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Loan Originator Retention a Key Theme of 2022

We’ve noticed a lot of discussion in the mortgage industry around loan originator success – especially retaining those experienced, purchase-orientated lenders who know the market and realtors – during 2021. With the industry trends expected in 2022, we anticipate originator retention to become an even greater focus in the months to come.

While national publications note widespread employee departures this year, mortgage lenders have industry-specific reasons to worry about their loan originators, according to a Total Expert interview with Mortgage Orb.

In November, for example, Total Expert Founder and CEO Joe Welu noted in Forbes that lenders expect profit margins to decline in the months ahead as competition increases for purchase loans amid rising rates. He alluded to Fannie Mae economist reports that significantly more lenders say personnel costs are diminishing their profit-margin outlook. Economists at Fannie Mae suggest that lender management of their workforces “will be critical to their bottom lines as competitive pressures remain intense.”

Margin compression and competition affect what lenders can pay for loan originations. When compensation is squeezed, originators often go looking for a place they can make more money. It’s not intuitive, but technology began to play a key role in combatting originator departures this year. We anticipate technology’s role will increase next year as well because producing more loans is becoming the best way to preserve originator comp.

Today, platforms like Total Expert take time-intensive work off loan officers’ plates. They produce warm, data-derived leads, and they attract more return business. Tech is making loan originators more successful, according to Alerus Financial. It also is adding a new consideration in the employment relationship – originators now must choose to leave behind a lender that makes them more money than might otherwise be possible at a lower-tech employer.

Total Experts highest performing article of 2021 was “The Do’s and Don’ts of High-Performing Loan Officers,” an article explaining how technology supports originator stickiness in the employment relationship. You can also watch our training on tactics to support loan originator success here.

Looking Ahead to Opportunities in 2022

The unprecedented, pandemic-related events of 2020, which stretched into 2021, culminated in a rare and extraordinary lending convergence: motivated buyers and borrowers could access historically low rates to gain more purchasing power while sellers experience high demand that propped up increases to home prices. We reported earlier this year that lenders like American Pacific Mortgage capitalized big-time on the market boom using technology.

Now, though, the landscape is changing for the year ahead. Mortgage loan originators will produce nine refinance loans and 16 purchase loans in 2022, according to a forecast published by The Basis Point.1 That production parallels a 74% decline in refinance originations in the mortgage market and flat purchase originations. The bright spot, economists suggest, will be slightly higher purchase volume – projected to reach 4.83 million loans – up from 4.74 million loans in 2021. Amidst rising rates, experts say 11.7 million borrowers – those who still have rates upwards of 3.75% – can still refinance to a lower rate. And, with home equity at a 10-year highpoint, the market offers lenders plenty of scenarios in which to help borrowers access cash in their homes.

In response to these market conditions, here’s how we’ve covered ways lenders can develop new capabilities to find loans in every nook and cranny:

  • Build off an existing mortgage servicing relationship to develop purchase and refinance loans from the current customer base
  • Earn referrals through compliant, co-branded marketing with realtor partners
  • Increase loan applications, or conversions to loan originators, through data-driven engagement that propels a growing lead-gen funnel

Adapting to the Market: Platform AND Partner

As market shifts are proving, the mortgage and real estate industry is ever-shifting in where and how it provides opportunities for lenders. Recent, rapid changes have come from all sides: consumer behavior and expectations, data and privacy, rates, home prices, and even new competition.

Lenders turn to tech companies because they need to differentiate themselves from their competition in the experience provided to consumers. Due to the scale and data-driven automation required to develop customers for life in mortgage, lenders need a true partnership with their technology provider for the experience, skillsets, training, support, and innovative process that will accelerate them to the leading edge.

Unfortunately, some mortgage marketers and leaders may not have had a great experience working with some tech companies. You’ve probably received many promises from tech companies in the past—some, or even many, of which failed to materialize in the differentiation or measurable business and process improvements you were promised. Yet you may not have much of a choice, it’s not until after you’re through onboarding that you really see how a company works with its customers.

With so much change, mortgage lenders must consider both the platform and the company developing that platform. It’s not enough for a technology to show success in one set of market conditions. Lenders will need to identify the right tech partner for the innovation they will need to stay competitive in the years ahead.

Read our article for three ways you can identify “The Right Tech Partner for Innovation” in mortgage lending.