How we got here and how we can fix it

The state of leadership in the mortgage industry

When people say, “There is no such thing as a perfect company,” are they really recognizing 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 that is often used but rarely understood in its full capacity.

Over the years, I’ve noticed a glaring problem that hinders the growth and success of many mortgage companies: promoting top-producing loan officers into management positions without equipping them with the tools, training or even determining whether they want to be leaders. This practice creates a leadership vacuum that percolates through organizations, ultimately affecting employee morale, productivity, and customer satisfaction.

The harsh reality is that the skills that make someone a successful loan officer – ruthless drive, competitiveness and independence – are not the same skills needed to lead effectively. Yet we continue to equate high performance with leadership potential, perpetuating a cycle of placing individuals 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 naturally excel as leaders. The reasoning seems simple: if someone excels at closing deals, building relationships with agents, and generating revenue, he/she must also have the ability to inspire and manage others. However, this perspective ignores a crucial truth: sales performance and leadership skills require fundamentally different skills.

Top producers often succeed because of their independence and focus on personal goals. However, leadership requires a shift toward prioritizing team success. Skills like coaching, conflict resolution and team motivation are rarely developed by sales roles alone. When organizations combine sales success with leadership readiness, they risk placing individuals in roles that can 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 could have thrived in their original role.

Recognizing the distinction between production skills and leadership skills is essential for creating a pipeline of leaders who can inspire and guide teams to long-term success.

A practical example: the costs of assumptions

In 2003, I made what I believed was a strategic move to turn around a struggling industry. One of my top-producing loan officers consistently outperformed everyone on the team, so I assumed he was the perfect candidate to lead the underperforming branch. My thought process was simple: If he could teach the loan officers at that branch to repeat his success, he could certainly make the branch profitable again.

But reality did not match my assumptions.

Production skills

Without hesitation, I promoted him to branch manager, confident that this was the logical next step. However, I did not ask a critical question: did he actually want to manage a team? I didn’t think about whether he had the desire or skills to move from being a top producer to leading others. In my eyes, success in sales equals success in leadership.

Four months later, the branch was still struggling, and worse, my top loan officer – now the branch manager – resigned. He didn’t just leave the branch; he left the organization completely and returned to the role of loan officer at another company. It became clear that he found it much more pleasant and enjoyable to work directly with customers than to lead a team.

This experience has 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 above example highlights the crucial skills gap between being a top producer and being an effective leader. Loan officers are often rewarded for their independent drive, their ability to close deals and their focus on individual success. However, these qualities can become a liability if they find themselves in leadership roles without the necessary people management skills.

Key Leadership Skills vs Production Skills:

The skills needed to inspire and lead a team often require purposeful development, not just a history of personal success.

How to develop leadership in the mortgage industry

To address the leadership gap in our industry, we must change the way we approach promotions and leadership development. Here’s how:

1. Implement structured training programs: The transition from loan officer to leader should include extensive training on coaching, conflict resolution and team management. Leadership is a skill that you can learn 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 adapt to their responsibilities.

3. Focus on emotional intelligence: Leaders who connect with their teams on a deeper level promote loyalty, engagement and better performance. Emotional intelligence training 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 to management positions without proper preparation is a systemic problem. By investing in leadership development, mentorship and continuous learning, we can cultivate leaders who are skilled not only at closing deals, but also at inspiring and mentoring their teams.

Leadership is not a natural progression; it is 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 staff and its owners.

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