Hello, LOs!
It's no secret that the Big Banks are ceding territory in the mortgage space and losing talented LOs in the process.
In Wednesday's edition of LendingLife, I asked you all to share your thoughts on Bank of America's self-inflicted wounds, and what that says about the larger future of depository banks in the mortgage space.
I got dozens of emails from LOs who used to work at the Big Banks, so I'd like to highlight a few of the responses. There are some real good ones!
A former LO at Countrywide seems to have gotten a feeling of deja vu. He told me that as soon as BoA purchased Countrywide, they wrangled all the LOs into a room to share the "good news" about changing their comp plan. Some saw the writing on the wall and left, but others hung in there.
"So, BofA's next step was to slow down operations dramatically," the Arizona-based LO said. "However, they didn't turn off (or turn down) the lead pipeline. So, those of us who stuck around ended up facing swelling pipelines and customers growing more and more frustrated that their loan applications were in some sort of abyss...BofA was talking at that time (some 12 years ago) about having their mortgage loan offers cross-sell other credit products. In theory and from a relationship sales perspective, that is a really great idea. However, if not implemented correctly, it turns into a no-win scenario for all involved. When the folks at the top of the food chain do not have a clear understanding of and appreciation in the value of their sales force, that type of growth cannot happen."
Another former BoA LO said the bank has "long been dysfunctional."
"When a client comes to the bank to get help from the manager because they cant get satisfaction on the 800 customer service line, guess what happens? The managers have no authority so they walk the client to an empty desk with a phone and have them dial…yep, you guessed it, the same customer service number they called from home. What a joke."
He criticized the bank's mortgage processing staff and said the sales operation manager position was created because fulfilment couldn't move files. "I am shocked only 100 [LOs] have left. I would bet on a mass exodus after this month," he said. "A top producer I know left about 2 months ago."
Of course, it's not just BoA that's losing market share and LOs. Wells Fargo has lost about two dozen top LOs since the start of the pandemic. Many have complained about bureaucratic compliance policies that have tied the hands of entrepreneurial mortgage sales staff, former staffers said.
Several LOs told me that BoA and other large depositories know they can't compete with big IMBs. Instead of shutting down the mortgage departments, they'd rather starve them of resources or integrate mortgage into other operations, the LOs said.
One former Wells Fargo employee said that prior to the financial crisis, it was common to see "comp revision" policies at the Big Banks. It usually prompted an exodus of LOs and/or management, who rotated between JPmorgan Chase, BoA and Wells Fargo, he said. But after the housing crash, top producers realized they didn't need the corporate structure, overlays or red tape that came with it.
"Some smaller federal and regional banks retained talent by offering the security of a salary + commission model," the Michigan-based LO told me. "We also started to see a breakdown in the old school heavy upper management structure. The landscape has changed and it seems like there's a plethora of hybrid retail/P&L models out there that allow the individual LO to control their own margins and compete more efficiently without being saddled by 5 layers of upper management sucking off the profits."
The LO said he could see all the Big Banks adopting a model where they cut out LOs altogether.
"Customers that stay with their bank will fill out an online application or sit down with a personal banker at a branch and then automatically get dumped into a processing center that operates like Quicken on the back side," he said. "The big banks aren't competitive in my market and I don't see them ever changing that."
Hope you all have a great weekend!
James Kleimann
Managing Editor, HousingWire
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