According to mortgage industry expert Matt Muscat, changes in the mortgage industry and in the financial landscape have made the job of loan officer more important and challenging than ever.

The landscape in the real estate and mortgage industries has been in constant flux over the past few years with major volatility, especially on the mortgage side. Record highs for hiring, followed by the biggest departure from the industry in a decade — plus further pending changes to how Realtors get paid — will affect how many loan officers (LOs) get business.

Not a lot is clear, but what is clear is that the job description of a loan officer has changed.

Whether you are reading this as someone in the mortgage industry, real estate industry or as a consumer, pay attention because working with a loan officer who has adapted to this new normal isn’t just in your best interest — it’s the only way to compete in this market, and it likely will be for the next five years.

For the past 10 years, maybe longer, the job of a loan officer was to take incoming calls from clients and Realtors and see what mortgage options their computer system would give them.

At some big mortgage companies, this was so easy that they would let their newest and least educated staff members act as LOs; those who were nice and made a lot of calls often made a lot of money — sometimes more than surgeons and highly trained professionals.

Market shifts

But then something happened — something totally natural and really something that happens every few years in the real estate industry. The market changed. Refinances essentially went away, wiping out much of the “easy” business that helped to supplement those LOs who otherwise were just doing OK.

To put this in context, there was a period of time between 2019 and 2021 when you could call almost any homeowner and convince them to refinance and create win-win for everyone. This wasn’t predatory most of the time; it was just the market.

The downside was there the whole time, but very few people noticed it. During this time, the job of an LO shifted from being a problem-solver to being an order-taker and a data-inputter. The industry hired in record numbers. I stopped doing marketing and sales coaching for almost nine months and focused on recruiting operations staff, so they could help close all the business that was coming in.

All the while, our industry was teeming with new LOs who had never learned how to be diagnostic in their approach; some of them only ever worked on narrow niches of certain types of deals. They didn’t learn how to educate clients, they didn’t learn how to suggest all of the options, they didn’t learn how to sell to Realtors, their sphere, and the broader public on the pros and cons of homeownership.

They didn’t truly learn to become mortgage loan officers. What’s worse, many of the experienced LOs out there took all of the easy business and forgot to keep their skills sharp. They lost touch with past clients, stopped building relationships with Realtors, and by and large lost their edge.

Now, in 2023 there’s no end in sight to higher interest rates. The transactions are different. The scenarios are different. The market is different, and the sentiment around buying a home is different.

Over 50,000 of the LOs who flooded the industry before are now gone but so are “most” of the easy deals. We are seeing gimmicky and misleading advertising from loan officers offering “free refinance,” all kinds of “guarantees” and other murky ads that scream of desperation. On top of that, the vibe is bad in many places.

Change is clear

One thing is clear. The “job” of an LO has changed, and, hopefully, has changed for good. The new job description is as follows:

  1. Study the market on a weekly basis. Communicate your findings to Realtors and your clients.
  2. Ask your leads, clients, and everyone as many probing questions as possible so that you can diagnose their current situation accurately and then prescribe the correct course of action, all while educating them on the how, why, and when.
  3. A modern LO needs to quarterback the sale and not only get people excited but also suggest strategies for how to win in “this” (i.e. any) market.
  4. Strategies will change with every market. A modern LO needs to constantly adapt and present those around them (including their staff) with opportunities to win. In this market, it could be 2-1 buydowns or renovation loans. The strategies will change with the market due to volatility, which is normal for the housing market.
  5. What will not change is that buying a home you can afford is always a good long-term bet. A modern LO can explain this, and provide their clients with confidence to pull the trigger on an educated decision. In essence, a good LO moves the market.

Whether you are a consumer buying a home, a Realtor who needs a true partner, or a loan officer yourself, there are great LOs and mortgage companies who have adapted and who operate by this new job description. Unfortunately, many haven’t.

Regardless of which boat you are in, it has never been more important to align yourself correctly to win in this market.

Matt Muscat is the author of TAG – The Tangible Action Guide for Real Estate Marketing. He is also the Marketing Director at Treadstone Funding and owner of Maltese Marketing.

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