In the ever-evolving landscape of the mortgage industry, understanding employment trends and leveraging data for strategic decision-making has never been more critical. In this episode, David delved into this subject with Dale Larson III, co-founder of Modex. Their discussion offered valuable insights into the current state of mortgage employment, highlighting the significance of data-driven recruitment and retention strategies. Companies that harness the power of data will be better equipped to navigate the complexities of recruitment and retention in an ever-changing market. Modex stands at the forefront of this transformation, offering tools and insights that enable mortgage companies to make informed, strategic decisions. Staying ahead of employment trends and leveraging data will be key to sustained success.
The Future of Mortgage Employment: Navigating the New Normal with Dale Larson III of Modex
[David] Listeners. We’re in for a real treat today. We’ve got Dale Larson of Modex joining us. And he’s got some new, fresh data. Now we’re thrilled to have any of our sponsors on, but I’m really pleased with this particular sponsor that we have because of the partnership we have with them. They are absolutely taking the market by storm. If you’re not familiar with Modex, you need to be, and you’re going to hear why in this interview, Dale, good to have you joining us.
[Dale] David, great to see you as well and thank you for the positive comments on Modex, Likewise, we appreciate the partnership with you and really much of the features and functionality in the platform have been driven by you and your team. We equally appreciate the partnership.[David] It is a great partnership. Mostly what I love about you and your dad, who’s a co-founder with you on the business is the sense of family. You guys are a tight family with so many values that align up with me and my family. I think more important these days, values, what values we hold are so much about what determines our success or failure in business and I love the fact that you guys are here to serve a market. It’s great. I always say making good money is a result of doing things well but doing it well and doing it right is really the key to it. So again, really excited to have you here for those that don’t know you, you and your dad started the business how long ago, just a real brief overview of what you started and the growth trajectory that you’ve been on.
[Dale] Yeah, I’ll do my best to be brief. It’s so funny, the last two calls we’ve had, we’ve had him with my dad, which he couldn’t, he can’t be attended today. And hopefully in future episodes we’ll have him, but it’s really funny. My dad’s rubbing off on me, right? I seem to tell more stories and have more metaphor. So, I’ll do my best to be brief here. So, the really quick history of Modex. Became a corporation in 2015, launched the first version in 2017 in Washington State where we’re based, took the platform nationwide fall of 2019. We have hundreds of clients nationwide, everywhere from mom-and-pop broker shops all the way up to multinational depositories. And really, we do two things. One, we have a platform called Modex Recruit which is a data platform where our clients subscribe to learn about the mortgage industry based upon factual data. And we have another platform called Modex Profiles where loan officers and employers can both claim profiles and connect with the way that’s comfortable for everyone, can be anonymous for a loan officer, and it’s also all driven by data as well. So that’s the lay of the land where we’re at now.[David] You guys do an exceptional job as so many of our clients use you. I think every one of our clients has a relationship with you. And so, it’s really exciting. There’s a lot of big opportunities out there, especially when it comes to leveraging data in terms of talent acquisition. And then more importantly, the biggest thing is trusting everyone else. How do I retain the good ones? I got, give us an update from what you’re seeing as far as the opportunities that are arising.
[Dale] So, I think in our last call, or which I encourage everyone to go look at that previous episode.[David] We’re gonna put the link to that previous episode down in the show notes on this particular show. But so you can go back and listen to the last couple, we’ll put all the links of your appearances. But going on what you were saying about what, since then.
