Loan Originator Hiring Insights - STRATMOR Group · 2018. 3. 1. · Which of the following Retail LO recruitment methods does your company use broken down by the level of LO experience

Loan Originator Hiring InsightsJune 2016

SPOTLIGHT SURVEYS

ORIGINATOR HIRING INSIGHTS

Contents

Background

Summary of Key Findings

Respondent Profile

Loan Originator Profile

Recruitment of New Loan Originators

Expectations of New Hires

Performance of New Hires

Training of New Hires

2

Background

The Loan Originator Hiring Insights survey was the tenth survey issued

under STRATMOR’s Spotlight Surveys program

Spotlight Surveys is a fast turnaround small-survey program that gives

senior mortgage executives a unique way to obtain specific qualitative

mortgage industry information about:

What senior executives at other companies think about issues and

significant new industry developments.

What actions they are considering, planning or have taken.

The Spotlight Surveys - Loan Originator Hiring Insights was launched on

April 15, 2016 and remained open until May 30, 2016.

Invitations were sent to 1,618 individuals representing 811 unique

lenders.

Responses were received from 43 unique lenders (a 5.3% response

rate).

3

SPOTLIGHT SURVEYS



Recruitment of New LOs

Recruiting is roughly split in thirds among Inside Recruiters, External

Recruiters and Recruiting by Managers

Lenders indicated that the Branch Managers are the most effective at

recruiting Experienced LOs (Score1 = 3.29)

While no method for recruiting Newbie LOs was deemed effective, the use

of Inside Recruiters (2.95) and Branch/Call-Center Managers (2.79) scored

the highest.

91% recruit Originators from Independent mortgage companies and 58%

target entire branches

79% recruit from Bank Owned mortgage companies and 37% recruit entire

branches

1 Using a scale where 1= Very Unsuccessful and 5 = Very Successful (and any aggregate score over 3.0 would

indicate an effective recruiting strategy)

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SPOTLIGHT SURVEYS



Recruitment of New LOs (cont’d)

Recruiting individual LOs from Independent (3.31) or Bank Owned (3.24)

mortgage companies were rated the most effective methods for recruiting

successful LOs.

Recruiting individual non-Mortgage Sales Professionals from outside the

mortgage industry was also ranked as an effective method (3.00) for sourcing

successful new LOs.

Lenders reported that recruiting whole branches from Independents was an

effective method (3.00) of landing successful LOs (but you have to take the

chaff with the wheat). Recruiting whole branches from Banks was reported as

substantially less successful (2.39).

Guaranteed compensation (35%) and increased commissions over a ramp-up

period (22%) are the most commonly cited recruitment tools.

26% of “Newbie” LOs are paid no incentives vs. 5% for new LOs with experience.

Both refundable and non-refundable signing bonuses are relatively uncommon.

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SPOTLIGHT SURVEYS



Expectations for New Hires

Experienced LO’s ramp-up period is 3-4 months for 81% of respondents.

Experienced LOs are expected to submit 5-6 applications per month for 43% of respondents

Newbie LOs, however, are given a ramp-up period of 6 months or more by 91% of lenders

The expectations for Newbie LOs are lower with 41% expecting 4 applications or less at the end of the ramp-up period

47% of lenders expect 3 closed loans or less from new hires after the end of their ramp-up period

Performance of New Hires

The average percentage of LOs who fail to meet their minimum application volume within the proscribed ramp-up period was about 30% for experienced-at-hire LOs vs. 43% for Newbies (who have both lower volume expectations and a longer ramp-up period).

42% of lenders reported that at least half of their Newbie LOs failed to meet their minimum application volume within their proscribed ramp-up period vs. 12% of LOs with experience when hired.

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SPOTLIGHT SURVEYS



Performance of New Hires (cont’d)

Experienced-at-hire LOs meet their volume expectations within 4 months for

90% of respondents

The time to be full effective is longer for Newbie LOs with 86% reporting 6

months or greater

Training of New Hires

Not surprisingly, Newbie LOs receive significantly more in-depth training than

Experienced LOs as regards both company systems policies and procedures

and products, compliance and borrower communications.

For Newbies, the percentage receiving in-depth classroom or on-line training is in

the mid-40s.

