Citadel introduces lender-paid compensation

Business continues to boom at Citadel Servicing Corp., and the company is passing that success on to brokers with the introduction of lender-paid compensation on its Maggi Plus and Non-Prime programs.

“This will allow mortgage brokers to have a minor increase in rate in order to have compensation paid by the lender,” said Will Fisher, CSC’s senior vice president of national sales and marketing. “Basically, that means we’ll be paying compensation to the broker – it won’t be charged to the borrower as far as points go. That’s pretty big. It allows the broker to give the borrower, in essence, a no-point loan. That allows them to be competitive, even with some of the bigger lenders.”

CSC launched the program just last week – and the company is making sure it’s worthwhile for brokers.

“This will give them another tool in their toolbox for making loans,” Fisher said. “…The thing with non-prime is that the rates are already about a point higher than A paper. We wanted to be aggressive in the space if we were going with lender-paid comp.”

In most lender-paid compensation plans, you need to add a full point to the rate, which equals about two to the broker. Citadel decided to beat that.

“We’ve decided to be more aggressive with the rate,” Fisher said. “If the rate increases by half a point, we’re going to pay the broker a point and a quarter.”

Brokers who want to participate in the program will need to sign an addendum. “They’ll also need to show they have a minimum $50,000 net worth – or we’ll take a personal guarantee,” Fisher said.

And brokers can decide whether lender-paid compensation is the way to go on a loan-by-loan basis.

“The broker can choose which program he’d like to go with loan to loan,” Fisher said. “If he sends us one loan where he wants to go lender-paid, he can do that – and if he wants to go borrower-paid on another, he can do that too. They’re not locked in to one or the other.”