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A temporary need: a company for the times fills lenders' needs for staffing up without building in costly overhead.

A Temporary Need

A company for the times fills lenders' needs for staffing up without building in costly overhead.

The nature of the mortgage banking industry, even in normal times, is one of constant peaks and valleys. In these times of volatile interest rates and economic uncertainty, it makes sense to use temporary services to fill mortgage staffing needs during periods of boom and bust.

Now, with the closing of insolvent savings and loans around the country, thousands of mortgage lending professionals are finding themselves out of work. Even surviving institutions are being forced to reduce staff--increasing the unemployment pool, and often leaving the institution's remaining staff overworked. One solution to both personnel crises is the use of temporary agencies. Such services provide work for unemployed professionals and aid institutions in times of increased lending activity--without committing to permanent staffing overhead.

"Temporary agencies are increasingly becoming a factor in all U.S. industries," says Robert Sherman, president of Mortgage & Financial Personnel Services, Encino, California. "My company specializes in filling that need in mortgage banking."

"We provide a service for mortgage companies, banks and thrifts during peak periods and special projects. This occurs when the mortgage industry is experiencing a boom, as it has periodically during the last eight years of economic expansion. Those booming origination periods produce a flood of paperwork and customer service needs. Every department in a mortgage lending operation is taxed during these peaks. However, during the current economic downturn, companies are becoming lean and mean; trimming their staff to a bare minimum. It is during times such as these that we get called in for special projects to supplement permanent staff," says Sherman.

Needs filled by temporary staff

Specialized temporary services can be efficiently used in several instances in the mortgage banking industry. * Temporary employees are often

crucial in covering positions during

permanent employees' vacations

and during maternity leave.

Currently, it is not unusual for an

employee to be out for as long as four

months caring for a newborn

child--a considerable time to leave

a position vacant. Substituting with

a temporary employee keeps tasks

up-to-date and also maintains the

position for the permanent staff

member. If the employee chooses not to

return, the mortgage company may

consider the temporary staff person

for permanent employment. * During an upswing in business,

temporary employees may be used to

help a lender handle increased loan

origination volume. "When the

market is strong and a company employs

some really hot-shot loan officers

that produce an extraordinary

amount of loans, the [lender] wants

to be able to fund and close those

loans," Sherman explains. This is

one circumstance when companies

like Mortgage & Financial can be

called in to help handle the

enormous flow of paperwork that goes

along with increased loan volume.

The additional origination activity

subsequently strains all departments

in a mortgage operation. This

increase may remain steady, but

generally falls off after two or three

months. If the former occurs, the

temporary may remain as a

permanent employee. If however, the latter

occurs, the company can release the

temporary employee back to the

agency without building in

permanent overhead expenses. * As local property-tax time

approaches, workload demands increase for

loan servicing departments.

Additional employees are required to

deal with the numerous inquiries

from borrowers regarding their

year-end statements. Experienced

mortgage banking temporaries can

be easily trained to support the

existing staff, which typically will be

inundated with phone calls and

correspondence. * When a mortgage company is just

starting out, management may not

have the time to review countless

resumes and conduct interviews to

establish a full-time staff. The use of

temporary personnel allows such a

foundling company to begin its

production operation immediately and

obtain a share of the market. In the

meantime, management can

conduct interviews as well as consider

the temporary employees for

transition to permanent staff. * Not only are temporary employees

convenient when a company is just

beginning, but also when it is closing

its doors. As staff members leave a

winding-down operation to find new

jobs, temporaries can be employed

to complete the company's

responsibilities and work until the last day of


Mortgage & Financial

Mortgage & Financial was established in 1980 to provide qualified, experienced personnel to mortgage banking firms, commercial banks and thrifts. The firm's first owner recognized the growth of the temporary industry and realized that a temporary staffing approach would complement the ups and downs inherent in the mortgage banking business.

In 1984, the company was purchased by then-temporary employee Bob Sherman. "Prior to my temporary position, I had worked for two mortgage companies," says Sherman. "Working as a temp, I got experience in over a dozen institutions. I was able to see how various companies operated. This broadened my loan servicing experience into shipping, funding, underwriting, processing and loan auditing."

At the time Sherman purchased the company, there were usually about four employees on assignment on any given day. Today, Sherman has expanded to more than 100 positions filled daily throughout Southern California and other parts of the country. He maintains a database of more than 6,500 possible candidates.

After an increase in sales, from $1.3 million in 1988 to $2.3 million in 1989, Sherman further expanded in the Southern California area. In 1990, he opened two new offices, one in San Diego and another in Orange County. However, because the current economic downturn is causing the mortgage industry to have problems because its overhead is geared more to periods of higher volume, Sherman says Mortgage & Financial's recent expansion has been hit as well.