For Experienced LOs, the corresponding percentage drops to around 5%

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SPOTLIGHT SURVEYS


RESPONDENT PROFILE

8

SPOTLIGHT SURVEYS


How would you describe the ownership of the company?

• There were 43

respondents to the

survey.

• The sample is

slightly weighted to

Independents at

65%.

9Proprietary and Confidential

Not for External Distribution

Which of the following best represents your role at your company?

• More than half of

the respondents to

the survey were

Production Heads

for Retail or All

Channels

10

SPOTLIGHT SURVEYSORIGINATOR HIRING INSIGHTS

Proprietary and Confidential


Across all the channels in which your company does business, what was the breakdown of your total origination volume in 2015?

• The survey

includes

respondents of all

sizes with 37% of

the sample

originating under

$500 million in

2015 and 26%

originating over $5

billion.

11

SPOTLIGHT SURVEYS




Please select the channel(s) in which your company does business.

• All of the survey participants are in either the Retail or Consumer Direct channels.

• The respondents to this survey were more likely to be in more than one production channel.

12

SPOTLIGHT SURVEYS




LOAN ORIGINATOR PROFILE

13

As of December 31, 2015 how many Retail Channel loan originators did your company employ?

• 70% of the respondents ended 2015 with 100 or fewer

Loan Originators

14

SPOTLIGHT SURVEYS




As of December 31, 2015, what percentage of your Retail loan originators

do you ESTIMATE fell into the experience categories broken out below?

• An “Experienced LO” is an Originator that had more than 6 months experience as an LO at the time they are hired.

• A “Newbie LO” is an Originator that had 6 months or less experience as a Retail LO at the time they are hired.

• Respondents reported that only 22.5% of the Experienced LOs had been employed for less than 6 months while 47.2% of Newbie LOs had been at their company for less than 6 months

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SPOTLIGHT SURVEYS




Experienced LOs Newbie LOs

RECRUITMENT OF

NEW LOAN ORIGINATORS

16

Which of the following Retail LO recruitment methods does your company use

broken down by the level of LO experience at the time they are hired?

• Recruiting is roughly split in thirds among Inside Recruiters, External Recruiters and Recruiting by Managers.

• Newbie LOs are more likely to come from direct recruiting by a Branch Manager or Other methods including College Recruiting and Employee Referrals.

17

SPOTLIGHT SURVEYS




Experienced LO

When Hired

Newbie LO When

HiredTotal

Inside Recruiter 30 13 43

Recruitment by Branch or Call Center Manager 34 16 50

External Recruiter on Retainer 11 2 13

External Recruiter Paid for Placement 14 1 15

Other 4 5 9

Inside Recruiter 32% 35% 33%

Recruitment by Branch or Call Center Manager 37% 43% 38%

External Recruiter on Retainer 12% 5% 10%

External Recruiter Paid for Placement 15% 3% 12%

Other: College Recruiting, Employee Referrals,

Sales Management Recruiting, Promote LOAs 4% 14% 7%

Total 100% 100% 100%

Total

% of Total by Category

# of Respondents by Category

For the Retail LO recruitment methods how would you rate those recruitment methods?

18

• Using a scale where 1= Very Unsuccessful and 5 = Very Successful, any aggregate score over 3.0 would indicate an effective recruiting strategy.

• Lenders indicated that the Branch Managers are the most effective at recruiting Experienced LOs.

• While no method for recruiting Newbie LOs was deemed effective, the use of Inside Recruiters scored the highest.

SPOTLIGHT SURVEYS




Which of the following recruitment sources of new Retail LOs does your company target?

19

• The primary source of new Originators are other mortgage companies 91% recruit Originators from Independent mortgage companies and

58% target entire branches

79% recruit from Banks Owned mortgage companies and 37% recruit entire branches

SPOTLIGHT SURVEYS




How would you rate the recruitment sources targeted by your company in

the previous question in terms of producing successful Retail LOs?

20

• Using a scale where 1= Very Unsuccessful and 5 = Very Successful, any aggregate score over 3.0 would indicate an effective recruiting strategy.

