After cutting to the bone over the past three years, several large mortgage lenders are beginning to ramp up hiring. These companies are adding sales and operational staff, preparing for the expected drop in rates and subsequent increases in volumes.
However, the industry is approaching this cycle with caution. Different from the boom of 2020 and 2021, lenders now face a more fragile financial situation, an extended pool of experienced candidates, and the likelihood of a smaller refinancing wave.
Consequently, the era of hefty compensation packages and substantial signing bonuses from the biggest lenders is far behind us. Today’s focus is on cultural fit, innovative talent compensation strategies, and leveraging technology to stabilize workforce needs through economic cycles.
“The first thing we are hiring for is more recruiters. We need more recruiters here to help fill all these openings we have,” Erica Danna, vice president of talent management at loanDepot, said. “I’m working on, anywhere the last few months, between 150 and 200 positions at a time.”
loanDepot’s focus is on the sales side, attracting experienced loan officers (LOs) and people who want to join the industry via its accelerated career in effective sales (ACES) program. The company has “never taken our foot off the gas when it comes to experienced originators, but operations are what has cranked up in 2024, so we want to be deliberate about who we’re hiring,” she added.
California-based loanDepot underwent one of the most significant workforce reductions among publicly traded independent mortgage lenders during the downturn, according to Securities and Exchange Commission (SEC) filings.
Among eight publicly-traded independent mortgage lenders—Better Home & Finance, Guild Holding, loanDepot, Mr. Cooper Group, Pennymac Financial Services, Rithm Capital, Rocket Companies and United Wholesale Mortgage (UWM)—all companies had a workforce reduction in the past two years. As a group, the number of employees shrank by 46%, from 88,203 in 2021 to 47,940 in 2023. (The data includes employees at parent companies and subsidiaries, in mortgage lending, servicing and other activities.)
loanDepot’s workforce alone declined by 62%, from 11,307 employees in 2021 to 4,250 in 2023, marking the second-highest reduction. Meanwhile, New York-based digital lender Better experienced the largest drop, with a 92% decrease from 10,400 employees in 2021 to just 820 in 2023.
Though loanDepot and Better are not yet profitable, they are repositioning themselves for the new cycle by building operational capabilities after resetting their cost structures when rates were high.
“We’re shifting hiring away, in the consumer direct vertical, to refi and home equity from purchase,” Chad Smith, president and chief operating officer at Better, said. “Purchases, even with rates going down, there’s going to be some seasonality, and we are just starting to see more applications for refinance and home equity for debt consolidation and customer activity.”
Smith noted that Better plans to hire 40 to 50 licensed LOs monthly, with a goal of 1,000 originators over the next 18 months. Gains in productivity mean fewer additions to operations staff per LO in this cycle, he said. The company has also subleased more office space, albeit on shorter terms, typically under 24 months.
Some publicly traded mortgage companies have already increased their workforce between 2022 and 2023, not only in the past few months. It includes Rithm Capital (+14%), UWM (+12%), Guild Holdings (+5%), and Mr. Cooper Group (+3%). These firms were better positioned during the downturn, benefiting from profitable servicing books or engaging in mergers and acquisitions, resulting in staff increases.
UWM, however, brings in people with no prior mortgage experience and provides extensive in-house training, according to chief strategy officer Alex Elezaj. This strategy requires careful planning, as hires are made months in advance to align with the company’s long-term needs. The wholesale lender’s workforce went from 8,000 employees in 2021 to 6,000 in 2022 but increased to 6,700 staffers in 2023.
“Most mortgage companies hire fast and fire fast based on the cyclicality of the business,” Elezaj said. “We’ve been hiring people over the past couple of years, so it’s not anything we are doing right now because people are talking about a rate cut. We’ve been hiring, training and developing our people. We’re overstaffed by design, and we never let sales get ahead of operations.”
What if the refi wave doesn’t materialize?
Unlike the previous cycle, mortgage companies are approaching hiring with greater caution this time around. After the hiring frenzy of 2020 and 2021, which was followed by widespread layoffs, lenders are now more conservative in bringing on people. According to the latest InGenius data, the number of active LOs in the country plummeted from 181,656 in Q3 2021 to 89,094 in Q2 2023.
Another factor is these companies’ weakened financial health after three years of declining originations. The share of retail lenders reporting pre-tax net income dropped from 92% in Q3 2021 to a low of 25% in Q4 2022, though it has since rebounded to 78% by Q2 2024, according to Mortgage Bankers Association (MBA) data.
“In 2020 and 2021, I had every lender I was working with coming to me and saying they needed a high number of underwriters and processors as soon as possible. It was too much for their internal recruiting teams to handle, so they needed our services,” recruiter John McKenna, founder and president of the Emerald Group Consultants, said. “Nobody was prepared for 2020 and how the rates dropped.”
McKenna continued, “We work with probably eight of the top 15 independent mortgage banks out there, and the large ones are going to be hiring. If rates are down quickly, they will certainly have to do it in a quicker manner. That’s when they use services like ours. But I don’t think this [general hiring movement] has started yet.”
