recruiterchuckcowan

Will Retail Mortgage Platforms Weather the Perfect Storm in 2014?

With the compression of originations and closing in the mortgage industry as demonstrated by February 2014 being the slowest month of closing in the industry in 14 years, it begs the questions how are all the privately held independent mortgage companies prepared to survive the upcoming 6-9 months of brutal business conditions? According to the MBA, the average cost to manufacture a loan for this group in the 4^th quarter of 2013 was over $5100.00 not including employee expense, the average profit was $150.00 per loan and those numbers are due to significantly change in the 1rst quarter of 2014 and not to the positive side. With that being said, can companies continue to lead their recruiting efforts by paying 80 to 125 basis points to their loan officers? CFPB has just start the in-depth regulating these non-depositories and small community depositories and their business practices.  And if the last year has proven anything, is that these companies could be looking at an additional 30 to 40 basis points cost per loan in compliance expense on top of their present cost to produce. So let us look at what could be a very realistic scenario in the 2^nd and 3^rd quarters of this year, if company spends say over $5600.00 or higher to produce a loan and you lose money on a per loan basis, how do you continue to pay 80 to 125 basis points in commission? I do hear a lot of companies have been to market and have started selling off their loan portfolios to generate revenue to offset these expenses, but how long can that last? Makes no sense, to sale off your portfolio assets to run your sales business and operate at a loss. This 1.1 billion dollar market is not going to grow by any sizable amount according to every report that I have seen over the last 45 to 60 days. What about those organizations that are owned by a hedge fund or REIT, I wonder how secure they really feel? Hedge Funds and REITs are not keen on not making a return. The business is due some major disruption and as LOs how do you feel about that? What are your risks? As recruiters and Managers recruiting LOs how do you feel about that? Can you really tell a candidate that there is a long term future with the company you represent? All I know, after 30 years of recruiting in this business the numbers that I see and hear just will not work moving forward and something will change in these business models. I am trying to create an argument for one player verse another, as I do not know who will and who will not be the fittest and strongest to survive, but I am more interested in future thought moving forward.

April 23, 2014 - Posted by recruiterchuckcowan | CFPB, Coaching, Employment Trends, Housing, Marketshare, Mortgage Banking, Mortgage Branch Manager, Mortgage Company, Mortgage Loan Officer, Mortgage Outlook, Mortgage Sales Recruiting, Real Estate, Uncategorized | Mortgage, Mortgage Recruiting