Eye on the wrong prize: How the myth of loan officer productivity is costing lenders

Few phrases surface more often in mortgage boardrooms than “loan officer productivity.” Leaders understandably want more loans per originator, more dollar volume per head and greater efficiency across the sales force. The metric feels clean and controllable, offering a simple way to measure performance and signal accountability.

Gradually, that focus can harden into the assumption that productivity is primarily an individual trait. Conversations drift toward hiring more “productive” people, intensifying training or pressing teams to close more. Yet, output reflects far more than personal drive. Organizational structure, territory design, competitive density and operational support all shape results. 

Viewing productivity as something that resides solely with a single loan officer obscures the broader organizational design that makes production possible in the first place. It can also obscure where much of the industry’s most practical growth opportunity lies—not necessarily in recruiting the best of the best, but in how effectively institutions identify, position and develop originators who align with the markets they want to grow.

The superstar illusion

Mortgage culture amplifies the emphasis on individual performance. Rankings spotlight top producers and recruiters pursue high-volume originators with the expectation that last year’s numbers will carry forward. A triple-digit loan count can quickly become shorthand for guaranteed impact.

In recruiting conversations, the dynamic can become surprisingly candid. Top loan officers often command sizable signing bonuses and are purported to ask for perks as lavish as company-paid country club membership. These stories circulate because they reflect a familiar reality: Top-producing originators often negotiate from a position of confidence, and lenders eager for volume sometimes accommodate those gilded expectations.

What tends to receive less attention is the context behind the production. Those loans may have been concentrated in a particular neighborhood, tied to a specific borrower segment or sustained by referral relationships built over many years. Change the geography, product strategy or competitive environment, and performance can shift accordingly. 

An exclusive focus on the top of the curve can therefore lead lenders to pay premiums for results shaped as much by structure as by individual skill—and occasionally for perks that signal status more than strategy.

The financial stakes are already significant. The Mortgage Bankers Association’s Quarterly Mortgage Bankers Performance Report shows that lenders spent an average of $7,598 per loan on personnel expenses in the first quarter of 2025. That’s more than 60% of their total production costs, which averaged $12,579 per loan. Net production income was negative $28 per loan, meaning lenders were losing money on each origination. Expanding headcount without clear alignment to market opportunity only intensifies pressure on the largest component of the cost structure.

A more reliable approach is to align originators with markets where careful analysis points to the strongest opportunities for sustainable growth. Those with more modest aggregate volume may be working in markets where demand exists, but production has not yet caught up with opportunity. In those cases, development and alignment can generate more incremental growth than another high-cost recruit.

When headcount becomes a reflex

The same mindset often appears during periods of turnover. If several originators depart, the instinct is to refill those seats quickly, ideally with candidates who bring impressive track records. The response can appear disciplined, yet it may simply replicate the same structural misalignment that existed before.

Markets have boundaries. Purchase activity rises and falls, competition clusters in certain corridors and some territories can support only a finite number of producers. Gradually expanding staffing beyond what local demand can sustain thins pipelines and heightens internal pressure. Even capable originators can struggle in overcrowded or poorly aligned markets.

Over time, this dynamic turns into a turnover treadmill. Recruiting packages can briefly lift volume, but rising compensation costs often outpace sustainable production, creating mounting pressure across the institution. As expectations go unmet, departures follow and the cycle begins again.

Data from the Mortgage Bankers Association and STRATMOR Group’s Peer Group Roundtables program illustrates how significant that churn can be. During the first half of 2022, one of the more recent periods with published detailed figures, annualized turnover rates for processors, underwriters and closers ranged from roughly 35% to 50% at large non-bank lenders and 18% to 22% at large banks. Turnover at those levels compounds operational strain and erodes consistency across the production platform.

The instability complicates target growth strategies. An institution may prioritize expansion in specific borrower segments or census tracts while its highest-volume originators operate elsewhere. Another marquee hire rarely shifts penetration in those priority markets; strategic placement and equipping loan officers with the right data and tools do. 

Redefining productivity

The starting point is a clear understanding of market opportunity. Examining where lending activity is concentrated, where the organization lags relative to demand and how much production each geography can realistically sustain reframes productivity as an outcome of alignment rather than individual intensity.

Historical scorecards reveal who produced in the past, but forward-looking analysis clarifies where opportunity is headed. That perspective allows leadership teams to establish shared goals grounded in measurable demand, calibrate staffing levels and define what strong performance should look like within each territory.

Within that framework, much of the scalable upside often resides in the middle of the productivity curve. Elite producers frequently operate with mature systems and entrenched networks, which can limit incremental expansion. Mid-tier originators, positioned in markets with identifiable demand and clear strategic direction, often demonstrate meaningful growth potential. Incremental improvements across that segment can compound significantly at the enterprise level.

As staffing, strategy and operational support align more closely with actual market capacity, production tends to stabilize. The organization gains steadier growth, improved retention and greater resilience through the industry’s inevitable cycles.

Bernard Nossuli is the COO of iEmergent
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners. To contact the editor responsible for this piece: zeb@hwmedia.com.