Let’s Look Ahead

Happy New Year my friend! It’s a new year, and with a new year comes a lot of predictions as to what we should all expect. I’m not going to share my predictions, but Hammerhouse LLC, an expanding national recruiting and strategic growth firm for the financial services industry, with mortgage sales and leadership placement at its core, announced today that the key trend impacting the residential mortgage market in 2014 in its view will be the development of the free agency market for successful mortgage originators. Here’s what this prediction means:

“In reality, 2014 is the first year of the new mortgage industry that will remain in place for many years to come,” commented Drew Waterhouse, Managing Director of Hammerhouse. He added, “As of January 10, 2014, when the QM rule takes effect, the mortgage industry will begin to operate in an external environment featuring additional comprehensive compliance and regulatory constraints, and lower overall volumes with a purchase orientation.”

“These significant changes will launch the Year of Originator Free Agency, an environment where lenders must convince proven producers, both existing and potential originators, that they offer the combination of benefits that will best serve them in the new environment. Firms must make a case to each originator that they can best offer superior marketing and operational support, rigorous compliance systems, competitive product and pricing options, management and leadership expertise and work/life balance that will enable continued success in the new lending environment, added Mr. Waterhouse.”

Key Retention and Recruiting Factors in 2014

Originators will consider:

>> Platform to build originators brand in the marketplace.

>> Robust business development systems.

>> Competitive pricing model and product growth strategy.

>> Jumbo lending as a focus – will lender’s capital structure enable them to take advantage.

>> Infrastructure to protect originators from compliance traps that can impact their license.

>> Rebound recruiting moves could cause lenders to overpromise and not deliver on all commitments in light of industry volatility.

>> Model-Matching to six key core components – Leadership, Culture, Business Model, Operations, Technology & Geography

Lenders will consider:

>> Self-sourced book of purchase-oriented business.

>> Business plan for growth.

>> Ability to work compliantly within team structures.

>> Effectiveness in origination within market sub-segments (Ethnic, Gender, Millennials, Reverse etc.).

>> Originator’s brand in the marketplace.

All lenders and individuals in the mortgage industry will be forced to redefine their business throughout 2014. This evolutionary process may result in relationships between lenders and originators that fall out of alignment. Consequently, both parties will need to perform on-going Model-Match assessments to ensure that they remain a good “fit” for one another. Model-Matches that are positive today may not be so in January or ones that work in March may be ineffective or even harmful by June. All parties will be forced to consider and reconsider their relationships as the full impact of the new lending environment is realized,” added Mr. Waterhouse.

All of the trends identified by Hammerhouse for 2013 will carry-over into 2014.  These trends include:

>> Purchase market focus.

>> Consolidation of lenders will accelerate.

>> “Highly-valued” originators will be rewarded and sought after.

>> Industry seeks youthful renaissance.

“In 2014, there will be an emphasis on recruiting more diverse originators. Market-segmentation will be a required focus for firms and originators expecting to maintain or grow their business in 2014, and beyond,” added Mr. Waterhouse.

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