Ah, the 2020 days, when loan officers were getting million dollar signing bonuses and Sales leadership made gangster money….and if you were an Underwriter, you could virtually write your own ticket. Fast forward a few years later. If you are in a position where Recruiting is part of your day-to-day job, you know that the first half of this year was…challenging. People were reluctant to make a move, even for more money; lenders were skittish on hiring as well. It’s as if the entire industry was holding its collective breath to see what was going to happen next. Layoffs and RIF’s littered the landscape. Thankfully, that crisis seems to have passed. To be clear, lenders are still trying to optimize hires, especially when it comes to Sales leadership – it’s still all about what Candidates can bring to the party to minimize down time but we are seeing a shift for the better, including in the C-suite.
Who Are Lenders Focusing On?
In a recent article, Housing Wire said that after cutting to the bone over the past three years, several large mortgage lenders are beginning to ramp up hiring. These companies are adding sales and operational staff, preparing for the expected drop in rates and subsequent increases in volumes.
However, the industry is approaching this cycle with caution. Different from the boom of 2020 and 2021, lenders now face a more fragile financial situation, an extended pool of experienced candidates, and the likelihood of a smaller refinancing wave.
Consequently, the era of hefty compensation packages and substantial signing bonuses from the biggest lenders is far behind us. Today’s focus is on cultural fit, innovative talent compensation strategies, and leveraging technology to stabilize workforce needs through economic cycles.
LoanDepot Looking Ahead
“The first thing we are hiring for is more recruiters. We need more recruiters here to help fill all these openings we have,” Erica Danna, vice president of talent management at loanDepot, said. “I’m working on, anywhere the last few months, between 150 and 200 positions at a time.”
loanDepot’s focus is on the sales side, attracting experienced loan officers and people who want to join the industry via its accelerated career in effective sales (ACES) program. The company has “never taken our foot off the gas when it comes to experienced originators, but operations are what has cranked up in 2024, so we want to be deliberate about who we’re hiring,” she added.
California-based loanDepot underwent one of the most significant workforce reductions among publicly traded independent mortgage lenders during the downturn, according to Securities and Exchange Commission (SEC) filings.
Among eight publicly-traded independent mortgage lenders—Better Home & Finance, Guild Holding, loanDepot, Mr. Cooper Group, Pennymac Financial Services, Rithm Capital, Rocket Companies and United Wholesale Mortgage (UWM)—all companies had a workforce reduction in the past two years. As a group, the number of employees shrank by 46%, from 88,203 in 2021 to 47,940 in 2023. (The data includes employees at parent companies and subsidiaries, in mortgage lending, servicing and other activities.)
loanDepot’s workforce alone declined by 62%, from 11,307 employees in 2021 to 4,250 in 2023, marking the second-highest reduction. Meanwhile, New York-based digital lender Better experienced the largest drop, with a 92% decrease from 10,400 employees in 2021 to just 820 in 2023.
Though loanDepot and Better are not yet profitable, they are repositioning themselves for the new cycle by building operational capabilities after resetting their cost structures when rates were high.
“We’re shifting hiring away, in the consumer direct vertical, to refi and home equity from purchase,” Chad Smith, president and chief operating officer at Better, said. “Purchases, even with rates going down, there’s going to be some seasonality, and we are just starting to see more applications for refinance and home equity for debt consolidation and customer activity.”
Smith noted that Better plans to hire 40 to 50 licensed LOs monthly, with a goal of 1,000 originators over the next 18 months. Gains in productivity mean fewer additions to operations staff per LO in this cycle, he said. The company has also subleased more office space, albeit on shorter terms, typically under 24 months.
Additional Lenders in This Environment
Some publicly traded mortgage companies have already increased their workforce between 2022 and 2023, not only in the past few months. It includes Rithm Capital (+14%), UWM (+12%), Guild Holdings (+5%), and Mr. Cooper Group (+3%). These firms were better positioned during the downturn, benefiting from profitable servicing books or engaging in mergers and acquisitions, resulting in staff increases.
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 MBA data.
