Loan officers, a casualty of the recession, harder to come by in Charlotte

With Charlotte's housing market making a comeback, it seems like celebration time for the region's mortgage industry.

Instead, as home sales continue to rise, many in the field say they face a struggle: finding skilled loan officers after many fled the industry during the housing downturn.

The souring of the housing market, the folding of lenders, new federal regulations, changes to compensation structures – all have contributed to a smaller pool of loan officers, industry officials say.

“Since 2008, a lot of people exited the business,” Phil Mahoney, president of Charlotte-based American Security Mortgage, told me this week. “There’s not a lot of good what I would call experienced mortgage banking talent in place. It would be hard for anybody to expand.”

The numbers tell the story. In Mecklenburg County, mortgage- and nonmortgage-loan brokers fell to 477 last year from a peak in 2006 of 1,331, a drop of 64 percent, according to federal data. (The 2012 figure is preliminary, according to the U.S. Bureau of Labor Statistics.)

Meanwhile, home sales have been soaring in the region. In the Charlotte metropolitan area, sales of existing homes hit 3,402 in May, up 31 percent from the same month last year, according to the Charlotte Regional Realtor Association.

Rising home sales help make Charlotte region attractive to lenders. Indeed, Mahoney said several have set up shop in the area in the past two years.

But as more mortgage companies enter the market, it serves to further strain the supply of loan officers. Just last week, Mortgage Network, a Danvers, Mass.-based company, opened a temporary office on Ayrsley Town Boulevard, with plans to move in August to a permanent location in Ballantyne.

“There are several builders and Realtors that are located over there. So that is who we are targeting to,” Brian Barron, manager of the office, Mortgage Network’s first in Charlotte, told me.

Barron said he’ll be hiring loan officers “as fast as I can recruit them. The more, the merrier.”

By the end of the year, he hopes to have as many as five loan officers.

Barron said he could see Mortgage Network having more than one office in the Charlotte region, although no others have been announced.

Independent mortgage companies say they face an added challenge in recruiting loan officers compared with banks, thanks to the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008. Among other things, the act requires loan originators to have a state license if they don’t work for a federally insured bank.

Hank Cunningham, president of Greensboro-based Cunningham & Co., an independent mortgage company that has offices in the Charlotte area, said SAFE creates an uneven playing field for companies like his. He said it’s tough for bank-employed loan officers to find the time to obtain a license while holding down their current job. On the other hand, if they leave the bank to work on getting their license, they can't work in loan origination until they get it, he said.

“It’s a hurdle to move from one employer to the next,” he said.

That’s why he’s been pushing the North Carolina General Assembly to pass a bill allowing transitional licenses for loan originators. With a transitional license, an originator would be able to leave a bank and go to work for an independent mortgage company while trying to obtain their state license, he said.

The bill has passed the House and is in the Senate. Even if it clears the General Assembly, SAFE would have to be amended for North Carolina’s bill to be legal.

Cunningham says he would hire more loan officers in Charlotte – if he could find the right people. But he says he won’t hire just anybody.

“I’d only hire somebody that was currently doing business and had referral sources."

Travis Minter, president of the Mortgage Bankers Association of the Carolinas, told me Friday that, since the recession, he’s seen loan officers leave the business in Charleston and Myrtle Beach, S.C., the markets in which he specializes. He added, though, that he’s heard about loan officers dropping out of the industry in Charlotte, too.

Federal changes to the way loan officers are compensated are one factor that’s driven them to other occupations, Minter said. Under the federal Dodd-Frank financial overhaul act, for example, a mortgage broker cannot receive compensation based on the interest rate or other loan terms or conditions.

Having fewer loan officers is bad for “turn time,” how long it takes for funding for a home loan to be approved, Minter said.

He said that, in the past six to eight months, lenders have added loan officers to meet demand.

Despite that, he calls Mecklenburg County’s 64 percent drop in mortgage and nonmortgage loan brokers “a pretty drastic reduction.”

(For more on worker shortages affecting Charlotte's housing market, check out a story my colleague, reporter Eric Frazier, wrote Thursday about employment in the homebuilding industry.)