Hardin explains what's really holding back the next generation of loan officers
The housing market continues to sputter along, and many in the mortgage industry are concerned that originators may decide not to stick around waiting for things to get better.
The latest sign came on Tuesday when the latest new home sales data showed a 10.5% drop in July from the previous month, and a 6.3% decline year-over-year.
Not only are fewer transactions hurting brokers’ bottom lines, but it is also making it difficult for new originators to get the hands-on training needed to understand the business.
One industry veteran is concerned for new originators in the market. He said for someone trying to break into origination now, training only goes so far without deals to practice on.
James Hardin (pictured top), president of Able Financial, Inc, has run brokerages and built origination teams since the late 1990s. He said those starting in the mortgage industry are finding a more challenging landscape than when he started years ago.
"Back in the day, we had that opportunity because we had so many touches," Hardin told Mortgage Professional America. "Now, talking to individuals looking to come into the business now, it's hard because they don't have the chance to afford the touches."
Every deal is a snowflake
Hardin said his early career involved mailing tens of thousands of flyers and fielding roughly 20 inbound calls a week per originator. That pace let mistakes surface quickly and let new hires correct course before those errors became costly.
A new loan officer today might land one qualified lead every few weeks. Hardin said that gap gives a lesson too much time to fade before the next file comes in.
"It's kind of like that dog that finally catches the bird it's been chasing, or the rabbit or the squirrel," he said. "What do I do with it?"
Even when a lead does convert, he said, no two files behave the same way.
"Every deal in the business, when I get in front of it, is a snowflake," he said. "There isn't one that's realistically the same."
He described a scenario where a borrower looks solid on paper, with strong credit, a sizable down payment and a stable job history. Then an undisclosed divorce and a $10,000 alimony obligation surface a week before closing. Surprises like that are common, he said. An originator only learns to catch them by seeing enough files to recognize the pattern.
"If you don't have enough touches, you're not going to gain enough experience on a deal-by-deal basis," he said. "Your learning curve is so much more."
For newcomers who lack a financial cushion, Hardin steers them toward a bank job first, even with lower pay and a manager watching over every file.
"If you could do that for a year and hang in there, it's a great learning ground," he said. "But that's the best way to learn right now."
Structure over speed
Hardin said there are training companies available to provide new brokers and originators with the basic knowledge of the job. However, this knowledge can be specialized, which leaves the new LO with only a limited view of the overall loan process.
"They don't learn the full process from start to finish," he said. "You have one person that does phone work on the sales, and then they hand you off to the next person that only does XYZ."
Turnover follows, he said, because those originators never learn enough to advance.
At Able Financial, Hardin said he takes the opposite approach with new hires, walking them through every stage of a deal rather than isolating them at the sales function alone.
"We do the calls with the person," he said. "You just get them in front of us, then you get us on the phone with them, then we will do the sales. You just sit and listen."
Hardin acknowledged that approach costs him time and money he doesn't have much of as a small shop.
"I can't afford for someone to come in that has no experience to be an LOA or a processor," he said. "Every deal for us right now, it means survival for a smaller company."
He said he can't stretch out a new hire's ramp-up the way a bigger, better-funded company could. Even so, he said the extra effort pays off for the people willing to put in the time.
"There's always better learning areas," he said. "But it is more difficult for individuals to come into the market now."
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This article is part of our Monthly Spotlight series, which in August focuses on broker training and education. Full coverage can be found here.
