At 5-foot, 9-inches and a strapping 240 lbs., Owen Thatcher doesn't look much like a free agent. He is, though, commanding a five-figure signing bonus to jump teams last year.

Thatcher isn't a big league catcher, as his stocky figure may suggest. He isn't one of those lightening quick, yet smallish NFL linebackers either, he's just a lowly loan officer. But a darn good one, which is why Countrywide Home Loans paid him the big bucks -- at least by the mortgage profession's standards -- to leave his old company a few months ago.

Loan officers like Thatcher, who asked that his real name not be used in this article, are a difficult commodity to come by in the mortgage business -- fully trained, top producers who originate millions worth of loans, year in and year out.

They are particularly valuable to companies looking to build their volumes in a hurry -- or hold their production numbers in a slower market.

But it's difficult to get the good ones to switch companies because at any given time, they have 80 percent of their production in various stages of the approval and settlement process. And until those deals close, they don't receive their commission checks.

Typically, when a loan officer leaves a company, he's paid only for those loans that close within 30 days after his departure. Sometimes, if he's lucky and he leaves on a high note, he'll be paid for whatever closes within 60 days.

But often, the agent's book of business extends way beyond that to 120 days, or even 180. Hence, the need to pay bonuses, which in this case amounts to being compensated for what is all but guaranteed to have gone to settlement had the loan rep stayed put.

"The bonus really pays people for what they already have in their pipelines," says Countrywide Chairman Angelo Mozilo.

Countrywide isn't the only player in this high stakes game. Others also are tossing around signing bonuses like professional sports franchises.

"Everybody is doing it," says Jim Boghos, president of Corporate Search America, an executive search firm with numerous clients in the housing finance sector.

Few of the major lenders are as glib about their forays into free-agency as Countrywide.

Julie Davis, a spokesperson for Bank of America Mortgage, said her company is "in the game" for seasoned loan officers. "Our compensation is competitive and in line with the kind of production someone has where he is currently employed," she said.

However, Washington Mutual did not respond to several requests for interviews, and Kevin Waetke, a spokesman for Wells Fargo Mortgage, the company from which Thatcher was recruited, said his company does not discuss compensation. "The information you want to address is proprietary in nature and we cannot assist in an interview," he said via e-mail.

But Boghos says all the big mortgage companies are willing to pay for top producers, especially now that the refinancing binge has all but faded away. "Anybody can make money during a refi boom; it is the purchase money business that gets you through the rough times," the head hunter says.

As Boghos sees it, free agency in the mortgage business is no different than free agency in sports. And like in sports, it's often the difference between winning and losing.

To remain viable, he says, lenders must replace "loans that leak out of the bottom of their large servicing machines," he says. "They've got to continually feed the monster, and the only way to do that is to pay for it."

Sometimes, signing bonuses are paid out in installments over a six to 12-month period. In other cases, loan officers are paid a somewhat larger commission based on the business they are expected to bring in over the first so many months they are with their new firms.

The amount of the bonus depends on the level of production. A loan officer who writes $2 million-$3 million in loans a month can expect a nice five-figure deal. But those who originate $5 million or $6 million a month can easily command six figures.

"We model it out," says Countrywide's Mozilo, describing how his big Calabasas, Calif.-based company determines what it is willing to pay in bonuses by looking at a loan officer's previous production numbers and calculating what can be expected of them going forward.

A 40-year industry veteran who was chairman of the Mortgage Bankers Association in the early 1990s, Mozilo says it's "rare" that Countrywide pays anything significant in the way of a signing bonus.

But he also admits to paying six figures to at least one highly successful California loan officer to move to his company. Indeed, he personally recruited the agent, whose annual production tops $500 million, leaving a meeting with stockholders to do so.

"She owns (her) market," Mozilo said, sounding a bit like New York Yankees owner George Steinbrenner. "Whatever we paid her, we'll get it back very quickly."

Buying people is seen by the Countrywide chairman as a far better way to boost volumes than by buying companies.

When a company acquires a competitor, which is something Countrywide rarely does, it usually pays "a fortune" for the loans that already are on the books, computer systems, software, desks and the like, Mozilo explains.

But there is no guarantee the loan officers who are responsible for most of those loans will stay. Often, in fact, they leave, sometimes going elsewhere but other times starting their own firms.

In luring away others' top guns, on the other hand, company's like Countrywide are "getting the cream of the crop" without buying -- or, perhaps more importantly, duplicating -- any of the hard assets it really doesn't need or want.

"This way, I get the top of the line," Mozilo says. "On balance, it's worked out pretty well. It's really a much cheaper way to go. What we really want is the people."

Published: February 16, 2005

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.