The leadership deficiency in the mortgage industry: How we got here and how we can fix it
The state of leadership in the mortgage industry
When people say, “There’s no such thing as a perfect company,” are they really acknowledging an inherent flaw — or are they feeling the void left by inadequate leadership? This is especially evident in the mortgage industry, where “leadership” is a term often thrown around but rarely understood in its full capacity.
Over the years, I’ve observed a glaring issue that stifles the growth and success of many mortgage companies: promoting top-producing loan officers into management roles without equipping them with the tools, training, or even determining whether they want to be leaders. This practice creates a leadership vacuum that trickles down through organizations, ultimately affecting employee morale, productivity, and client satisfaction.
The harsh reality is that the skills that make someone a successful loan officer — relentless drive, competitiveness, and independence—are not the same skills required to lead effectively. Yet, we continue to equate high performance with leadership potential, perpetuating a cycle where individuals are placed in roles for which they are unprepared.
The misconception of “top producers = great leaders”
A common but flawed assumption in the mortgage industry is that top producers will naturally excel as leaders. The reasoning seems simple: if someone excels at closing deals, building relationships with real estate agents, and generating revenue, they must also have the ability to inspire and manage others. However, this perspective overlooks a critical truth—sales performance and leadership capability require fundamentally different skill sets.
Top producers often succeed due to their independence and focus on personal goals. Leadership, however, demands a shift to prioritizing team success. Skills such as coaching, conflict resolution, and team motivation are rarely developed through sales roles alone. When organizations conflate sales success with leadership readiness, they risk placing individuals into roles that may lead to frustration and poor team performance.
This disconnect can have significant consequences. Teams led by untrained managers often experience a lack of direction, inconsistent communication, and low morale. For the individual promoted without preparation, the role can lead to burnout and disillusionment, resulting in the loss of a valuable employee who might have thrived in their original role.
Recognizing the distinction between production skills and leadership skills is essential to creating a pipeline of leaders who can inspire and guide teams toward long-term success.
A real-life example: The cost of assumptions
In 2003, I made what I believed was a strategic move to turn around a struggling branch. One of my top producing loan officers was consistently outperforming everyone on the team, so I assumed he was the perfect candidate to manage the underperforming branch. My thought process was simple: if he could teach the loan officers in that branch to replicate his success, surely, he could lead the branch back to profitability.
But reality didn’t align with my assumptions.
Production skills
Without hesitation, I promoted him to branch manager, confident it was the logical next step. However, I failed to ask a critical question: Did he actually want to manage a team? I didn’t consider whether he had the desire or the skills to transition from being a top producer to leading others. In my mind, success in sales equated to success in leadership.
Four months later, the branch was still struggling, and worse, my top loan officer — now the branch manager — quit. He didn’t just leave the branch; he left the organization entirely, returning to a loan officer role with another company. It became clear that he was far more comfortable and fulfilled working directly with clients than managing a team.
This experience taught me that without preparation or a genuine desire to lead, even the most talented individuals can struggle, leading to frustration and missed opportunities.
The skills gap: What it takes to be a great leader vs. a top producer
The example above highlights the critical skills gap between being a top producer and being an effective leader. Loan officers are often rewarded for their independent drive, ability to close deals, and focus on individual success. However, these traits can become liabilities when they are thrust into leadership roles without the necessary people management skills.
Key leadership skills vs. production skills:
Leadership SkillsCoaching and mentoringBuilding client relationshipsEmotional intelligenceProspecting and closing dealsTeam motivation and engagementIndependent problem-solvingConflict resolutionStrong work ethic and competitivenessStrategic thinkingQuick decision-making and adaptability
The skills needed to inspire and lead a team often require deliberate development, not just a history of personal success.
How to develop leadership in the mortgage industry
To address the leadership deficiency in our industry, we need to change how we approach promotions and leadership development. Here’s how:
1. Implement structured training programs: Transitioning from loan officer to leader should include comprehensive training on coaching, conflict resolution, and team management. Leadership is a skill that can be learned with the right guidance.
2. Create mentorship programs: Pair new managers with experienced leaders to provide guidance and support. This can prevent new leaders from feeling overwhelmed and help them adjust to their responsibilities.
3. Focus on emotional intelligence: Leaders who connect with their teams on a deeper level foster loyalty, engagement, and better performance. Training on emotional intelligence can transform an organization’s culture.
4. Continuous learning: Leadership development should be an ongoing process, with access to resources such as workshops, online courses, and leadership retreats.
A call to action for industry leaders
The mortgage industry’s habit of promoting top producers into management roles without proper preparation is a systemic issue. By investing in leadership development, mentorship, and continuous learning, we can cultivate leaders who are not only skilled at closing deals but also at inspiring and guiding their teams.
Leadership is not a natural progression; it’s a conscious choice that requires preparation, support, and growth. By prioritizing leadership development, we can build stronger, more resilient organizations that thrive in the ever-changing mortgage industry landscape.
Fobby Naghmi is the Senior Vice President of Homecomings.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
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