As the refinance boom enters its fourth month, mortgage companies are stretching their already beefed-up staffs to the limit and are facing a dearth of qualified workers, several lenders say.
Refinancings, fueled by mortgage rates that have hung steadily near 7% since late December, have soared to almost 60% of mortgage activity. Many lenders said they had anticipated an increase in volume during the first months of this year, but several said that the strength and endurance of the demand have taken them by surprise.
Many companies began falling behind in March and have almost exhausted available staffing options, several sources said. Rather than turn away business, lenders are simply lengthening the application and funding process.
Last month there was a shortage of qualified personnel, and were going to be facing that for a very long time, said Richard Easton, a mortgage consultant and the chief executive officer of Startbank, a New York firm that sells business plans for mortgage companies.
This refinance boom has essentially cleaned up everybody who was looking for a job, and it didnt take long. There are no people walking around with mortgage-lending resumes, Mr. Easton said.
Mr. Easton said that with the loan process slowing and customer service suffering, lenders can miss business opportunities amid the sea of applications.
After increasing permanent staff in January and turning to temp agencies in March, MortgageIT.com is simply telling customers that the process will take from two to four weeks longer than usual.
You try to be fair in managing expectations up front, said CEO Doug Naidus. You tell people that want to refinance that its no longer a 30-day process, its 45, and two weeks from now it might be 60.
At HomeSide International Inc. in Jacksonville, Fla., human resources officers have been holding on-site job fairs to recruit talent, regardless of whether prospective employees have mortgage experience.
Robert Vick, senior vice president and director of human resources, said applicants are given aptitude tests, and those that are hired attend classes before going to work. The fairs have been successful, but HomeSide also has an on-site temp agency to help meet staffing requirements, he said.
We came into the year thinking things would be flat, but with the very attractive rates right now for both new business and refi business, our hiring needs are significantly higher than what we had expected, Mr. Vick said.
Similarly, Patrick S. Flood, president and CEO of HomeBanc Mortgage Corp. in Atlanta, said that his company has been able to navigate the shortage of qualified help.
For 10 years HomeBanc has run a recruiting, training, and development program through which it hires people with no mortgage experience, trains them in five- or eight-week classes, and assimilates them into the corporate culture, Mr Flood said.
The influx of business and resultant staffing up present another challenge to lenders: too many employees when the refinance activity dries up.
Mr. Naidus said that to prevent painful layoffs, MortgageIT.com hired permanent employees with an eye to what it would need nine months down the road not including the refinance business. I tried to immediately staff for what my natural growth would be for the third quarter, he said.
Nonetheless, he added, few lenders foresaw the steepness of the refinance spike.
After using temp workers in March, lenders are slowing their turn times, or length of time it takes to process a loan application. You stay out of trouble as long as youre honest with your clients and business partners, Mr. Naidus said.
Everybodys doing the best they can, but its slow, said David Harris, president of Lowestloan in Valhalla, N.Y., the nascent online mortgage operation financed by investor Carl Icahn.
Over the past two and a half months, Lowestloan has doubled its sales and processing employees to meet demand, and has temp workers handling administration and paperwork to allow sales and processing staff to concentrate on taking applications.
In addition, in boom times employees may be promoted before they are ready. As a result, Startbanks Mr. Easton said, some trainers themselves still need to be trained.
Qualified underwriters are taken away by other companies to fill management positions, so a person who may not be ready to be an underwriter is promoted, he said. Then a person who is not trained at all becomes a loan processor it does weaken the core staff.
Erick Bergquist contributed to this article.