"I'm concerned," says Sherman, "but on the other hand, confident that we will get our share of RTC contracts and continue subcontracting to other primary contractors. Our core client base is also very strong.

Mortgage & Financial is an approved RTC contractor, which Sherman believes will prove instrumental in attaining the desired growth of his company. "Up to this point, we've worked with former clients that have been taken into the RTC conservatorship and received several subcontracting deals helping audit loan portfolios of government-seized thrifts. Several clients have used us just prior to takeover in order to supplement their already skeletal staff and supply information to the RTC.

"I [recall reading] about the RTC's creation in May of 1989 and have been actively promoting the idea [of sending temporaries out-of-town to travel to RTC-contracted jobs] ever since to our candidates. The jobs we've had so far have been really exciting for my employees. Many people have been sent out-of-state and are anxiously awaiting future assignments," he says. Some temporaries have enjoyed spending time in different regions of the country, he explains, and accommodations and travel expenses are taken care of by Mortgage & Financial.

Mortgage & Financial has a formidable clientele that includes some of the top mortgage companies in the country such as California-based ARCS Mortgage, Calabasas; IMCO Realty Services, Santa Rosa; Coldwell Banker Commercial Mortgage Banking Services, Los Angeles; Countrywide Funding Corporation, Pasadena; as well as GMAC Mortgage Corporation, Elkins Park, Pennsylvania; and Sears Mortgage Corporation, Riverwoods, Illinois--to name just a few. The company also provides temporary personnel services to FDIC, Fannie Mae and Freddie Mac.

"I once thought of franchising the business to other cities, but right now I need to concentrate on our new offices. I'm really going to be busy filling jobs throughout the country; sending loan audit teams and review underwriters to handle the increasing workload the industry has due to the S&L bailout," he adds.

Mortgage & Financial provides a unique supply of personnel to the industry because the firm saves a company from having to do a lot of the dirty work involved in the hiring process.

According to Sherman, professionals in the mortgage industry tend to be quite mobile, creating a distinctive need for his service. "Even before the S&L crisis came to the surface in August of 1989, when the RTC was established, we had a great deal of interest from people who were currently employed. Professionals in the mortgage industry have a strong desire for advancement and tend to move around a great deal within the industry. We receive many calls from people who are disenchanted with their current job and request a long-term, temporary assignment or another permanent post. When we find them another assignment they leave a vacancy that their old employer then needs to fill. However, we will never openly recruit from a client company."

Fulfilling assignments

Every week, Mortgage & Financial receives dozens of resumes from professionals across the country, but primarily in the Southern California area. "Unfortunately, due to the current economic downturn, companies are [conducting] massive layoffs, and there are some really good people out of work. This has given us a greater pool of high-caliber workers from which to draw," Sherman says.

Each applicant in the database is carefully screened before being sent out for an assignment. After resumes are reviewed to determine qualifications, employment application forms are mailed to the candidate to collect information and to complete a checklist of jobs previously performed in the industry. Written verifications are sent out to ensure the applicant has performed these functions in previous jobs and then interviews are conducted, preferably in person. All of Mortgage & Financial's counselors have past experience in the lending industry in order to better understand an applicant's actual qualifications.

"Although we get many applicants from the yellow pages and help-wanted sections of the paper, it's referrals [from previous temps] that bring in most of our new employees and our clients. We are listed in the National Directory of Executive Recruiters and are a member of the Mortgage Bankers Association of America," says Sherman. "The mortgage industry is pretty closely knit and we've established ourselves here as providing good people...."

When the agency receives a job request, candidates are reviewed according to their ability, availability and geographic location. "We try to keep driving distance to a minimum," Sherman explains. "If a candidate does not live within about 45 minutes of the job site, we don't consider that a viable option for the employee."

For long-term assignments, Mortgage & Financial now sends the client information by facsimile machine regarding the chosen candidate prior to their arrival, in order to preview the employee's qualifications.

The most typical assignment lasts approximately three to four weeks--depending on the market and the time of year. The most requested jobs are loan processing and auditing. There are also numerous requests for closure specialists, bankruptcy specialists and collectors.

"Using a temp service that specializes in the industry is important for all positions in the field," says Sherman. "When a client calls regarding their VOE or VOD [verifications], a Mortgage & Financial receptionist would ask which loan processor is handling the file. A receptionist from a general agency isn't familiar with mortgage terminology."

Temporary employment also provides a great opportunity for out-of-work professionals to stay current with the latest regulations while continuing their job search. "It's often difficult to convince professionals who have had a six-figure income to work as temps," he says.

"I have to convince them that they can use this time to keep the cash flow coming in and still look for a permanent assignment. Of course, if things go well, the employee often has the opportunity to go permanent. That's when my job is really satisfying, when I can help out my client and my candidate at the same time."

