REQUIRED READING: With unemployment stuck above the 9% range and the national economy still far removed from a comfortable level of post-recession stability, it is not hard to believe that mortgage bankers are more than a little jittery when it comes to job security.
However, experts in financial services employment trends have an encouraging message for the mortgage banking industry: Despite the dismal economic scenario and the challenges facing loan officers, today's mortgage bankers may very well enjoy a higher level of job security than other professionals within the financial services world.
Getting an exact handle on the number of individuals employed in mortgage banking is difficult, because no entity is tracking employment trends specific to this industry. The U.S. Bureau of Labor Statistics (BLS) compiles data relating to ‘real estate credit’ and ‘mortgage and non-mortgage loan brokers,’ but these overlap in areas that are unrelated to the origination of residential home loans.
Working with these admittedly broad parameters, BLS data confirms that today's mortgage banking industry is on the thin side. The most recent BLS statistics on the industry came out in May, which found 241,500 employees on the payroll. That was a promising expansion from April, which recorded 238,900, but it was down from the May 2010 figure of 258,800 – and it is light years removed from the early 2006 peak of more than 500,000 employees. According to the BLS, today's employee numbers mirror the data recorded in mid-1997.
But, then again, mortgage banking is not alone in terms of financial services shrinkage. A report issued in June by the Chicago-based outplacement consulting firm Challenger, Gray and Christmas found that U.S. financial services companies made plans to eliminate 11,413 jobs during the first five months of this year – compared to 9,431 during the same period in 2010.
According to John A. Challenger, CEO of Challenger, Gray and Christmas, the near future does not look optimistic for financial services employment.
‘There are more clouds on the horizon,’ he explains. ‘There is more concern that Wall Street may be about to go through another round of layoffs due to the lack of trading volume. And the new legislation seems to be dampening activity – no one really knows where it is going. Plus, financial institutions still have a lot of bad loans on their books.’
Dr. Peter Morici, professor at the University of Maryland's Robert H. Smith School of Business, concurs. ‘Employment in financial services will not be as robust,’ he says. ‘It may decline or not grow as rapidly as in the recent past, depending on overall macroeconomic conditions – a two percent growth versus a recession.’
There is also the challenge posed by a new wave of mergers and acquisitions within mortgage banking.
‘That is the result of lower volume,’ says Robert Baron, founder and president of New York-based BCGI American Real Estate Executive Search Co. ‘Rather than two firms limping along at 50 percent capacity, they get together and reduce staffs.’
‘Inevitably, when there are mergers and acquisitions, people will be lost in the aftermath,’ adds Challenger. ‘You don't need two headquarters, or branches on adjacent corners or duplicated operations.’
However, Challenger warns mortgage bankers not to automatically believe the end is near.
‘Do not assume that your job will not be there in the future,’ he says. ‘Many times, that is not the case.’
Gibran Nicholas, chairman of the CMPS Institute, headquartered in Ann Arbor, Mich., believes that mortgage bankers who do an excellent job are in the best position of staying employed.
‘If you can go out and make sales, you have job security,’ he says. ‘In view of the new compensation rules that took effect April 1, there is no incentive [for an employer] to keep you on board if you are not generating volume. If you are increasing sales and adding value to the company you're working with, no one will turn you out.’
Baron observes that anyone who is not bringing in sales volume will most likely be voluntarily seeking greener pastures elsewhere.
‘A lot of people in mortgage banking are paid on a commission basis,’ he explains. ‘More often than not, those people take themselves out of the game rather than being let go – they figure out they should be doing something else. In a commission-driven business, people generally don't say, 'I want to go across the street and be a mortgage banker somewhere else.' They would rather be on the principal side, with a salary role plus a bonus.’
Thomas J. Pinkowish, president of Community Lending Associates in Essex, Conn., and co-chairman of the Connecticut Mortgage Bankers Association's education committee, points out that mortgage bankers who are licensed through the Nationwide Mortgage Licensing System and Registry and receive continuing-education training enjoy more viability in the job market.
‘Licensing makes mortgage bankers more marketable,’ he says. ‘Of course, it may not help you keep your job if everyone in your department or company is laid off. But now, with licensing, you can work for your choice of lender – a depository institution, a broker or a mortgage banking firm. Someone who is not licensed can only work for a depository.
‘Continuing education is also required for anyone who is not a depository-institution employee,’ he adds. ‘If someone is licensed and passed all of the continuing-education tests, this would help for their job security.’
John Landers, regional vice president at Robert Half International, based in Menlo Park, Calif., states that mortgage bankers with niche-related specialties would also be more attractive when facing downsizing.
‘In tougher times, employers look at skill sets,’ he says. ‘Right now, the industry is extremely short staffed in terms of accounting – and with a lot of mergers and acquisitions, there is more demand for that. Also, there is a demand to acquire specialists in risk management and compliance.’
Landers notes that despite ominous threats to existing jobs in the industry, there are entities that are bucking the downsizing trend. ‘There are some companies that feel more comfortable hiring,’ he says, ‘both on a project basis and full time.’
Among those companies looking to expand is Milford, Conn.-based Total Mortgage Services, which announced in July that it was hiring 50 loan officers to help expand its retail channel. The company currently operates in 24 states and the District of Columbia, and it has additional licenses pending in five states.
‘Part of our expansion strategy is to significantly increase our retail production team by adding 50 high-quality mortgage sales professionals who not only have a track record of producing quality loans, but who are technologically savvy, have great communication skills and are aligned with our integrity-based culture and our centralized model,’ says John Walsh, president of Total Mortgage Services.
Baron adds that high-quality mortgage bankers will ultimately not have to worry about being out of work – especially in view of what has transpired over the past few years.
‘If they've lasted this long, they're fine,’ he says.