I read a post today by one of my favorite bloggers here on AR, Janet Guilbrault.  Her post was called, "Shattered Dreams, Wasted Time:  The Shattered Dreams Of The 20 Something Mortgage Broker" looked at the exodus of the young mortgage brokers from our business from a different angle that I had ever looked at it.

Personally, I've pretty much had a problem with these guys (and gals) since they first started showing up on the scene in the early to mid nineties.  While I guess that I technically fit the term back in the late 80's when I first migrated to the mortgage business from real estate (I was 26 years old), I had paid my dues by listing and selling real estate for 4 years.  I also had an educational background in finance and economics.  So, becoming a "Loan Officer" made a certain amount of sense for me.

My first years in the mortgage business were lean ones.  I earned a living, but that was about it.  Most of my time and effort was spent developing a referral base and learning my trade.  As time went on, I made progress towards becoming a professional loan officer and was rewarded by making more money.

The First Wave

Then the first wave of refinances hit.  All of a sudden being a loan officer was THE thing to be.  If you weren't around during that period it's actually kind of hard to describe how it was.  Pandemonium?  A mad house?  Completely nuts?  Yeah, those terms might give you a taste of what it was like.

Processors being taken out on gurneys.  Fist fights over chairs in a waiting room.  Payoff requests taking 30 days to be received.  These were all things that I witnessed during this first wave.  To say that the industry was unprepared is an understatement.  I personally had over 100 loan applications in process at one time!  If I had ever made a lock without having to pay a "pare-off" penalty, I would have made a fortune!

If you were a loan officer at this time I can almost bet that you also woke up at least once from a dead sleep "taking" a loan application in a dream.  Am I right?

Anyway, suffice it to say that it was indeed nuts and there were a lot of people making a lot of money in a field that was loosely regulated at best.  That's when the 20 somethings started showing up.

Feeding Frenzey

The first time I noticed them I was at a mortgage banking function and I happened to be standing next to a group of them by the bar (where else would I be???).  I took note because these guys were so young.  I mean, I wasn't ancient myself, but up until this point I had pretty much always been one of the younger guys in the business here in St. Louis.

They stood there with their spiked up hair and ill fitting suits and that's when I heard one of them say something that until this day has tarnished my opinion of this particular species of shark....um, I mean loan officer.  I heard the one guy bragging to another one how he "took" this little old lady for 8 points!

I hadn't meant to ease drop, but what this guy was saying had caught my attention.  He went on to say that the lady had misplaced a house payment and had clicked a 30 day late on her mortgage.  His underwriter had approved the deal, but she didn't know this and further more, she was afraid that it was going to cause her to be turned down.  This young hammerhead took advantage of the situation and told her that he would have to charge her a higher interest rate AND that she would have to pay 5 points to get the loan.  Not knowing any better, the lady took the deal.

I was flabbergasted!  How could anyone be so unethical?  Well, for all I know this kid was probably one of the young hot shots who went on to create the sub-prime mortgage market, but at that particular time I remembered taking note of how greedy some loan officers could be.  I vowed to never be that way.

As The Waves Rolled In

As the waves of refinances rolled in I noticed more and more of these young sharks prowling the waters.  With the advent of the sub-prime mortgage market the levees broke and soon the entire industry was awash in these guys.  I knew one kid who went from being an assistant waiter at a fancy restaurant to owning a mortgage company in his first year in the business!  One car dealer here in town got signed up to do mortgages having never done one before.

As Time Moved On

More and more of these folks gravitated towards the business.  It didn't take much to qualify.  Even big banks and mortgage banking companies were recruiting these guys and as Janet put it, "the bank rep would price it and the processor would close it".  

One of the things that was odd about this time was that a good number of real estate agents weren't aware of the booming number of loan officers because for the most part these young guns couldn't be bothered with calling on real estate agents.  There was simply too much money to be made hanging out in the office feeding off of the phones.

When the first lull came and the refinances started to dry up, it was then that these guys started going out into the real estate offices.  I remember one agent who described it to me this way, she said,

"When one person has their nose up your butt, that can feel kind of fun.  When two people have their noses up your butt, that's still fun...maybe even kinky!  When 27 people have their noses up your butt, then it becomes a pain in the ass!" 

Just when I thought things would be getting back to "normal", sub prime became the thing.  This entire new market made it possible for these guys to stick around.  Not to only "stick around" but it also gave them an entirely new group of people to take advantage of!

The Silver Lining

Which brings us to today.  Sub prime is gone.  We've got a refinance market going, but a lot of people don't qualify due to tightening requirements and suppressed home prices.  A lot of these 20 somethings...some of which are now getting into their late 30's...are leaving the business.

Like Janet, I hate to see some of them go.  But for the most part, their leaving the business is the one silver lining that I can find in the entire credit/housing crises.  

Maybe now that these folks are going to go back to college or back to selling used cars or whatever they end up doing, at least they won't be acting as loan officers.  Maybe the industry can learn from it's mistakes of the past and make being a loan officer back into something to be proud of.

R.B. "Bob" Mitchell

ValueList Real Estate Services, Inc.