RTC involvement

"I would be happy, to be quite frank, to continue subcontracting our employees until we are granted primary contractor status [for the RTC]," Sherman says, "as long as my people are busy working. However, I've been assured by a member of the RTC that my firm will be receiving future solicitations."

"Estimates say that the S&L bailout could take anywhere from three to five years," he says. And if the current rumblings about an increase in troubled banking institutions proves true, the RTC could continue its operations in the commercial banking sector, thus providing more contract work for firms such as Mortgage & Financial, he says.

"There is just so much work out there," adds Sherman. "There is no way that the 16 approved due diligence firms can handle the huge [RTC] workload that will be coming up in the next few years."

Employees from Southern California are being used both locally and nationally. On the local level, the use of area employees saves the primary contractor money in travel, hotel and per diem expenses. Nationally, there is the issue of bias. "When there are bad loans in an area where firms have to re-underwrite and check for fraud, they don't want local people knowing about a company's dirty laundry. Due diligence is supposed to be an unbiased, third-party, expert opinion of the situation; that's when my people are brought in from out-of-town," says Sherman. Due diligence temps are brought in to do any number of tasks concerned with underwriting, quality control and loan audit review. Specific areas they are prepared to handle include checking for the accuracy of the mortgage note, deed-of-trust, corporate assignments, sales transactions, appraisals, and compliance with Reg Z, truth-in-lending, environmental standards and disclosure regulations.

Benefits of temporary use

Regardless of what happens with the RTC, Sherman believes that his company will always fill a need in the industry. "As long as loans [are] serviced, new loans are originated and homes are purchased or refinanced, our pool of employees will be requested at one time or another," says Sherman.

One mortgage company that used the agency during a sudden increase in activity is Chicago-based First Interstate Mortgage. In 1989, the bank needed to sell $2.1 billion in Fannie Mae and Ginnie Mae pools. Twenty-seven Mortgage & Financial employees were brought in to help process the additional work created by the sale.

The temporary employees worked in the secondary market division auditing loan files to be sold to investors. Some pools contained as many as 11,000 to 16,000 first mortgages. "We were responsible for auditing these pools to verify the files were complete and the documents were correct," says Carol Ataganian, a temporary employee assigned to the First Interstate project.

"We called title companies and county recorders to retrieve the missing deeds-of-trust, title policies and corporation assignments in question, and re-recorded information that was incorrect," she recalls. "We ensured that the files complied with government regulatory requirements and also acquired and corrected mortgage insurance certificates when necessary.

"Another of my assignments was to submit approximately 500 to 600 FHA and VA loans for insuring and guaranteeing," adds Ataganian. After working as a branch manager with experience in underwriting, closing, and originations at a Pasadena-based thrift, Ataganian found that temporary placement was beneficial while she was between permanent jobs. This project lasted a little more than a year, with some temps eventually hired on a contract basis. After its completion, several of Mortgage & Financial's employees attained permanent employment with First Interstate.

"The greatest benefit of temporary use is that the [lending institution] may continue to function at its fullest capacity without having to commit to hiring additional permanent staff," says Sherman. But there is also the added benefit of the lender not having to handle the extensive paperwork and the time-consuming reviews of resumes and background checks that go with hiring. As the primary employer, [Mortgage & Financial] also eliminates the other paperwork that human resources departments are required to complete, such as weekly payroll taxes, workers' compensation and unemployment insurance. We also relieve our client from the financial responsibility of vacation, holiday and sick pay.

"Our clients have the benefit of filling their immediate needs with the option of taking on the employee full time in the future," adds Sherman. This transition to permanent status is referred to as the "Temp to Perm" program at Mortgage & Financial. Sherman says approximately 7 to 10 percent of the company's temporary placements end up as permanent employees. The potential permanent employer is also able to directly observe an employee's ability to function on the job. In the same vein, the candidate has the opportunity to get the feel of the environment before making a commitment to the mortgage company.

Like most temporary services, Mortgage & Financial has a tiered-discount system used when their temporaries are hired on a full-time basis. There are four levels of discounts on the placement fee, (generally 1 percent per $1,000 of annual salary) that vary according to the number of days the candidate works on a temporary basis. The fee is often waived for good clients who have retained an employee after 90 days.

"Effective personnel is the most important commodity for a successful company in a competitive marketplace. When our clients experience an immediate need, our job is to find them the right temporary or permanent employee as quickly as possible without forgoing efficiency," concludes Sherman.

Amanda Hotchkin is a member of Ruder Finn, an international public relations firm with offices in Los Angeles, New York, Chicago, New Orleans and Washington, D.C.
COPYRIGHT 1990 Mortgage Bankers Association of America
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:Mortgage & Financial Personnel Services
Author:Hotchkin, Amanda
Publication:Mortgage Banking
Article Type:Cover Story
Date:Dec 1, 1990
Previous Article:Many job hunters, fewer jobs.
Next Article:A slow start for reverse mortgages.

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