The mortgage business may be tougher than ever, but the increasing age of loan officers has upped competition for talent and some say that new rules around how those loan originators may be compensated has granted an unfair advantage to nonbank mortgage lenders.

You know the story: After the Great Recession, regulators cracked down on what they deemed abusive lending practices, in part by crafting new rules around how loan officers can be compensated. In particular, regulation prohibits loan officers from being compensated based on the terms of a loan.

And when the Consumer Financial Protection Bureau was created, it fast took up the reins and has not hesitated to smack down firms both large and small for crossing a line.

But with consumer confidence on the mend and interest rates still near historic lows, there is still business to be had. While Massachusetts has no shortage of banks to make mortgages, nondepository institutions have certainly given their banking competitors a run for their money.

For instance, Guaranteed Rate, which was nowhere on the scene in 2011, captured the top position in purchase market share in the Bay State last year.

“Everybody’s looking for mortgage loan officers and the nondepository institutions are very aggressive,” said Scott Auen, senior vice president of retail lending at Southbridge Savings Bank.

Adding that Southbridge Savings lost some of its own staff to a nondepository mortgage lender last year, he said, “It’s consistent that for a community bank to compete, if they have a good loan officer, they need to have a very competitive compensation plan or you will lose that loan officer – and typically to a nondepository institution.”

But Shant Banosian, branch manager and senior vice president of mortgage lending at Guaranteed Rate, doesn’t see it quite that way. While of course his firm is doing everything it can to recruit talented loan officers, he said he doesn’t often see those loan officers flocking to nondepository mortgage lenders from the banking side of the business.

“I find that you’ll see people from the nondepository side going to the bank side occasionally, but you very rarely see the guys come over from the bank side,” he said. “The people in the nondepository side typically have to get their business on their own.”

On the other hand, loan officers at banks sometimes get business fed to them from the bank’s other business lines, and that can be tough to give up, Banosian said.

But Banosian confirmed that competition for good loan officers is fierce. He said that while Guaranteed Rate has been aggressive in its recruiting, his firm tries to sell recruits on the company itself, boasting resources like high tech and comprehensive marketing support, rather than the compensation package.

“We really try to show our recruits how our company will help you do more business and make more money,” he said. “But there are companies out there that are definitely offering competitive compensation packages or sign-on bonuses.”

Perception Vs. Reality 

Still, the perception that nonbank mortgage lenders are stealing top talent from banks persists, and perhaps understandably so.

“It’s very common for people to think that,” said Benjamin Giumarra, a regulatory consultant with Spillane Consulting Assoc. (and a contributor to this newspaper).

With so little new talent coming up through the ranks, the market for good mortgage loan officers is hypercompetitive right now. Aggressive recruiters may either not fully understand what they can and cannot offer from a legal perspective, or the recruiter may just tell the recruit what he or she wants to hear, he said.

That can leave already heavily regulated community bankers feeling like they’re at a disadvantage. Emotions run high and allegations fly. Giumarra likens it to a game of telephone. Bankers aren’t typically in the business of sharing their trade secrets with one another, so when a loan officer leaves one bank for another, perhaps for the promise of a fat signing bonus, it can be difficult to verify that.

While so-called “pick a pay” schemes will undoubtedly run afoul of the CFPB, Giumarra said that lenders can get creative with their compensation schemes and still play by the rules. For instance, it’s safe to pay loan officers differently for new customers and it’s safe to pay out a bonus based on the profits of the mortgage department as a whole if that money comes out to less than 10 percent of the loan officer’s total compensation for the year.

Regardless of where the loan officers are going, the CFPB has made it clear that compensation will be a focus in the year ahead, and Auen thinks that that could help steer mortgage loan talent back toward community banks.

“I think the tide is going to turn,” he said. “Some loan officers see the writing on the wall and there is a flight to stability to community banks.”