The Pondering Recruiter: Where have all the banks gone?
2023 has lifted off like a lead balloon, and I’ve been receiving a steady amount of call backs, and inbound calls, from Loan Officers who are frustrated with their current lender’s rates, compared to local banks and/or credit unions. Most feel that rates are going to plateau for the spring market, leaving them with the realization that things aren’t improving any time soon. By they time they’ve called me, they’ve already succumbed to the “if you can’t beat them, join them” philosophy, and are looking for that “greener grass”. The problem is, when you boil it down, there are fewer and fewer banks competing. Wells Fargo and Flagstar are the most recent casualties, and there isn’t any one bank out there gobbling up all the business. So who’s stealing all of your loans?
Many who call feel that there must be one bank at the root of the deals lost, and that if they can find a bank who can compete with those slamming 5/1 ARMs, they can capitalize on future business. The sad truth is that there isn’t just ONE bank consistently beating them on rate. They’re being beat by several smaller banks/CUs, who can go ultra-low on any given day. While those banks don’t have an unlimited appetite, it still stings losing a loan. Especially when today’s loans are harder and harder to come by. You may lose a loan today to a bank with a 4.875% on a 5/1, but that rate may not be there tomorrow. Perhaps it will be, but with a different bank. Therein lies the frustration held by many LOs. It’s a moving target.
Most banks have the ability, and desire, to their add to their sales team, but only if it doesn’t strain their portfolio. That’s resulted in some banks limiting who they hire (focusing on conventional LOs, with less than 30% jumbo). Or, in some cases, I’ve seen banks put on a hiring freeze, allowing them to dedicate their portfolio availability to their current sales staff. For example: If a bank has 200M in port availability, with a staff of 7-8 LOs, bringing in another 2-3 LOs would mean less to go around. Bottom line is banks are being more selective on who they hire.
Here’s an example:
A top LO from a top 10 national lender called me on Friday to share their frustration. In the past 90 days, they’ve lost 4.4M in loans to competing portfolio lenders. In their eyes, their lender is “middle of the road” at best, when it comes to rate. And to make matters worse, their product availability on the ARM side, can’t compete either. Their hope was that I’d have a regional bank who could dominate on rate/product, and still allow them to be just as competitive on conventional and FHA. In addition to all of that, they expected the same level of marketing, tech, and infrastructure they’re currently getting. Basically a “holy grail” in today’s market.
After listening and learning about what they’re in search of, I asked them to break down the loans they’ve lost. Out of the 8 files we discussed, only one bank captured more than one loan (they had 2). The rest were a mixed bag of non-QM (multi-family properties with complicated asset depletions ), portfolio driven products (20% down loans to 3M), or rock bottom ARM rates. Even though they realize that it’s not just one bank or CU at the root of their frustration, they’d rather join a bank and capitalize on getting any loan they get their hands on. Is that mindset short sighted, or smart? Every Loan Officer is in a different situation, with different viewpoints on today’s market, so I’ll let you decide for yourself.
Ultimately, we discussed the banks I work with, compared to their lender, and ones they’ve interviewed with. They agreed to connect this week and set up 2 initial interviews with ones we discussed. Are they the perfect fit for them? That remains to be seen. But, those two banks provide the programs they’re looking for, local presence in their market, and rates much better than their current lender. While I’d love to tell them that I’ve found the next “holy grail” of lenders, with a catch all portfolio and the lowest of rates, this market just doesn’t allow for it.
Where do we go from here?
We do have options for you, and can introduce you to regional banks/CUs who can compete with the lowest of rates, any given day, and who DO have portfolio capacity (just not unlimited). In addition to those regional players, we work with some of the top lenders in the country, who have local bank relationships, and may be able to provide you with the change of scenery you’re looking for. While they may not be the lowest on EVERY deal, you may find they’re far more competitive than your current lender. In fact, in the 4th quarter, and YTD, 75% of our placements have been with lenders as opposed to banks. One main reason is that they have the ability to chase that “moving target” by working with several local banks, in addition to their national outlets. Giving them the ability to always have an option to compete with that low ARM rate, or non QM port product.
If you’re feeling that your current bank or lender is on the losing end, more often than not, it’s worth reaching out and discussing the banks we work with. At the very least, let’s start the dialogue and see how I can help you build… or at the very least, maintain… your business through 2023. – Jeff