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Employment Cuts Reflect Changes in Mortgage Industry

The slowdown in origination as well as the decrease in defaults is having a devastating effect on mortgage industry employment. In the past two months, non-bank mortgage companies cut 8,600 employees from their payrolls. In addition, J.P. Morgan recently announced that 8,000 jobs were being cut, with similar cuts being made at all their depository institutions.

Although employment is being reduced, the need for certain types of talent is more critical than ever, according to Rick Glass, founder of R.T. Glass & Associates, one of the mortgage banking industry's leaders in executive search since 1993. However, he said the demand for certain types of skills has changed during the past several years, and continues to change in order to adapt to new regulations and fluctuating markets.

During an interview with Louis Amaya on Mortgage Markets Today, Glass explained that there have been three trends predominant since the crash in 2007. "There was not much happening in 2007 through the end of 2008," Glass said. "There was a cautious attitude, a hesitation because investment into the mortgage banking infrastructure was mild at best."

Beginning in the first quarter of 2009 to the end of 2011, Glass said the hiring trend was like a tidal wave. "The demand for servicing talent was off the map, and we were extremely busy searching for chief servicing officers and senior leadership in top-level impact roles." However, he said that demand started to diminish in 2012 and 2013.

"We saw a shift in 2013," Glass explained. "There was a need for leadership to guide companies in the new environment, and we began to search for experts on risk and compliance as well as some of the more traditional key roles in operation and production."

So, what has happened to the people who were hired for default servicing at the senior level from 2009 to 2011? Glass said for the most part, the people brought into those leadership roles at that time are still in place. "Those companies have been growing, and some are adding origination channels, some are carving up servicing, and others are adding component servicing," he added.

The trend for 2014 is a larger demand for change management. "As the entire industry is changing, there seems to be a need for transformational change in leadership with a broad execution focus," Glass said. "Recently, I've noticed the need for key executives to upgrade and revitalize company performance, implement transparent best practices, and optimize or even rewire existing platforms."

He believes the Six Sigma methodology type of approach is something the industry needs more of. In support of this, Glass said, there is currently demand for driven subject-matter experts with an engineering / manufacturing type of mindset, capable of steering and optimizing performance. They must also have  a passion for measuring, monitoring, and integrating controls.

Glass stated that leaders for the mortgage industry of tomorrow may come from other disciplines. He believes that someone who has been in the industry for 30 years may not have the skillsets needed to retrofit or re-engineer existing operations if that person has been out of touch with the Six Sigma process improvement model.

"There have been a few people from the manufacturing side who have done very well in the mortgage industry," Glass said, "but there is not a pipeline for that. My job is to find them, but there is also a void of new talent coming into the industry." He observed that people are retiring, and others are leaving the industry while younger people are not rushing out of grad school into the mortgage industry. "There has been a void since the sub-prime crash, and the mortgage industry has been given a bad name over the past several years," he said.

To attract and train new talent, Glass feels that companies are going to have to make a significant investment in organizational development. He noted that companies like Quicken Loans have mastered that practice, and have set themselves apart. "They are career pathing and offer incredible internal learning opportunities to younger people," he said. "I think there are a lot of firms waking up to that practice and realizing if they don’t choose that path, they are going to suffer."

In addition to searching for specific skills, Glass said that candidates' personality traits are also involved in his searches. "We're looking for a high-performance driven athlete, a person who has a passion for the discipline and goes the extra mile," he explained. "Owning the discipline, being able to engage and keep the team accountable, and running at a high performance level, is a standard," he explained. "In addition, we look for someone who is aligned with the client's culture, core values, and philosophies."

In 2014, Glass predicts, "I think there is change in the wind, and I think there are going to be some opportunities in this business," Glass said. "Once we can get a little creative, there's going to be some real excitement. I think there is a light at the end of the tunnel."

The Five Star Institute and iServe Companies have partnered to create “Mortgage Markets Today,” an in-depth, formal talk radio resource featuring expert guests, quality subject matter, and timely insights. The show delves into a vast array of topics ranging from the secondary market and federal compliance standards to real estate and mortgage lending.

Investors, lenders, service providers, and all those interested in and affected by the mortgage and housing markets can tune in on the Web at Radio.TheFiveStar.com or download audio podcasts of program broadcasts from iTunes.

Editor's note: The Five Star Institute is the parent company of DS News and DSNews.com.

About Author: Sandra Lane

Sandra Lane has extensive experience covering the default servicing industry. She contributed regularly to DS News' predecessor, REO Magazine, from 2004 to 2006, covering local market trends, the effects of macroeconomic shifts on market conditions, and "big-picture" analyses of industry-driving indicators. But her understanding of the mortgage and real estate business extends even beyond those pre-crisis days. She is a former real estate broker and grew up in what she calls "a real estate family." A journalism graduate of the University of North Texas, she has written articles for various newspapers and trade journals, as well as company communications for several major corporations.
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