[Dale] Yeah, last time we talked about the propensity to move, which we described what is the likelihood that a loan officer is going to move? And we think that here at Modex, and I’ll get into some, I have some hard numbers here., there’s a higher probability of certain loan officers switching jobs. And there’s some easy logic to it. You would think someone who’s, more concrete in their career, they’ve been at a job, maybe a bank or a credit union for 30 years, is less likely to switch jobs. High producers who maybe get more attention from their existing employer, less likely to switch jobs. And that is true. That’s true in the data. And I’ll be able to unpack that here in a moment. Really, it’s looking at the data and saying, Hey, not only which loan officers are going to switch jobs, but what population of loan officers And there’s two things here, population, by production and then by time and industry, right? So, if we look at the numbers here, so this is the last 12 months of data. We pulled this data a week or so ago. So if we look at fifty to a hundred million dollar a year producers, the last 12 months, they did fifty to a hundred million dollars in production. There are 1,842 loan officers period in the industry that did fifty to a hundred million dollars in production. Okay. 175 of those folks switched jobs in the last 12 months. Okay. So about 10% of those super producers in the market switched jobs. So that’s that. Now, if we were to scale it down, if we were to look at $20 million to $50 million a year producers, again, we’re looking at the last 12 months, there were 11,982 loan officers that fit that production range. Of that 11,982. 1,655 of them switched jobs. So about 14% of them switched jobs, right? So the less production you get, the more moves we’re seeing. Now, the last one I can get you here, the $1 million to 20 million producers in the last 12 months, there are 123,801 loan officers that fit that range. Of that 27,580 switched jobs, about 22% of those producers switched jobs. So if you’re looking at that data and if you’re a recruiter or a hiring manager or a business owner, I would probably encourage you to go after the one to 20 million a year producers, because they’re 12% more likely to switch jobs than your fifty to a hundred million dollar a year producers.[David] That is so interesting. Any insights as to why that is? You’ve been able to draw conclusions as to why, or read into that a little bit.
[Dale] My suspicion is that higher producing loan officers they get more attention at their existing employer. They maybe get more of what they want. They want marketing support. They’ll get it because they’re a high producer and they bring revenue into the business. Whereas your $1 million to $20 million a year producer is important. I want to make that clear. They are important. They may get less attention than the 20-50 or $50-100 million dollar a year producer. And so our position would be, Hey, If you’re a recruiter or business owner, it might make more sense to go after the 1-20 million a year producers because you’re more likely to hire them. It’s a better use of your time.[David] Yeah. There’s more app for them to make switch versus the others. That’s really interesting. Yeah. Obviously the top producers are always going to be the one that will be targeted and everyone’s going to want to go after. And that’s, I think another factor, but it’s really interesting that there is a higher percentage of them that actually do move. Do you think that sign on bonuses and things like that are playing a big role? recruiting those top people. It seems like it is. At least that’s what we’re seeing.
[Dale] I think it very well could. I think a couple of years ago when the rates were really low, I think that really played a big role. There was money, just crazy money being thrown around. Just some of the stories I heard were just obnoxious, but in this market for the bigger producers. Yeah. Oh yeah. It’s still a thing for the lesser producers. I think it’s more around comp, culture, support, stuff like that. But for the bigger producers, yeah, there’s still signing bonuses certainly happening all the time.[David] Yeah, it’s really interesting. What are some of the primary drivers behind shifts in mortgage industry employment patterns? If you see any, I’d love to hear those. And can you qualify the magnitude of these changes? In other words, changes in the workforce size, composition, geographic distribution, things like that?
[Dale] Yeah. I think I’m seeing in the market. Have, again, I’m not trying to sell Modex on here, obviously, we have this great functionality.[David] Go ahead and sell Modex. I’m all for it. I want people to use it. It’s a great tool.
[Dale] We have this feature called workforce data, which allows you to see the movement of loan officers between branches and companies and so it’s really interesting to see a lot of large companies really not growing at the pace that you would expect and they also have large swings in growth and loss of growth, right? So one month, they may hire 300 loan officers in the next month, they may lose 600 in the next month, they may hire 800. So it’s just up and down. So we also see a lot with acquisitions. We’ll see, a massive influx of loan officers to a company. What I’ve been happy to see is some of the small to mid-sized lenders, a lot of brokers, seeing some pretty incredible growth. This is a friend of mine Tuan at Loan Factory. Watching their growth in the Modex data. He talks about all the time on LinkedIn and they’re growing, but when you actually look at the data, it’s pretty incredible to see some companies like theirs growing. But yeah, there’s a lot of movement going on in the market for sure.[David] When you’re looking at some of the magnitude of some of these changes, what are driving more of the magnitude?
[Dale] I think loan officers are looking for support in this market. is a really tough market with interest rates. We’re not seeing any changes really. And so I think a lot of loan officers are looking for more support and they’re maybe not getting the attention that they used to at their existing employers and so they’re looking for kind of a funny way to put it looking for attention. But, they’re looking to go to an employer that will maybe support them better on the IT front, on the marketing front, there might be some comp changes, some leads provided. So I think that’s what’s driving, a lot of the shifts in the market right now.[David] Are you noticing any patterns on geographic distribution? Is there certain geographic areas that seem to be moving more than others?
