Loan Simple, a mortgage lender with branches across the country, has introduced a plan – called Share – that gives its originators and branches the opportunity to receive a recurring and growing revenue stream in addition to their traditional origination income.
Jason Dozois, Loan Simple’s CEO, decided that loan officers needed an income they could depend on, rather than having to face an “all-or-nothing” situation at the start of each month. The result was Share, a program in which loan officers and branches keep getting paid for the loans they make and the borrowers they support.
“On the loans that we service, each time the borrower makes a payment, the loan officer gets paid, and the branch gets paid as well,” Dozois said. “We take the money we would’ve received for loan servicing, and that revenue gets passed on to our loan officers and the branches.”
Loan Simple started the Share program earlier this year, after spending two years developing it and making sure it passed regulatory muster. The plan has been a big hit with Loan Simple originators, he said.
“Loan officers never thought they would be able to move beyond the endless 30-day cycle,” he said. “The concept of long-term, continually growing, stable income is not typically associated with the mortgage business.”
Dozois said that in traditional mortgage companies, the loan officers – the life blood of the company – have the least financial security. That struck him as unfair.
“There’s a massive amount of servicing money flowing through the industry after a loan closes – but it currently flows to the people at the top,” he said. “The loan officers – the people who are actually creating the product – there are no guarantees for them. There is no ongoing benefit for them to do a great job for their borrowers. They start from scratch every 30 days. … We decided they deserve better.”
Everyone benefits, Dozois said, because the foundation the company, the loan originator, is secure. When loan officers are secure, they can make the right business decisions to ensure long-term growth and continual originations, he said.
“If you’ve got to put food on the table right now, you make ‘30-day’ decisions,” he said. “With our Share program we can shift that time frame out three months, three years, or literally 30 years as a borrower pays on their loan. This gives the loan officer the opportunity to make decisions that are better for their career and better for their borrowers.”
In the Share model originators have a monthly, compounding servicing income in addition to their standard origination income. That gives them an incentive to evaluate a borrower’s situation and choose the loan program that will work the best for the borrower over the term of the loan versus the loan that might be the easiest or quickest to close right now.
“In this model, your income is going to be determined by your ability to help the borrowers become successful homeowners,” Dozois said. “If your borrowers become long-term successful homeowners you will have long-term compensation.”
A loan originators focus should be on providing the borrower with the best loan terms so the borrower is always in a good position financially. With Share the loan officer wins when the borrower wins.
“If you want the loan officer to do their best by the borrower, then it’s simple: Do the best by the loan officer,” Dozois said.
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