How we got here and how we can fix it

Leadership position in the mortgage industry

When people say, “There is no such thing as a flawless company,” are they really admitting a flaw—or do they feel that unsatisfactory leadership is a vacuum? This is especially evident in the mortgage industry, where “leadership” is a term that is often bandied about but rarely fully understood.

Over the years, I have seen an obvious issue that hinders the growth and success of many mortgage companies: promoting top loan officers into management roles without equipping them with tools, training, or even determining if they want to be leaders. This practice creates a leadership vacuum in organizations, ultimately affecting employee morale, productivity, and customer satisfaction.

The sad truth is that the skills that make a successful loan officer—unrelenting drive, competitiveness, and independence—are not the same skills needed to lead successfully. However, we continue to equate high performance with leadership power, perpetuating a cycle where people are put into roles they are not prepared for.

The misconception of “top producers = great leaders”

A common but flawed assumption in the mortgage industry is that top producers will naturally succeed as leaders. The reasoning seems simple: if someone is successful at closing deals, building relationships with real estate agents, and generating income, they should also have the ability to motivate and manage others. However, this view ignores an important fact—sales performance and leadership skills require very different skill sets.

Top producers are often successful because of their independence and focus on personal goals. The leadership, however, wants a change in prioritizing the team’s success. Skills such as coaching, conflict resolution, and team motivation are rarely developed in sales roles alone. When organizations combine sales success with leadership readiness, they risk placing people in roles that can lead to frustration and poor team performance.

This disconnect can have significant consequences. Teams led by untrained managers often suffer from a lack of direction, inconsistent communication, and low morale. For someone promoted without preparation, the role can lead to burnout and disillusionment, resulting in the loss of a valuable employee who may have thrived in their original role.

Recognizing the difference between productivity skills and leadership skills is critical to creating a pipeline of leaders who can inspire and guide teams to long-term success.

Real-life example: The cost of speculation

In 2003, I made what I believed to be a turnaround plan for a struggling branch. One of my productive loan officers was always the best performer on the team, so I thought he was the right person to manage the underperforming branch. My thought process was simple: if he could teach the loan officers at that branch to replicate his success, surely, he could return the branch to profitability.

But the truth did not match my thinking.

Production skills

Without hesitation, I promoted him to branch manager, convinced that it was the next logical step. However, I failed to ask the important question: Did he really want to manage the team? I didn’t think he had the desire or the skills to transition from being a top producer to leading others. In my mind, success in sales equaled success in leadership.

Four months later, the branch was still struggling, and to make matters worse, my loan officer – now the branch manager – quit. He didn’t just leave the branch; he left the organization entirely, returning to a position as a loan officer with another company. It was clear that he was more comfortable and satisfied working directly with clients than managing a team.

This experience taught me that without preparation or a real desire to lead, even the most talented people can struggle, leading to frustration and lost opportunities.

The skills gap: What it takes to be a top leader versus 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 be a liability when placed in leadership roles without the necessary people management skills.

Leadership skills are important compared to productivity skills:

The skills needed to motivate and lead a team often require deliberate development, not just a track record of personal success.

How to develop leadership in the mortgage industry

To address the leadership shortage in our industry, we need to change the way we approach promotion and leadership development. Here’s how:

1. Use structured training programs: The transition from loan officer to leader should include comprehensive training in coaching, conflict resolution, and team management. Leadership is a skill that can be learned with proper guidance.

2. Create educational programs: Pair new managers with experienced leaders to provide guidance and support. This can prevent new leaders from feeling overwhelmed and help them get used to their responsibilities.

3. Focus on emotional intelligence: Leaders who connect with their teams on a deep level foster 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 practice of promoting top producers to management roles without proper preparation is a systemic issue. By investing in leadership development, teaching and continuous learning, we can develop leaders who are not only good at closing deals but also at motivating and guiding their teams.

Leadership is not a natural progression; it is a conscious choice that requires correction, support, and growth. By prioritizing leadership development, we can build strong, resilient organizations that thrive in the ever-changing environment of the real estate industry.

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.

To contact the editor responsible for this piece: [email protected].

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