Reaching Out to Rookie LOs

Hiring and Training Diverse Loan Officers — What Works

By Patricia Sherlock QFS Sales Solutions

In today’s market, the current average age of mortgage loan officers stretches from the late 40s to early 50s. While not a bad range, it’s become clear that attracting a younger, more diverse generation to mortgage lending has been challenging at best.

In this article, I will share lessons learned in training rookie minority loan officers. Since 2004, I have been training both rookies and experienced loan officers on how to self-source business, a non-negotiable skill for sales professionals who want to succeed in mortgage banking. When rookies are hired and trained correctly, they will generate volume quickly and a select few will even become superstars within 12 to 18 months. Investing in rookies is a smart business decision.

Shifting Demographics And The Mortgage Workforce

Current mortgage industry demographics clearly show why lenders need to hire a more diverse workforce. According to Fannie Mae, mortgage industry employees are 73% white, 6% Black and 7% Hispanic. Overall, less than 13% of jobs in the housing workforce include Black and Hispanic representation.

One of the biggest contributing factors to the industry’s near glacial pace of demographic change also is a simple one. Lenders are reluctant to financially support rookies who lack a book of business and must receive training to ramp up their sales results. As such, mortgage lenders have traditionally opted to hire experienced originators with a Rolodex of contacts.

Moreover, the U.S. population has become increasingly multicultural in the past decade. According to 2020 Census Data, the country’s demographic makeup is 60.1% white, 18.5% Hispanic, 12.5% Black and 5.9% Asian. The white population is projected to drop to 55% by 2030. If lenders want to be relevant to more diverse homebuyers and generate loan volume and revenue, they will need to align their workforce to connect with diverse consumers.

A recent Federal Reserve Bank of Dallas trade article from June 2022 noted why hiring diverse sales professionals is critically important: “… underrepresentation of minority loan officers has adverse effects on minority borrowers’ access to credit.” Investing in a diverse sales force is no longer a noble goal but a business solution to increase loan volume in a rapidly changing marketplace.

AN UNTAPPED BUSINESS OPPORTUNITY FOR CREDIT UNIONS

In October 2021, Freddie Mac issued a report that revealed key insights on where lenders should be directing future prospecting efforts: “… future homeownership potential of diverse young adults aged 18 to 45 is estimated to be a lending opportunity of potentially 41 million borrowers who could qualify for a mortgage loan currently and another 13 million who are almost ready.” This is a huge opportunity that credit unions and other lenders can tap if they can provide a diverse sales force that can source these potential borrowers.

This does not infer that white loan officers cannot market to minorities, but research has shown that originators from the same ethnic background as borrowers can make prospects feel more comfortable on their home loan journey by understanding their shared culture and values.

THREE KEYS TO DIVERSE HIRING & TRAINING SUCCESS

There are three parts to successfully hiring and training diverse rookie loan officers, or LOs:

1. Recruiting Diverse LO Candidates

The reality for rookies without a current book of business is that they identify and evaluate candidates differently than experienced loan officers. With veteran loan officers, lenders can pull analysis on their volume and type of business by using vendors who specialize in production data.

Recruiting diverse candidates necessitates being involved at the local level with non-profits and other local influencers. “These are groups that credit unions are involved with deeply”, says Alissa Sykes Tulloch, EVP, Ameri CU in Albany, New York.

Churches and charities can also be especially helpful in identifying local potential mortgage stars. Former Armed Forces personnel are another good source of candidates for mortgage lenders. Joining and participating in local Facebook groups is another important recruiting vehicle for lenders. In my experience, it is not necessary to require a college degree for the loan officer position. Research by industrial psychologists has shown that having a college degree is not predictive of sales success in origination.

Evaluating candidates is also different and lenders need to use a validated pre-hire assessment for the loan officer position. As all managers know, just because candidates interview well is no guarantee that they have the sales skills to be successful producers. Using a DISC instrument during the selection process is not effective because it was not designed to be used for hiring but rather, as a communication tool for improving team building.

Origination is not a profession suited for everyone. A loan officer must have a combination of behavioral and personality traits that will drive business to their credit union. “A key responsibility of a loan officer is prospecting.” states Elizabeth Million, SVP, Elevations CU, Boulder, Colorado. “At the heart of the loan officer’s position, they are tasked to develop relationships with people they do not know.”