• Recruiting LOs from Independent or Bank Owned mortgage companies were rated the most effective

• Recruiting Sales Professionals from outside the mortgage industry was also ranked as an effective source of new LOs

• Full details are shown on the next slide

SPOTLIGHT SURVEYS




How would you rate the recruitment sources targeted by your company in

the previous question in terms of producing successful Retail LOs?

21

SPOTLIGHT SURVEYS




1 - Very

Unsuccessful2 3 4

5 - Very

Successful

Aggregate

Score

New college grads 6.00 8.00 6.00 4.00 1.00 2.44Independent mortgage companies 3.00 6.00 13.00 15.00 5.00 3.31Bank or bank affiliated mortgage companies 3.00 5.00 14.00 12.00 4.00 3.24Sales professionals outside the mortgage

industry 1.00 6.00 9.00 4.00 2.00 3.00Non-sales professionals outside the mortgage

industry 6.00 3.00 2.00 0.00 0.00 1.64Whole mortgage branches of independent

mortgage lenders 5.00 3.00 8.00 5.00 4.00 3.00Whole mortgage branches or units of bank or

bank affiliated mortgage lenders 6.00 7.00 6.00 3.00 1.00 2.39Other 0.00 0.00 3.00 1.00 0.00 3.25

New college grads 24% 32% 24% 16% 4% 100%Independent mortgage companies 7% 14% 31% 36% 12% 100%Bank or bank affiliated mortgage companies 8% 13% 37% 32% 11% 100%Sales professionals outside the mortgage

industry 5% 27% 41% 18% 9% 100%Non-sales professionals outside the mortgage

industry 55% 27% 18% 0% 0% 100%Whole mortgage branches of independent

mortgage lenders 20% 12% 32% 20% 16% 100%Whole mortgage branches or units of bank or

bank affiliated mortgage lenders 26% 30% 26% 13% 4% 100%Other 0% 0% 75% 25% 0% 100%

Total

# of Responses by Category


For each level of LO experience at the time they are hired, which of the following is your company's principal recruitment incentive?

22

• Guaranteed compensation is the most commonly cited recruitment tool.

• Increased commissions over a ramp-up period is used by 22% of lenders.

• 26% of lenders don’t pay incentives to Newbie LOs while only 5% don’t offer incentives for Experienced LOs.

SPOTLIGHT SURVEYS




Experienced

LO When

Hired

Newbie LO

When HiredTotal

No incentives are paid 5 12 17Non-refundable signing bonus 7 0 7Refundable signing bonus 9 1 10Up-front advance against future commissions 16 3 19Guaranteed compensation over the ramp-up or

some other specified time-frame 35 19 54Increased commission scale over the ramp-up

or some other specified time-frame 25 9 34Increased commission scale 9 2 11Other 1 0 1

No incentives are paid 5% 26% 11%Non-refundable signing bonus 7% 0% 5%Refundable signing bonus 8% 2% 7%Up-front advance against future commissions 15% 7% 12%Guaranteed compensation over the ramp-up or

some other specified time-frame 33% 41% 35%Increased commission scale over the ramp-up

or some other specified time-frame 23% 20% 22%Increased commission scale 8% 4% 7%Other 1% 0% 1%

Total 100% 100% 100%


Total


EXPECTATIONS FOR NEW HIRES

23

What is your expected "ramp-up" period, the amount of time within which

a new hire in 2016 is expected to meet minimum volume requirements?

24

• Experienced LO’s ramp up period is 3 months for 58% of respondents. Newbie LOs, however, are given 6 months or more for 91% of lenders

SPOTLIGHT SURVEYS





What is the minimum monthly application volume in units which a newly

hired originator is expected to meet by the end of their ramp-up period?

25

• Experienced LOs are

expected to submit 5-6

applications per month for

43% of respondents

• The expectations for Newbie

LOs are lower with 41%

expecting 4 application or less

at the end of the ramp-up

period

SPOTLIGHT SURVEYS




Experienced

LO When

Hired

Newbie LO

When HiredTotal

Does Not Apply 7 7 14

3 units or less 4 8 12

4 units 4 5 9

5 units 11 4 15

6 units 8 4 12

7 units 2 1 3

8 units 1 0 1

9 units or more 7 3 10

Does Not Apply 16% 22% 18%

3 units or less 9% 25% 16%

4 units 9% 16% 12%

5 units 25% 13% 20%

6 units 18% 13% 16%

7 units 5% 3% 4%

8 units 2% 0% 1%

9 units or more 16% 9% 13%

Total 100% 100% 100%

Total



What is the minimum monthly closed loan volume in units which a newly

hired originator is expected to meet by the end of their ramp-up period?

