue didn’t quite crack the top 10 for importance, it’s relevant because companies are constantly striving to replace older employees who retire or leave the industry. It also goes hand in hand with two other common concerns among survey respondents — the cross-training of staff and the development of future leaders.
“Because lenders are, in general, a little to a lot overstaffed, it’s easier for them to cross-train employees today than it has been maybe at any point in the past,” Swerbinsky says. He notes that companies with an emphasis on cross-training prior to the COVID-19 pandemic had a “huge advantage” when record sales volumes arrived as they had well-rounded employees who could be, for example, capable originators, processors or underwriters.
“The one thing with the mortgage industry is, expect the unexpected,” Swerbinsky says. “People kind of think, ‘Oh, we’ll never have a climate as busy as it was last year,’ but they don’t want to get caught sleeping the next time.”
Along with his role as a lender, Gigliotti co-founded Axis Lending Academy, a nonprofit organization that aims to address staffing and educational gaps for the mortgage industry. Many of these trainees come from similar sales-based careers in hospitality, retail or insurance. The academy emphasizes cross-training, which Gigliotti finds to be inherently beneficial to all relationships, whether personal or professional. He likens it to the “symbiotic understanding” of a parent-teacher collaboration to help a child learn.
“When learners graduate from Axis Lending Academy, they’ve got a firm understanding as to how each function (in the mortgage process) plays a role and what each function does,” Gigliotti says.
Once a mortgage company is able to recruit and retain strong employees, however, there still is work to be done to maximize value. Measuring an operational employee’s productivity and a loan originator’s profitability were the No. 4 and No. 7 most pressing issues, respectively, that emerged from The Mortgage Collaborative’s survey.
According to Swerbinsky, business-intelligence software that can measure productivity in multiple ways is soaring in popularity among lenders. Again, he says, this is tied to the remote-work environment. Productivity was high during the early months of the pandemic, waned last fall and winter as “people started to get burned out,” then rebounded this past spring as more employees returned to the office.
As the mortgage industry goes through its natural evolution, decisions based on data and insights are more important than ever.
Steven J. Ramirez, CEO, Beyond the Arc
The Mortgage Bankers Association reports that the average pull-through rate (the percentage of applications that result in closed loans) was 76% in the first quarter of this year. Pull-through and fallout rates, as well as average closing times, are metrics that companies tend to watch closely.
“Mortgage originators that have 30%, 40% fallout, they’re sucking resources on deals that don’t end up closing,” Swerbinsky says. “A loan originator that can, on average, get their loans from app to clear to close in 28 days versus 38, that’s 10 less days [lenders] have to pay to hedge that interest rate risk.”
“As the mortgage industry goes through its natural evolution, decisions based on data and insights are more important than ever,” Ramirez says. “Your focus should be on creating a business culture that fosters fact-based decisions using data. And there’s a certain level of data literacy that should permeate throughout the entire organization.” ●