There are 14 behaviors and personality traits that lead to above-average mortgage sales success. For more than 20 years, I have partnered with industrial psychologists to analyze the behaviors of top producers at large and small lenders, including credit unions. Here are the specific behaviors and personality traits we have identified that are critical for success in origination.

It should come as no surprise that an originator position is not just about building relationships, but also driving new business to a lender. Identifying candidates that have a combination of relationship-building skills and drive can be hard to assess during an interview. A validated pre-hire assessment provides an objective analysis that managers can use to filter candidates and make more informed hiring decisions. As with any pre-hire assessment, it is better to use this tool during the early stages of the interviewing process. Training those who do have the right combination of traits increases the likelihood that they will produce results quickly for a credit union.

2. Rookie Training Program Curriculum

A common belief in mortgage lending is that it takes years of experience before an originator can be successful and that these selling skills cannot be taught. This myth underlines why many lenders do not recruit rookie originators. In my experience in the sales trenches, if rookies are matched for origination, they can quickly learn how to succeed in today’s selling environment, including our current difficult market. practice and repetition. This approach drives rookies to better understand the real world of interacting with individuals and building rapport and trust. In my experience, students want tactical sales training programs. Training programs that don’t deliver these elements is a primary reason why rookie originators fail to hit production goals.

But, to make training work for new employees, the program must include the right components. Lenders often train new hires on their computer systems, product mix, and compliance and regulations. While these are important topics, they do nothing to teach rookies how to stand out and sell in a competitive marketplace and develop realtor referral sources.

Today’s consumers are inundated with sales pitches and loan officers are tasked with breaking through the deluge of content to gain a prospect’s attention and trust. This is not easy and requires advanced selling skills and learning digital marketing techniques.

In our rookie training programs, we follow three guiding principles to ensure a high success rate:

Training is current and tactical. Classes are fast-paced and are taught for a variety of student learning styles. Students and instructors are on webcam. Students’ questions must be answered in real-time.

Instructors are former commissioned salespeople knowledgeable in digital marketing. Instructors who can share real mortgage examples of what LOs face are more credible to students. Students are required to present, complete homework and pass quizzes and exams. Their performance in class is a strong indicator of their potential origination success.

By having highly interactive training, students are able to build confidence through practice and repetition. This approach drives rookies to better understand the real world of interacting with individuals and building rapport and trust. In my experience, students want tactical sales training programs. Training programs that don’t deliver these elements is a primary reason why rookie originators fail to hit production goals.

During our training programs, students learn how to:

Position and determine their niche

Create a targeted list of referral resources

Script their opening messaging

Reach out to their targeted referral sources and set up a meeting during the program

Review their results and metrics so they can measure what works and determine what needs to be changed

Conduct effective one-on-one meetings with consumers and referral sources

Present to groups from local realtor/broker meetings to lunch-andlearns

Scale and use a one-to-many marketing strategy

Understand different communication styles and how to influence prospects

Use “magic words” to move the prospect to the next part of the sales funnel

Ask for the business: What really works in a world where trust is scarce

During our program and even in a difficult mortgage environment, students generate pre-approvals, set up realtor meetings and even close loans. In fact, during a recent session, a $3 million loan was originated and closed!

3. Rookie Training, Coaching and Reinforcement

Even though most students have early success in expanding their referral sources and generating leads, development doesn’t stop once the virtual classroom work is completed. Students are provided 30 days of small group coaching to assist them in further developing their sales techniques and provide feedback on their business development efforts. Continual reinforcement of the right selling habits is important to prepare an originator to handle the roller coaster of prospecting for borrowers and referral sources. The more often the right selling techniques are reinforced, the more successful rookie loan officers will become. This benefits the credit union and its members in multiple ways.

FINAL THOUGHTS

Rookies, whether they are minority or non-minority candidates, are worth the investment in time and money, and hiring them should be a priority if lenders want to serve the an increasingly multi-culture homebuying public.

Patricia Sherlock of QFS Sales Solutions, a sales training firm focused on ramping-up loan officers to generate self-sourced business. She authored “Reaching the Top of the Game: Best Practices of Top Mortgage Originators” for the Mortgage Bankers Association. Her weekly sales blog can be found at www.patsherlock.com.