Mortgage Hiring a Bright Spot in Finance

A quick examination of any job board will highlight one evident truth: Hiring in the financial sector has slowed to a near crawl. One exception is in the mortgage industry, where banks such as Citigroup, Wells Fargo and Fifth Third Bank have been adding to their head count to process the recent flood of refinancing requests.

Citigroup has hired several thousand people in its mortgage business this year and said it anticipates continued growth into a more normalized market when interest rates return to prerecession levels, said Mark Rodgers, director of public affairs at Citi. The New York-based bank has been opening new retail branch locations and has hired roughly 130 home loan specialists this year, Rodgers said.

Wells Fargo has doubled to 1,200 the number of team members charged with supporting the Home Affordable Refinance Program (HARP), which enables homeowners suffering from dwindling real estate prices to refinance their homes, said Tom Goyda, a Wells Fargo spokesman. The firm recently opened an underwriting center in Jacksonville, Fla., to support HARP.

"When rates drop, we add more team members and expand our office space to handle the increase in consumer demand," Goyda said.

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When rates drop, we add team members

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Fifth Third Mortgage Company, a subsidiary of Fifth Third Bank, has been adding staff in the loan processing and sales areas over the last year. The Cincinnati bank is recruiting experienced mortgage loan originators, underwriters, processors, closers and mortgage management professionals, said Janet Brinkman, vice president and recruiting manager at Fifth Third.

Quicken Loans, an Internet-based mortgage house, has hired an average of 120 mortgage brokers per month in 2012, said Michelle Salvatore, director of recruiting.

Mountains of Red Tape

The recent uptick in mortgage hiring is a direct result of low interest rates, more home purchases and the mountains of red tape born from the 2008 mortgage crisis.

Even the simplest refinances for affluent and responsible homeowners require months of appraisals, exhaustive credit checks and supplementary paperwork, forcing banks to hire additional workers, said Frank Donnelly, president of the Mortgage Bankers Association of Metropolitan Washington, D.C. and a certified financial planner.

While the new regulations have added jobs, they have also created a few unintended consequences that are affecting mortgage workers and the industry in general.

Mortgage employees work long hours and often get burnt out from dealing with the sheer amount of paperwork, said Donnelly. Strict regulations also add additional pressure to loan originators and underwriters, who are monitored internally and by state and federal regulators.

"If you aren't operating at top efficiency, you get dinged," said Paul Hindman, managing director at Management Advisors Executive Search, a Raleigh-Durham, N.C.-based recruiting firm specializing in the financial services industry. "Any little mistake goes on your permanent record. Employees are working 60 to 80 hours a week to deliver quality."

The emphasis on compliance and transparency is greater than ever before, said Craig Paris, assistant vice president at Eastern Bank Advantage Mortgage Group. Complying with new regulations is particularly time-consuming for underwriters, who now need to manually work through each and every aspect of a loan to determine its accuracy.

Higher Turnover

The end result is that many mortgage workers are quitting their jobs to take similar positions at rival firms, assuming the grass is greener, Paris said.

"There is a lot of hiring going on but much of it is turnover-based," said Hindman, who questions whether mortgage companies are making net gains or just backfilling positions to compensate for turnover. "We are looking to hire three underwriters because we're losing four," Paris said.

The mortgage industry added a net 10,000 employees between May and June, according to the Mortgage Bankers Association, citing information from the Bureau of Labor Statistics. However, the industry added just 1,300 jobs in the first four months of the year, suffering losses in both January and April. Excluding June, when the mortgage industry added nearly 8,000 jobs, total head count has remained relatively unchanged over the last year.

The spike in June suggests that if home sales continue to recover, so should mortgage hiring. The overall number of people handling mortgages is relatively low given the demand, said Mike Montgomery, a senior economist with IHS Global Insight. "If you put yourself in the position of a mortgage broker, it is probably 'safe' to pick up hiring after a very lousy period," he said.

Citigroup, Wells Fargo, Fifth Third and Quicken Loans didn't comment on the percentage of 2012 hires that were backfills, but did say they have made net gains during the first half of the year.

The mortgage crash has also resulted in a lack of fresh talent in the industry, hence the talent poaching and long hours for mortgage workers. Many new hires lost their jobs in 2008 and, with the uncertainty of the housing market, most freshly minted college grads are leery about getting into the mortgage industry, said Donnelly, who estimates the average age of mortgage employees to be around 50.

Hesitant to Train

This trend is exacerbated by the fact that mortgage houses can't afford to train and bring on new talent, due to the sheer complexity of the job, Donnelly said. And with all the talent poaching, companies are hesitant to train inexperienced employees knowing that they may be investing resources for the benefit of close rivals, said Pat Sherlock, president of QFS Sales Solutions, a financial sales consultancy firm.

"Companies are more exposed, and they just can't take risks on people," said Sherlock.

Quicken Loans operates an internship program with hope of encouraging interns to come back to the company on a professional basis, Salvatore said. Several of Sherlock's banking clients are in the process of designing programs to bring in fresh talent.

Interest Rate Uncertainty

Should interest rates begin to rise again, the need for additional hires would probably slow. But this isn't all bad news for talented professionals, particularly loan originators, said Sherlock.

Mortgage houses will need better salespeople when interest rates rise and the refinancing market cools, she said. Unlike refinancings, new loans are more scrutinized and require smarter and more aggressive salespeople, who in turn can take advantage of the higher margins associated with new business, Sherlock said. Banks will also be more willing to train less experienced but more talented salespeople as the housing market continues to stabilize.

Average home prices increased in June for the first time since 2010, suggesting the market is finally moving in the right direction. The June hiring spike is in part due to "suspicion the recovery in home sales is for real now," Montgomery said.

Now if the mortgage industry can just find enough qualified people to make those loans.

Write to Beecher Tuttle at beecher.tuttle@dowjones.com