Working in a Post Comp Reform World by Leif Boyd

by 23 Sep 2011
Loan originators will continue to take stock of what various companies offer   On April 1, 2011, the mortgage industry ushered in a new era of compensation reform. Since then, the landscape has been one of change and adjustment. Industry leaders and loan originators are all learning where to go from here.   With these recent changes, American Pacific Mortgage and many other companies continue to feel the effects of compensation reform. During this time loan originators have embarked on a journey to research and compare options for compensation at different companies.   In the months leading up to the April 1 switch, a great deal of mystery surrounded companies’ compensation packages and the changes that they would make. Brokers sought answers about compensation packages, but few companies would divulge what those packages would look like. This was a challenging time for those in the industry, as they were left with 120 days of wondering how they would be paid for the rest of their careers. After April 1, companies finally began to reveal details about their new compensation packages. With this knowledge, loan originators can now more easily compare companies and compensation packages.   Now that companies have shared details of their compensation plans it appears that most are quite similar, leaving little room for companies to distinguish themselves on compensation alone. Some companies are flirting with the outer limits of what is perceived to be legal, while others are adhering closely to the law. As the Consumer Finance Protection Board reviews packages, the industry will learn which companies have stayed within the law and which have pushed the boundaries. All of this will likely keep compensation reform in the spotlight and generate additional analysis and speculation about change.   With this reform comes a fairly standard model of compensating loan officers and brokers across the industry. Companies have learned that loan originators are concerned with more than the compensation model. They need a company that will support them with other tools and processes so they can do their jobs well. The more marketing and back end support that loan originators receive, the more they can focus on closing loans. The more loans they close, the more money they can make under almost any compensation package.   Brokers, retail branch managers and loan officers must now look beyond the rates when deciding which mortgage bank to partner with. They should evaluate the support services each company offers to their loan originators. Having a strong support system behind each loan originator gives them the tools they need to run their business effectively and efficiently. There are four key tools that create solid support systems for loan originators at a mortgage company:  
  • Fulfilled Marketing Support
  • Customer Relationship Marketing Software
  • Lead Generation Technology
  • Home Office Infrastructure
  These are a few important resources that a company may offer to help loan originators maintain productivity and keep their focus on closing loans. Loan originators should keep these resources in mind as they scout companies where they might want to work.   Fulfilled Marketing Support Like most businesses, loan officers need to market and advertise. Often, though, they do not necessarily have the time or the experience to handle their own marketing efforts. With fulfilled marketing support, a loan originator can simply ask for a marketing piece. The home office will design the piece to meet their specifications and legal requirements, and personalize it for the originator. This equips loan officers with professionally designed marketing materials that will help them promote their work and effectively communicate with potential and current clients.   An efficient mortgage bank recognizes that its loan originators’ time is better utilized selling loans and making new contacts rather than designing a marketing piece. At American Pacific Mortgage, loan originators submit their requests to a marketing team that designs and customizes each piece with loan originators’ contact information and photo. The loan originator can then share their marketing piece via email, print it out to use at meetings or even load it onto their iPad for a presentation.   Customer Relationship Management Software Some mortgage banks provide customer relationship management (CRM) software to their loan originators to help them manage each of their current or potential clients. This tool allows loan originators to easily see notes from previous meetings, loan history, birthdays and other pertinent information so that they can stay in touch with clients and feel personally connected with them. This software can also help loan originators better market to each of their clients, ensuring that they only get information that is relevant to their particular needs and interests. A good CRM package can give originators an edge that determines whether they sell a client a loan once or continue to build that relationship, close multiple loans and earn referrals.   Lead Generation Technology This specific technology is used to help loan originators identify and target potential clients. The system leverages many web-based resources to provide qualified insights, which streamline the business development process. For example, American Pacific Mortgage uses a proprietary lead generation system. This enables loan originators to access relevant data, and it also connects them with appropriate industry partners to develop new leads. This vetted data can make a major difference in scouting leads and establishing long-term relationships.   Home Office Infrastructure A strong home office infrastructure for loan originators is perhaps one of the most important elements of finding the right mortgage bank. It is this support system that helps get loans approved in a timely fashion and provides loan originators with what they need. Most importantly, loan officers who know how the home office operates and are comfortable working within its structure will be more effective and successful. Every support service that the home office provides is one less task that the loan officer has to do themselves, allowing them to focus on the profit-generating activities that caused them to choose their career in the first place. The more a loan originator can focus on selling and closing loans, the more likely they are to continue to succeed in their career and achieve their financial goals.   Industry movement is showing that loan originators are steadily gravitating towards mortgage banks. Mortgage banks are preferred because they give loan originators the ability to sell loans more directly. This system allows for a more streamlined and consistent approval process, giving loan originators the ability to provide an accurate timeline to their clients on when their loan should be approved.   Loan originators are still learning how compensation reform will impact their finances and the companies they work for. It is possible that there will be significant movement until originators find the company that best fits their individual needs. As this shift happens, mortgage banking companies may continue to adjust their compensation packages and back end services in an effort to retain and attract top talent. Industry experts might speculate that companies will eventually offer similar support services, so loan originators will need to carefully weigh their options. They can do this by speaking with other originators who work with companies they want to join and ensuring that the company has a history of successfully completing loans and supporting originators.   Since April 1, 2011, mortgage industry professionals have finally learned the details and effects of compensation reform. However, it will take time to get a truly accurate picture of the new compensation landscape. Many of the post-compensation reform loans have recently started closing and loan originators are slowly learning what it is like to be paid under their company’s new guidelines.   As the industry moves into the second and third quarters in this post compensation reform world, loan originators and mortgage companies will each look at their balance sheets to see if they have made the right decisions. Is everyone still profiting? Are loans closing in a timely manner? What is the bounce rate of loan applicants? These are just some of the many questions that everyone in the industry will continue to ask.   Many companies may have to continually evaluate their new compensation packages. They may even adjust their compensation packages and support services to stay competitive, keep top talent and ensure that loan originators are successful. Similarly, loan originators will continue to take stock of what various companies offer. In light of these industry changes, ongoing movement is possible as loan originators determine which companies will offer both compensation packages that fit their needs and that provide them with the most business development support. It is this duel array of compensation options and support that will allow loan originators to succeed.   About Leif Boyd: Since joining American Pacific Mortgage, Leif has taken an active role in overseeing all aspects of mortgage origination including the oversight of the production department and 114+ branches. In addition to the responsibilities of business development, APM's branch network reports directly to him. For more information about American Pacific Mortgage and the services it provides please contact Leif at or (916) 960-1325. (NMLS# 225906)


Should CFPB have more supervision over credit agencies?