Rebecca Richardson, an LO at One Real Mortgage, echoed this perception: “I don’t see a ton of hiring in the way that a refi boom is coming.” She added, “There’s the awareness that it’s going to be a refi wave. However, lenders and loan officers are more focused on optimizing systems and processes and making sure you have the right people, but not necessarily a big staff up. The concern is: and if the refi wave doesn’t happen?”
According to the MBA estimate, refinancings will reach $591 billion in 2025 amid lower rates, almost three times the volume in 2023. However, if materialized, this production will be 78% lower than the $2.6 trillion in 2021.
During second-quarter earnings calls, top mortgage executives emphasized that while hiring continues, it’s at a measured pace. The focus is now on scaling the technology deployed in recent years.
“We’re still hiring, but we’re not hiring extremely high numbers because we’ve got our team, we’ve got our technology,” Mat Ishbia, CEO at UWM, said. “We’ve got our systems, and we feel really good about where we’re at. So the focus right now is on growth, scale and being prepared, and we are.”
loanDepot CEO Frank Martell said that over the past six months loanDepot has been investing in origination capabilities by boosting the number of loan officers and operational staff.
However, he added, “We’re leaning into the anticipation that the market will continue to rebound and rates will moderate. And as I mentioned, I think that’s an increasing likelihood. So, we believe that we have the capacity to pick up incremental volume. But I think also the automation to pick up the operating leverage associated with that. So, it’s not as people-intensive as it might have been in the past.”
MBA data indicates that the mortgage industry, particularly in the retail channel, has seen a recovery in productivity over the past year. The number of loans closed per production employee rose to 2.2 in Q2 2024 from 1.7 in Q2 2023. During this period, expenses related to sales personnel dropped to 93.2 basis points from 96.4 basis points, reflecting fewer LOs and lower compensation.
For some companies, improving productivity meant streamlining operations and cutting job positions, particularly among regional managers. In some cases, these managers now oversee a larger number of LOs; in others, their roles have been eliminated entirely.
“Those are the ones that, over the last couple years, have gotten squeezed by the elimination of layers because there’s a lot of non-producing managers who are fixed costs that, when margins go down, they get cut. I talked to many of them on a daily and weekly basis that are very talented, but they may just not have that team with them anymore,” Mckenna said.
“They deserve transition packages. That doesn’t mean infinite.”
As the hiring landscape in the mortgage industry evolves, so does compensation packages.
Negotiations for operations professionals are taking longer, sources said. Lenders have fewer financial resources than in the past, while candidates still push for the boom years’ salaries and grapple with inflation. However, with a larger pool of candidates available, many are ultimately accepting lower compensation packages.
“When I post those jobs, I get hundreds [applications] within a couple of days. Our recruiters get bombarded with applications, and honestly, most of them are qualified. It’s up to us to filter, find the best ones and not rush to hire,” Danna, from loanDepot, said. “They’re willing to take a little bit less, but they can’t survive on much less than what they were making in the last couple of years. So, I think operations is the biggest challenge in the industry. There’s a significant oversaturation of talent.”
In the case of LOs, the industry has had to get more creative. During the last refi boom, companies routinely offered large incentives to attract top producers—a strategy that is less feasible now. In some instances, this approach backfired, leading to legal disputes between lenders and producers that can drag on for years.
“We’ve seen too many organizations for the last three years: they grow, they explode, they go away,” Shane Stanton, loanDepot’s senior vice president of talent acquisition for the retail channel, said. “We’ve always been built to add value to originations and, from a strategy perspective, now what we’re focusing on is continuing to hire as many quality originations that are going to be responsible for growth as we possibly can.”
According to Stanton, “when the biggest boom happened, the industry got sideways in its priorities,” with the companies that grew the most being those that “wrote the biggest checks,” despite having “nothing powerful about their platforms.” Currently, originations recognize that “chasing that check damages their business” and seek for organizations that allow them to scale their time to do more business.
“They deserve transition packages. That doesn’t mean infinite. It hasn’t gone away. But less of these fiscally irresponsible decisions are happening,” Stanton added.
Glen Lemeshev, chief revenue officer at CrossCountry Mortgage, said that in terms of compensation, “Generally speaking, loan officers have embraced the fact that in a market that has overall fewer transactions and more competition, in order for them to be competitive and to be able to retain business in the long term, they have accepted being able to work and produce at a high level but at a more reasonable compensation than years back.”
Lemeshev added, “They would prefer stability and access to great products and terms with a slight trade-off of slightly lower loan officer compensation.”
McKenna, of Emerald Group Consultants, observed that companies have learned from past cycles and are approaching compensation more strategically. Instead of simply offering large upfront checks, some incentivize producers with added basis points when they close a certain number of loans after a specified period, such as six months or a year.
Smith from Better pointed to other compensation strategies, such as increasing marketing expenses or providing more leads over time. To attract more experienced professionals and improve its financials, Better is also shifting from fixed to variable compensation for LOs and some operational staff.
“I haven’t seen it yet, but my sense is that [compensation] it’s going to get more competitive,” Smith noted.