[Dale] Yeah, there are big markets that I would say that mortgage companies operate, it’s pretty common, right? It’s going to be your Texas, your Florida’s, your California’s your Washington’s, your East Coasts, a little bit more of the core us is a little bit slower. Yeah, there’s a lot of shifts jog, from a geographic standpoint of what’s going on in the market.[David] So what is the latest industry benchmarks for employee turnover rates within the mortgage sector and how do these compare with historical averages?
[Dale] I would say we’re seeing more turnover than we have in the past just because the market hasn’t recovered right back to pre pandemic levels. However, I was still fairly shocked to see, how many loan officers are switching jobs in the market. Again, low to mid producers, 22% almost 25% of the markets shifted. That’s a lot of loan officers moving jobs. We’ve generally used the general term of about one third of loan officers are in flux at any point in time and a statistic we used a couple of years ago was that about 86,000 loan officers switch jobs per year. So that’s job switches. That’s not people entering the market or leaving the market. But there is a lot of movement going on in the market today.[David] I would imagine, so are you noticing anything as it relates to time, how long someone’s been in the industry? Are the people that are newer industry, do they change more frequently than those that have been in the industry for 10, 20 years?
[Dale] Yeah, and I’m actually really happy to bring that up because that was the second kind of statistic that I brought today. So along the lines of what we were talking about a few minutes ago with the 50 to 100 million, 20 to 50, 1 to 20 million dollars. We did the same kind of thing, but looking for time and industry. And to clarify with you and all your listeners, this is all factual licensing. This comes from licensing data. So I’m not just making this up. It’s not like an assumption. This is actual hard statistical data. I’m gonna work from I think, the least impactful to the most impactful, which the most impactful, I think was interesting. So if we look at loan officers that have been in the job 10 plus years, there are 95,276 of them, and about 14% of that population, the people that have been in the industry at least 10, 10 plus years, switch jobs. Okay? So if you’ve been at your job 10 plus years, you’re gonna move 14% of the time. Now, if we look at people that have been in the industry five to 10 years. There’s about 12,944 of them and 20 percent of them have switched jobs in the last 12 months. So the less experience you become, and I’ll get down to a very specific point here in a moment. The less experienced you are, the more likely you are to switch jobs. If we look at people that have been in the industry three to five years there’s a 20, 22 percent of that population has switched jobs in the last 12 months. if we look at one to three years, 20, 21 percent of the market has switched. Now, I think this is the most interesting statistic. If we look at loan officers that have been in the industry one year or less but have done a loan in the last 12 months, there’s a 63 percent chance that they’ve switched jobs. So 63%. That’s the big one that I think is really interesting. Not a lot of loan officers entering the industry right now, which is fine. So we would say in the last 12 months, there were 5,670 loan officers who have been in the industry zero to one year that did at least one loan. 3,596 of them switched jobs in the last 12 months. So they come into the industry, they maybe get their license, they get trained, they do a loan, and then they find a new job. So 63 percent of that population switch jobs. So again, going back to what I was saying earlier, if you’re an employer, I would go after loan officers that are brand new to the industry. And it’s a funny position, but it’s someone else has trained them, got them licensed. They know how to use their LOS. They know how to talk the marketing talk and the mortgage talk, then they should go switch jobs. So that’s an interesting demographic to go after.[David] What I find so interesting about that it’s for those companies that are smart enough to recruit new flat, fresh bodies into the industry and getting them trained up, are not holding onto them. I would love to dive into as to why that is. Why is it that you invest the money to get them to a point of being productive? And then you 63% of the time they leave you. That would be into any insights into why that is or any suspicions. Why?
[Dale] I was just talking to a friend about this. I’m not sure. I’ve, we just provide the stats. I don’t have the analysis of the game.[David] You just provide the statistics. Yeah.