26

• 47% of lenders expect 3

closed loans or less from new

hires after the end of their

ramp-up period

SPOTLIGHT SURVEYS




Experienced

LO When

Hired

Newbie LO

When HiredTotal

Does Not Apply 2 5 7

3 units or less 19 15 34

4 units 9 4 13

5 units 8 4 12

6 units 0 1 1

7 units 2 0 2

8 units 1 0 1

9 units or more 2 1 3

Does Not Apply 5% 17% 10%

3 units or less 44% 50% 47%

4 units 21% 13% 18%

5 units 19% 13% 16%

6 units 0% 3% 1%

7 units 5% 0% 3%

8 units 2% 0% 1%

9 units or more 5% 3% 4%

Total 100% 100% 100%



Total

PERFORMANCE OF NEW HIRES

27

What percent of your LOs do you estimate fail to meet your minimum application volume within their proscribed ramp-up period?

28

42% of lenders reported that at

least half of their Newbie LOs

failed to meet their minimum

application volume within their

proscribed ramp-up period vs.

12% of LOs with experience

when hired.

SPOTLIGHT SURVEYS




Experienced

LO When

Hired

Newbie LO

When HiredTotal

0.0% to 4.99% 3 1 4

5.00% to 9.99% 0 1 1

10.00% to 14.99% 8 4 12

15.00% to 24.99% 12 5 17

25.00% to 49.99% 13 6 19

50.00% to 74.99% 3 8 11

75.00% or Higher 2 4 6

0.0% to 4.99% 7% 3% 6%

5.00% to 9.99% 0% 3% 1%

10.00% to 14.99% 20% 14% 17%

15.00% to 24.99% 29% 17% 24%

25.00% to 49.99% 32% 21% 27%

50.00% to 74.99% 7% 28% 16%

75.00% or Higher 5% 14% 9%

Total 100% 100% 100%

Total



For newly hired LOs who meet your minimum monthly volume expectations, how many months on average do you estimate it takes?

29

• Experienced LOs meet their

volume expectations within 4

months for 90% of

respondents

• The time to be full effective is

longer for Newbie LOs with

86% reporting 6 months or

greater

SPOTLIGHT SURVEYS




Experienced

LO When

Hired

Newbie LO

When HiredTotal

Less Than 1 month 1 0 1

2 months 5 0 5

3 months 19 1 20

4 months 12 1 13

5 months 2 2 4

6 months 2 12 14

Greater Than 6 months 0 13 13

Less Than 1 month 2% 0% 1%

2 months 12% 0% 7%

3 months 46% 3% 29%

4 months 29% 3% 19%

5 months 5% 7% 6%

6 months 5% 41% 20%

Greater Than 6 months 0% 45% 19%

Total 100% 100% 100%

Total



TRAINING OF NEW HIRES

30

31

• Not surprisingly, Newbie LOs receive In-Depth training 47% of the time

• 91% of Experienced LOs receive Basic or Moderate training on company systems, policies and procedures

SPOTLIGHT SURVEYS





By level of LO experience, which of the following best describes the training on company systems, policies and procedures your company provides to newly hired LOs?

32

• Both Experienced and Newbie LOs receive less intensive training on products, compliance and borrower communication than on company systems

SPOTLIGHT SURVEYS





By level of LO experience, which of the following best describes the training on

product menu, product selection, compliance and borrower communication your

company provides to newly hired LOs?


Not for External Distribution33

Contact Us

SPOTLIGHT SURVEYS


Dr. Matt LindSr. Partner

STRATMOR Group

Office: 781-749-6457

[email protected]

Nicole YungSr. Partner

STRATMOR Group

Office: 303-486-6823

[email protected]

For more information on STRATMOR Spotlight

Contact:

[email protected]

mailto:[email protected]



Documents

Loan Originator Hiring Insights - STRATMOR Group · 2018. 3. 1. · Which of the following Retail LO recruitment methods does your company use broken down by the level of LO experience