Some top-flight loan officers who fled nonbank mortgage lenders for megabanks, seeking job security and a future, are returning to the nonbanks because the big boys take too long to close loans.
At stake, quite simply, is loan commissions. Not only are there reports of companies like Bank of America Corp. and Wells Fargo & Co. getting stingy with commissions, but because these lenders take so long to close mortgages, some real estate agents won't give certain branches referrals anymore.
A former B of A loan officer who worked for the lender in the Houston area said he left the bank to work for a nonbank because closing times were so bad — a situation that he said didn't exist at Countrywide Financial, which B of A bought in mid-2008.
Requesting his name not be used, the loan officer said B of A executives who were put in charge of the home lending unit placed so many "overlays" on the business that processing times have increased by several weeks.
"You have a lot more chiefs that you need to report to now," he said. "It speaks to workflow, people and management focus. Even the loan imaging system they switched to takes longer."
The loan officer said he grew so tired of the slow processing and underwriting times that he went to work for a midsize nondepository where loans can close within 30 days or sooner if necessary.
He said B of A is now taking 45 to 60 days. (His own refi with B of A took seven months, he said, because he used an out-of-town call center.)
Asked why he would jump ship during a precarious time for the economy and mortgage banking, he said: "The Houston market is actually pretty good, especially compared to the rest of the country."
B of A did not dispute that loan closings can take a long time, especially in the wake of tighter underwriting requirements from Fannie Mae and Freddie Mac. Although the lender would not provide details, a spokeswoman said: "The mortgage environment has undergone dramatic changes over the past several years. Conservative underwriting standards have been enforced and regulatory changes have been enacted in order to ensure that consumers can safely afford their mortgages over the life of the loan." She added that while B of A is "playing a leading role in this new era of responsible lending, we also understand that these changes often translate into longer processing periods. This is the reality across the industry."
That may be so, but it's also giving some nonbanks a leg up on the megabanks.
Chris George, the chief executive of CMG Mortgage in San Ramon, Calif., said his company can take an application and fund a loan in 30 days. "We can do even 15 to 20 days" as long as the borrower is "submission-friendly."
One mortgage banker said that over the past year his firm lost four loan officers to B of A and Wells. "So far three of them have come back to us," he said. This executive, who requested his name not be published, said the loan officers who left "thought they were getting stability by joining a big bank, but they disliked the control they saw."