When James Sias joined Cincinnati-based Fifth Third Bank in Jan ‘23, the mortgage division was in bad shape. During Covid, Fifth Third regularly took 6 months(!) to close refis, if they could close them at all. LOs received huge guarantees & huge pricing exceptions to match any offer, even if the bank lost significant money on the deal. Roughly 100 of the LOs weren’t originating any loans at all.

Operationally, the bank kept rates too low for too long & didn’t staff up or outsource fast enough. Fifth Third even stopped buying correspondent loans for a month b/c they couldn’t handle it. Sias also discovered there wasn’t even a CRM; LOs used their own Excel spreadsheets.

“They were big, but they were bad,” Sias, the head of mortgage lending at Fifth Third, said in an interview w/ The Scoop.

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These days, Sias, who was previously at Huntington Bank, is frequently on the road meeting sales leaders & mending fences w/ mortgage & real estate folk. Execs see an opportunity to capitalize on the bank’s rapid overall growth w/ cross-sale strategies. Fifth Third is aiming to be a top-10 bank in the U.S.

“It's part of why I've been a little bit more public lately,” he told The Scoop. “It’s not something I love to do. We’re not perfect, but we’ve done a lot of the right things. So I think we’ve got a good, strong story to tell & the bank is wanting to invest.”

Sias says the focus in mortgage on customer service & has yielded an NPS of 80% YTD. They cleaned house by parting ways w/ a third of their sales leaders & about 100 LOs. These days, the bank now won’t hire an LO unless he/she is doing a minimum of 24 units a year (w/ some exceptions for community loan officers). The 60 or so who have joined have averaged about $16.5M in annual volume; the departures averaged about $4M. 

“What really drives the needle is finding the right leader by market,” he said. “I hired the right guy in South Carolina, given him the support he needs, & he's taken it from 2 people when I started to $35M a month. Now I've got parts of Florida where we've replaced the manager 2x since I started, & we're the same size.”

Fifth Third is looking to be a "cross-selling machine" & is emphasizing "advice-led lending," w/ a big push on FTHB & LMI (particularly for the CRA rating). Fifth Third also recently made a splashy acquisition by picking up Dallas-based Comerica Bank 🐯 for $10.9B. There’s potential for the mortgage division. For example, Comerica has 100 branches in Texas but no LOs. Sias said he is looking to hire about 50 LOs just in Texas alone.

"We're trying to change the story here. We're very open & say we sucked in the past, but the CEO [Tim Spence] recognized that, he brought in people from outside the organization to fix it. He's giving us money. We signed a $90M contract w/ ICE to bring on Encompass & MSP, so we're going to the best servicing system in the country & Encompass.”

Hey everyone — quick but very important update. The Mortgage Scoop is moving behind a paywall on Wednesday, Nov. 19. Starting then, only paid subscribers will receive the full M/W/F editions — the scoops, the deep dives, the analysis, the stuff you can’t get anywhere else. I’m also adding bonus content exclusively for paid readers.

If you want full access, Founding Members can lock in $240/year right now before prices rise. It’s also available for $30 a month. Monday editions will stay free for everyone. If you’re interested in a group subscription, please message me at [email protected].

American Security Mortgage’s Jon Overfelt said the revelation about the future of the LO hit him while he was eating Christmas Tree Cakes 🎄 . 

“If the LO job is becoming an advisor job… Then the LO pay has to change completely,” he wrote on LinkedIn. “Think about it: you used to have stockbrokers, & now you have financial advisors. Here’s the part we don’t like to admit: Most top LOs are already doing advisor-level work but are paid on a transactional basis.” 

Per Overfelt, the hours of coaching, budgeting, credit help, strategy sessions, market guidance, etc. just doesn’t mean squat 🏋 to a good percentage of borrowers. Rate is still the #1 reason customers choose a lender.

“Ignoring that doesn’t change the reality of how borrowers behave,” he said. “Across multiple roundtables this year, w/ top producers in every market, the message is the same: Borrower loyalty is at an all-time low, & it’s not coming back.”

If the industry doesn’t evolve, he believes fewer people will do this job at the level today’s market demands.

“Tech isn’t replacing the human advisor role. Not now. Not anytime soon. So if the job has changed, the pay model has to change right along with it,” he said. “We need guardrails to protect the LO’s most valuable asset: time.”

The message resonated w/ Joey Hansen, an LO in Colorado.

“Happened to me just this week,” she wrote. “A couple that I spent hours advising, providing them w/ the strategy they needed to not only win the house, but meet their very specific payment and cash to close goals… took that tailored strategy and handed it to a ‘family friend’ who beat it by a few dollars & went with them. ‘Nothing personal Joey, we just wanted to go w/ the close family friend & the best option for us.’ You can have the best scripts to try to prevent this, but there will always be consumers that simply do not value that advisor kind of relationship.”

Pugnacious FHFA Director Bill Pulte has alienated not just those in the White House, but some pretty powerful mortgage companies as well. Rocket Companies didn’t anticipate issues getting its then-$9.4B deal for Mr. Cooper by the business-friendly Trump administration. But Rocket complained to the White House that Pulte was slow-walking the process, sources told the WSJ. 

“Trump intervened & his chief of staff Susie Wiles ordered Pulte to bless the deal, the people said. A spokesman for the FHFA said that characterization of the Rocket deal’s review is false. A person close to FHFA said the agency was doing proper diligence on a significant deal.”

But that’s not all! Rocket had a separate, earlier run-in w/ Pulte, when Pulte suggested the lender invest 💸 in 1789 Capital, whose principal Omeed Malik was later given a seat on Fannie Mae’s board, sources told the WSJ. The FHFA & Pulte disputed the allegation, saying it was “categorically false.” A lawyer for 1789 said neither the firm nor Malik was aware of such a suggestion by Pulte.

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