If you're willing to work hard and have a way with people, originating mortgage loans can make you rich. And the job offers ample opportunity to build client relationships. But it can be a boom-and-bust business. What's more, restrictions are getting tougher, jobs seem more scarce than ever and the field has taken its share of the blame for the housing mess. Little wonder that turnover tends to run high. Here's a closer look at the career:
Most mortgage loan officers are paid on 100% commission, according to Jeff Babcock, a partner of the STRATMOR Group LLC, an industry consulting firm based in Peachtree City, Ga. "You truly eat what you kill," he said. While most companies adhere to a recent Department of Labor ruling to pay minimum wage and overtime, many pay these as an advance on commissions, he said. "More and more of our clients have moved to this plan."
Average loan officer compensation at midsize lenders was $86,300 in 2009, up from $56,700 in 2008, according to the MBA/STRATMOR Peer Group Roundtable, a semiannual benchmarking at 55 lenders. Average compensation at the largest lenders was $126,000 in 2009, compared to $73,400 in 2008. "2009 was a boom year, 2010 is going OK," said Babcock.
Mortgage bankers often set their own schedule, and some occasionally work on weekends and frequently are on call. Those at the manager level may work 10 to 12 hours a day.
Employers typically provide standard health-care packages and retirement-savings plans. Training is a constant at leading mortgage companies. "The market is changing dramatically, and you have to keep up with all of the changes," said Rosella Campion, a loan officer and branch manager in Boston at Mortgage Master Inc., a large mortgage company based in Walpole, Mass.
Top sales professionals may occasionally receive a token of recognition, such as a bowl or a plaque. Many companies recognize top performers in a "presidential" or "prestige" group, which may be rewarded with trips or three- to four-day vacations with their spouses, which may feature a motivational speaker. "These are people with fairly high egos," said Babcock, referring to top sales pros who have the potential to earn more than the CEO of their company. "Recognition is an important part of their values."
Mortgage loan originators must either be licensed or registered with the Nationwide Mortgage Licensing System, according to Bill Matthews, chief executive of the State Regulatory Registry LLC, a subsidiary of the Conference of State Bank Supervisors, in Washington, D.C., which runs the system. Those employed by banks, bank subsidiaries, credit unions or thrifts are registered through their employer. All others must be licensed by their state, which involves passing a national exam, 20 hours of prelicensing education and, thereafter, eight hours of continuing education annually. In many states, originators need to meet additional testing and licensing requirements and submit a credit report. All mortgage loan officers must be fingerprinted and undergo a criminal background check. It's worth noting that these are new requirements; until recently in many states anyone could get a job in the field.
Skills and Traits
As with any commission-based job, being self-motivated is important, as are problem-solving and math skills. "Taking a mortgage application is a complicated job. There are many levels to it. It's like peeling an onion," said Campion. Interpersonal communication is also key. "It's important that people feel comfortable with you," she said. "You have to have a caretaker personality."
The next rung on the career ladder for loan officers is typically retail sales manager. A producing mortgage-loan officer may advance to home-loans manager, a role that also oversees managers and carries administrative responsibilities. Other options would include a variety of support roles and regional manager positions. Some pros go out on their own and start an independent firm.
Best Part of the Job
"What keeps me in this job is what we're able to achieve, helping our customers become homeowners. I enjoy the competitiveness, the income and the career-development opportunities. It's a great business to be in," said Tom Kenny, a senior vice president and regional sales executive in the retail sales division of Bank of America Home Loans in Alpharetta, Ga. Meeting people is what Campion enjoys most. "It's a wonderful way of really getting to know people," she said. "I have had some clients for 15 years, including their children and families." Because mortgage pros often become so intimately acquainted with the finances of their clients, confidences can approach the level of doctor-patient relationships, she said. "You get to know people very well."
Worst Part of the Job
"The worst part is the pace of the change that we've seen in the industry," said Kenny. In response to the subprime crisis, the industry has been undergoing a big overhaul. Many of the changes have for the better, industry pros said. Big challenges have included dramatic staffing contractions and keeping up with industry guidelines. The overall industry pullback in lending is another sore point. "We have to say 'no' to people who are definitely credit worthy. It's more the market than those particular clients," said Campion. "It used to be there was more common sense, and that's very frustrating."
Withstanding the reputational hit that the profession took during the economic crisis hasn't been easy. Campion said when people learned what she did for a living, attitudes would shift. "For a while there, people were like, 'Oh...,'" she said, adding that these feelings have largely faded. "A lot of the bad eggs are out."
Churn in the industry is often high, even in good years. Employee turnover can run from about 30% to 50%, according to Babcock. "If you're in a market that's severely depressed, it's harder to make a lot of money," he said.
Entry-level professionals tend to break into the field because they know others who refer them, and referrals continue to be a common route to new jobs higher up the ladder. Producers with large books of business typically receive calls from recruiters eager to lure them away to a new company. "I get calls constantly," said Campion. At senior levels, active job hunting requires a lot of networking. Kenny suggests working connections through the Mortgage Bankers Association and local organizations.
Write to Laura Lorber