Mortgage Movers: A Deeper Look at Loan Originator Performance Trends

For our recently released white paper, “Loan Originator Performance Trends: How to Build a Team of Hall of Fame Originators,” we sampled the non-identifiable production data of 5,500 LOs over a 30-month period to see what trends we could uncover about LO performance and profitability. One of the most shocking stats we uncovered is 70% of lenders’ total loan volume is produced by only 3% of LOs.

In addition to this revealing production statistic, we also discovered some interesting trend data around changes in LO performance over that same period, which we’ve graphed as follows:

LBA Ware's LO Performance Trends Chart

One of the more notable observations is the lack of mobility we observed amongst the “Utility Player” category, which we have defined for the purposes of this paper as LOs that either meet or fall below average industry production levels.

As this graph illustrates, the vast majority of this group remains classified as a Utility Player throughout the 30-month period, with only a handful ever making it to the upper-tier production levels.

In the upper production tiers (Starter, All-Star, Hall of Fame), there seems to be more mobility, which is possible for a number of reasons. First off, these LOs are typically in high demand and may, therefore, be more likely to “jump ship” to another lender far more frequently than their Utility Player counterparts.

Also, the shift from a refinance-driven market in 2016 to one dominated by purchase business in 2017 and early 2018 may have weeded out LOs that were riding repeat business via refis rather than cultivating prospects or referral sources for new business, resulting in upper-tier performers dropping to the Utility Player level.

In fact, this market shift may be one of the reasons for the increased size of the “Terminated” category in December 2017 as compared to the previous 12 months. Another possibility for the growth of this category is the corresponding crunch lenders began to feel on their per-loan profit. With LO commissions commanding more than 50% of loan revenue, lenders may have been more inclined to cut ties with LOs that, for whatever reason, weren’t making the grade internally.

While not quite as large as it was in December, the category of Terminated LOs for June 2018 is still larger than it was a year or even 18 months prior, signaling that lenders are cutting ties with LOs far more frequently than before. While this culling of the herd may, in fact, be necessary, there are other solutions lenders can employ in the face of margin compression and reduced per-loan profit.

In our white paper, we offer lenders strategies for flipping the distribution in the Loan Originator Performance Trends diagram to build a team of hall of fame-level producers. Want to learn our secrets for building a team of top producers?

Download the white paper to find out how.