For the first time in many years, the mortgage industry is facing the real possibility of rising interest rates and a flattening or shrinking mortgage market. As a loan originator, are you prepared for your company cutting commission rates, reducing support staff or even closing their doors? Although our business climate is still very strong, I have already spoken to a number of colleagues who are facing just this reality. Their companies—both small mortgage brokerages riding the refinance wave and branches of large national companies—are making drastic cuts or closing offices.

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Do you have a contingency plan in place? Are you marketable to other companies? Could you make it on your own with little marketing or processing support? If a change becomes necessary, what should you look for in a prospective employer?

If you don’t prepare for the worst, you may soon find yourself with no job, no plan and very few options for long-term success in the mortgage industry. On the other hand, those originators prepared for inevitable changes will actually utilize these changes to improve their careers. Let’s look at some key issues every originator should consider.

Never assume your job or company is secure from downsizing, drastic cuts in staffing or even closing its doors. It doesn’t matter if you work for your best friend, are the top producing loan officer for the area’s largest bank or manage a branch of a profitable mortgage brokerage; the industry changes much too rapidly for anyone to get too complacent.

Make numerous contacts within the profession. Always keep track of which companies in your area are improving and which are not. Heed the advice of Michael Corleon from The Godfather II: “Keep your friends close and your enemies closer.” The more you know about your competition, the greater the opportunities you will have, should a job change be necessary.

Develop your own mortage leads. Have you relied on your company to supply your leads? If so, you may be in for a rude awakening when the leads become scarce or disappear altogether. To ensure your long-term success as a mortgage originator, you must be able to attract your own clients and generate your own business. If you rely on company-generated mortgage leads, your market value to potential employers is almost zero, and you are jeopardizing your future in this business. Conversely, if you have an established client and referral base that produces consistent loan volume, you can be more selective about your next move. Good companies and profitable opportunities will always be available to mortgage professionals who generate their own business.

Expand your working knowledge of the entire loan process. If you walked into your office tomorrow and found that your processor was laid off, would you be able to originate, process and close your own loans? After all, it doesn’t matter how much business you bring in the door, only how much actually closes. The top loan originators are skilled in marketing their services and skilled in the technical and procedural functions necessary to the mortgage process, including the ability to process, underwrite and close loans. The better you become at these important functions, the better your chances for success and security in the industry.

Do your research before changing companies. Changing companies is common in this business and may lead to better opportunities. However, most of us would rather not have to change too often. Not only is it difficult and costly to make clients and referral sources aware of your move, but it can also be very stressful if the companies keep going out of business. No one can predict the future, but here are some points to consider when researching other companies or job opportunities:

• What are the company’s history and direction for the future? Has it been around for a number of years, or is it a product of the recent refinance wave?


• Do they have a defined business and marketing plan and direction or do they seem more like a group of loan officers, each doing his/her own thing with no unified goal? There are many companies of various sizes with well-defined marketing plans and objectives. However, there are just as many, if not more, with very little organization or direction.


• Who is steering the ship and in what direction? What are the hierarchy and culture of the company and do they fit with your personality and career goals? Does the owner or manager provide support, leadership and guidance or does there seem to be chaos and little teamwork? Talk with others in the company to see if their views of the support, direction and leadership are positive and consistent. Make sure the leadership and culture will help enhance your career.


• Is the company compliant and ethical in its business practices? Ask to see some of the loan files and procedural guidelines. Does it require all the appropriate and most current state and federally mandated forms? (If you don’t know them, you had better learn quickly.) Does it have a compliance department that audits files for accuracy? Could you afford to have all your commissions and fees refunded back to your most recent clients because your company didn’t make sure you properly disclosed your fees?


• Does the company pay its originators on a W-2 or 1099? More and more states are changing how originators can and can’t get paid. Does the company follow the rules of your state? If you do business in more than one state, is the company properly licensed and does it follow the guidelines for each state? Look carefully at its compliance practices.


• What is expected of the loan originators? Are there production quotas or assigned territories? Will you be expected to process your own loans or is processing provided? Does the company provide any marketing support? Does the company provide processing software, computers and desk or office space? Can you work out of your home?


• Is the company a mortgage bank, brokerage or both? How does the structure fit with your experience and business goals? Does it offer the loan programs or have lending relationships with certain underwriters or wholesalers that you need for your client base? How receptive is it to developing other relationships or expanding the breadth of its loan programs? Is it FHA- and VA-approved? Make sure its lending options are consistent with your needs.


• Lastly, what are its compensation structure and opportunities for future career growth? Is its compensation based on closed loan volume, total fees generated or a combination of both? Does it have a tiered compensation structure? Are commissions the same for company-generated versus self-generated leads? Is there a minimum amount you must make on each loan? Does the company set the loan pricing, or can you price loans directly from each wholesaler’s rate sheets? If you refer or recruit another loan officer to the company, are there incentives or overrides to you? What looks like a very attractive compensation plan on the surface may not always reflect the true picture. Most originators advise their clients to compare “apples to apples” when shopping for loan programs and interest rates. It is just as advisable to ask the appropriate questions to prospective employers regarding their compensation structure.

Just as the competition to attract more clients and loan volume will increase, so will the competition to attract good loan originators. We have all seen and heard some pretty outrageous interest-rate and program claims by lenders trying to make their phones ring. As you start looking for employment and career opportunities, you will probably see the same type of income potential and compensation claims used by companies to attract loan originators.

The mortgage industry will continue to change rapidly. In the past five to 10 years, we have seen interest rates fall to all-time lows and underwriting guidelines and loan programs created to accommodate millions of new customers. This climate also helped expand our industry and provided tremendous opportunities to many within the profession. As the market starts to turn, interest rates creep up and business starts to decline, will you be ready for the changes, challenges and opportunities?

Copyright Mike Smela. All rights reserved. Mike Smela is Vice President, National Recruiter and Mentor for Carteret Mortgage. Along with coaching other loan professionals and helping them attain their dreams, Mike still originates loans himself. Finding a mortgage niche in the medical profession, he created PhysicianLender.com and has developed a loyal client base of doctors and nurses nationwide. If you’re a loan officer or mortgage broker looking for a place to call home, Carteret Mortgage could be it. Call Mike at 248-816-3289 or 248-705-4456, or email him at MikeSmela@PhysicianLender.com.