RealEstateEconomyWatch.com

Top producers will continue to be on the move this year as the lending industry transitions form refinancings to purchase mortgages, according to Hammerhouse LLC, a national recruiting and strategic growth firm for the financial services industry.

“This will be a pivotal year for the mortgage industry,” said Drew Waterhouse, managing director of Hammerhouse.  “The transition to a purchase-oriented business model that will last for decades will fundamentally alter the industry and the careers of the people in the business. Leadership in the lender ranks may change, but one thing will remain the same-it will take talented, skilled originators to acquire and close the loans.”

Waterhouse predicts competition for producers will cause lenders will invest in programs and systems to attract and retain the best producers. There will be a clear distinction between organizations that have a clear and consistent value proposition for the self-sourced originator and those that do not. Originators will focus on gaining efficiency to improve work life balance and to grow their business.

With purchase mortgages a priority, lenders will shake up management with selective or whole-team changes.  The “era of refinancing” is over in the mortgage industry and management that can effectively respond to that reality will be in high demand.

Enforcement actions based on previously new regulations will help to normalize operations as expectations become clearly known.  But many new regulations are still to be written and implemented. This will take time and will not be pain free. One likely outcome will be more consistency between depositories and non-depositories such as bank originators going through the state licensing process for each state in which they want to originate.

Consolidation among lenders will continue. The changing mortgage market and regulatory burdens will force some lenders to “strategically exit” geographic markets or origination all together.  The characteristics that created a rational case for getting into the mortgage business in the past will now support their getting out. Others will seek to grow market share through purchase or attraction of the best talent impacted by the changes.  Still others will seek to leverage the better production platforms of competitors and seek buyouts or mergers. The watchwords for 2012 are “lean and mean,” Waterhouse said.

Responsible and well capitalized organizations will continue to infill and expand.  He said 2012 is going to be another great year for mid-market mortgage organizations. Both established and new organizations entering the market will capitalize on market restructuring opportunities.  This will include adding incremental production to existing offices as well as strategic expansion into new markets around “high quality” teams and individuals. But “high quality” is a two-way requirement. Top career originators will only choose to leave existing situations for lenders that can demonstrate a culture of integrity and secure finances.