[Dale] But one friend of mine recently told me it might be a generational thing. So probably, this the millennials, et cetera, they’re career builders, even my generation I guess I’m technically a millennial, we’re like my demographic, my age group, we traditionally don’t have careers. I’m in a little bit north of Seattle here and we have the Boeing plant, Boeing manufacturing plant here. And, usually people would go to work for Boeing. This is how I joke about it. People would go to work for Boeing and they died Boeing. Like you work at Boeing 40,50 years, and that would be it. My generation, we don’t do that anymore, which is neither here nor there, but I’m going to suspect that we have more younger loan officers entering the industry, they’re getting trained. And then they’re hopping to a new employer because they can probably make more money at some somewhere else. I think it’s a generational thing. Younger loan officers are looking to go up the ladder and make more money or be more senior by switching to a new job, getting a new title, better comp. That’d be my suspicion.[David] It’s really fascinating. What other data do you have that you could share with us that may be interesting?
[Dale] This is really all the statistical information I brought today. I think some of the other really interesting things that we’ve been looking at recently is a demographic data. So diversity data. So we’ve really dug into CRA data, census data and then CTLMI. So I don’t really have anything like overtly exciting to bring to you guys today on that, but we think that’s a really interesting realm. And then going back all the way to what you were talking about, maybe at the beginning of our call here was a retention.[David] Yeah. That’s the part that so many people are struggling with.
[Dale] I’m not bringing statistical information today on that. However, a lot of people said, Modex data is great for hiring loan officers. Can it be used for retaining loan officers? Because it’s much more expensive to lose a loan officer. Sorry, it’s more expensive to hire a loan officer than it is to just keep one. So we would love to use our data and it goes right along the lines of the arrivals and departure data or the workforce data to say, Hey, companies, employers you seem to be losing lots of loan officers within this area, Southern Florida or Northern Texas, whatever. You should take a closer look at that because there’s something going on here, or you’ve lost 50% of your branch managers in the Northeast. Do something about it. And I think also we could do comparative analysis where we could say, Hey, like you’re losing 10% of your staff every month, but you’re replacing with 12%, but Hey, for some reason, your competitor is not losing as many people. So why are they not losing people? But you are.[David] I think that’s what’s so exciting about what you provide. Modex provides some of the best, most in data, rich business intelligence. When you’re really starting to be able to dive into it. Think about some of that, the power users that you have at Modex, people that are using this, you think really effectively, give us some examples. You don’t have to name any names. You can honor them if you want to, but give us some names or give some things that they’re doing differently using the Modex data versus others that are probably not. Fully exercising the power of Modex.
[Dale] Yeah. I probably won’t name names because certain clients, we were not supposed to use their names and I don’t want to confuse that up, but I think, a lot of times people come into our platform saying, I want to find this type of loan officer. I’m going to find a 10 to 20 million producer in Seattle who works at a lender, who’s been in the industry 10 years. You can do that, of course, or platform. The other side is, maybe there’s specific loan officers you don’t want. So not only can you filter for who you want, you can also filter out who you don’t want. So then you might say, Hey, I don’t want loan officers who are on credit unions. I don’t want people that are brand new to the industry. I don’t want people that are doing mainly HELOCs. So then you can further narrow it, by not only saying these are the people that I want, but you can also say, these are the people I don’t want. So I think a lot of people are finding some success with that. I think secondly, our more sophisticated clients have done integrations with CRMs. I think that’s a big deal. Generally our position right now on integrations is Modex doesn’t want to build a CRM. We think other people have done that much better than us. Surefire, HubSpot, Total Expert, et cetera. But we would rather plug into those CRMs. So we can plug into those CRMs. So we can then take production data and we can push it into a CRM where then our clients can manage those relationships and marketing campaigns out of a different CRM. And I guess the last thing on the wholesale side, we don’t talk a whole lot about wholesale. What’s really funny, David, too, is our platform is called Modex Recruit, which is very employment related. And that’s because we’re mainly a recruiting platform. We’re for employment. However, we’ve backed into the fact that there are dozens of alternative use cases to our data in correspondent and wholesale and real estate and all kinds of fun stuff. So we have clients who are in the wholesale or non QM space. Who are leveraging our data to find new perspective loan officers to do business with not to hire, but to sell their product to their mortgage product to, based upon the type of product that they’re selling. So they could come into our platform and say, Hey, Modex, show me loan officers that are doing non QM business, but not non QM business with me. And so we can tell them, Hey, here are the 20, 50,000 loan officers that have done me on QM. That’s just a random number. And then they can go reach out to those little officers and, try and start doing business with them.[David] It’s really interesting about the retention information, but when it comes to the recruiting side, what are some best practices that people are using that you’re finding is getting better results than others? There’s some people really struggling in the recruiting front right now. They’re just not getting the results and there is a big question that many would love to hear you answer.
[Dale] Yeah, and I may give an answer that not everyone likes and I have clients on all sides of the spectrum. So we have lots of clients who take, I would call the shotgun approach where they just send, they just target a lot of loan officers at once. My opinion, is that’s probably not the most effective method, but it does create results. My opinion that some of our more successful clients are more intentional with the recruiting So they’re not taking the shotgun approach. They’re being very intentional about who are they’re going after So they’ll say hey I’ve gone from our database has 1.5 million loan officers So they’ll bring it down from 1.5 million down to a thousand and then they’ll say okay of those thousand which do we really like and then they’ll try and engage with, 100 to 1,000 loan officers and try and really build that relationship. There is 1 company of ours that actually has a book club. I’m not going to mention their name, but for some of the top producers that they’re targeting, it’s either a monthly or quarterly, they send a book to those loan officers. And they’re part of the President’s Book Club, even though they’re not a part of that business. And so they really, over time will slowly drip on them trying to show like, Hey, this is the culture of our business. And then that, I think they actually have a pretty good success about around that. So my opinion is some of the more successful methods or strategies around recruiting are being intentional building relationships, not this shotgun bland approach. It works, but I don’t think it works as best as being intentional, building relationships.[David] There’s a lot that goes into this. Modex is such an outstanding product as it is now. What are some things that you’re going to be, you’re releasing out? Can you talk about what’s on the roadmap kind of direction where you’re going?
[Dale] Yeah. We’re gonna be working on some new contact data stuff. Right now, Modex has lots of contact data on loan officers. We have some contact data on real estate agents. We are going to be changing how we do that. We’ll be able to provide our clients more, better, faster contact data and more accurate. So that’s coming here in the near future. Very excited about that. That’s going to be driven by some AI, big hot topic, but we’re going to be working on that. We also think that a lot of the stuff, the statistical information that I brought you today is going to be really relevant to mortgage companies here in the future. So not only would Modex like to tell clients. Hey, Here’s loan officer production information. We would like to help them drive recruiting strategy where we could tell the company. Hey, these are the loan officers. You should go after, for these reasons so we’re going to be going more down that road, that propensity to move modeling where we can say, hey, these loan officers are most likely to move for this population of loan officers. You’re most likely to hire. And I’d say, lastly, just trying to merge in as many other interesting data sets as we can. That could be HAMDA data. That could be other public record data. Really understand further, where are loan officers going? What are they doing? and how can we help our clients, make more informed decisions? When they’re recruiting,[David] It’s been so good to have you back on and hearing about the latest data that you’re bringing up and finding is so fascinating. Dale, so good to have you here. It’s fun. I miss having your dad. But it’s really been great to have you here and give us an update on what’s going on there. How can best people get ahold of you? What’s the best way?
[Dale] Yeah, you can find our website modex.com, M O D E X. com. You can also reach out to me directly. That’s fine. Dale at modex.com and then I’ll redirect you, if it’s a sales related inquiry, I’ll redirect it to the right salesperson. If it’s like a media inquiry, we do media partnerships for anyone who’s in the media realm. You guys can talk to me, but yeah modex.com. You can learn a little bit more about us.[David] That’s good. What does Modex stand for as an acronym?
[Dale] It’s not, it stands for Mortgage Rolodex. Modex.[David] Oh, really? Mortgage Rolodex. That’s I love it. ML. That’s really good. That’s fun. I was, I’ve been always wondering about that. Thank you so much for being here, Dale. Love having you greet your family and continued success. Thank you for the partnership. Appreciate it.
[Dale] Thank you. Blessings.[David] Blessings.
Important Links
Dale Larson III : Driven leader with experience in both finance and technology. Strong record of enriching team culture and innovation.
As the founder and CEO of Modex Inc, Dale III is a driven technologist with a focus on real estate, mortgage banking and the transformational use of data analytics. He leads the team of both mortgage professionals and software engineers in the development of tools that analyse data in the area of human capital and business intelligence for the mortgage banking space.