Profile picture for Steffnie

I just wonder what everyone's thoughts were on the new Loan Officer Compensation starting 4/1/11.

  • March 01 2011 - US
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Answers (12)

Talk about waiting to the last minute.

An appellate court in Washington late Thursday night granted a stay delaying implementation of the Federal Reserve's loan officer compensation rule until April 5
  • April 01 2011
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Alan, I, too, am really interested in seeing the quotes on Ziilow after 4/1. I am thinking there may be as much as a .375 spread in rate. From what I have heard it appears some companies still do not have a comp plan in place.  
  • March 16 2011
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Profile picture for OK State Lender
It should be business as usual for everyone. Don't stress yourself out over these changes. This is the business world people, changes occur all the time. Weather you are in the Real Estate industry or car industry or any other industry. The best will all ways find a way to continue and adapt to the changes.
I am reading all of your comments and I see that you have concerns for either the brokers or the borrower. 
My advice for you to strengthen your relationship with your referral sources. Thats where your business comes from and that should be your priority. When someone is referred to you vs. found you online, there is a big difference. Shoppers will always be shoppers and all of us will have our share of them. Sometime, we will be the beneficiary of a shopper coming from another lender and sometime we will be shopped with someone else. That will equal out.
The point is, just be the best professional you can be in your industry, treat people with respect and offer them great service. Don't get down because someone shopped you for an 1/8 in the rate or $500 in closing costs. Nurture your referral sources, create a presence in your community and you will succeed in the market place. 
  • March 16 2011
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Profile picture for NorthpointeBank
I think the only ultimate change that we will notice is the lack of flexibility in pricing. There will no longer be  simple mechanism for changing you margin. I am keenly interested to see how this effects lenders on Zillow. Basically if you are a loan officer getting a equal amount of business from Zillow and local purchase business you are going to have to choose one or the other because the margins on Zillow are much lower.

I also think that there will be two real losers in this scenario loan officers and the intelligent shopper. The LO for obvious reasons, but the smart shopper because no matter what they do they won't be able to go back and forth to different lenders as a negotiation. there will be no more haggling in the industry if you want a better offer you are just going to have to go to a different lender. No I am sure some of the big retail lenders will build into the comp a matching offer, but only because they start at such high margins ( hence why you don't see them quoting on Zillow)


  • March 16 2011
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Profile picture for Mike Politzer
Steering is key. The imact is going to be that you're locked in, which can only make it tougher on the borrower, since it's the flexibility to move, in the face of changes within the escrow, in the face of competition, any number of potential conditions, that differentiates loan officers from "order takers" that work in the banks. And, make no mistake, this initiative is spearheaded and endorsed by the big 5 - so that we all work in their world.

Overages on compensation stay with the lender, can't go to the LO, the broker or, worst case, the borrower. No front/back end compensation options - limiting the borrower's options. Comp commitment stays with the transaction fro 90 days - requiring all new registrations if the deal falls out. Requirement of multiple options being communicated to the borrower, whether they ask for them or not, resulting in less timely responses.

I'm guessing that this is going to have the effect of driving more very talented and committed professionals out of this business, regardless of whether wholesale goes away or not. LO's will find it even harder to navigate the rules and still be competitive, at least service wise, against the big 5 banks who are paying their people minimal salary and minimal per deal comp.
  • March 11 2011
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I think the wholesale channel is going to have a tough time; specifically with the anti-steering provision.
  • March 09 2011
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the only issue I have is that the same percentages carry accross all loan amounts, if you set your comp plan for 400k business, that bps level is going to make doing a 125k loan worthless.  our bank is also setting one level for each wholesaler we broker to, so pricing within the branch will be different between LO's on banked loans, but the same on the ones we broker out.... also, no changing levels between FHA and conventional makes it odd... president of the bank is coming to town to discuss tomorrow, looking forward to hearing what they have to say
  • March 08 2011
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Profile picture for Steffnie
Nancy, I am riding the pony till she just won't go anymore.  I have a strong sales background, worst case I am going back to DELL!! ha  The company that I work for was built over 13 years ago from two crazy men that thought they would be oil tycoons by now.  They were a broker until 1 year ago last month.  I have worked with them for 4 years now and I love this business.  It has its ups and definitely its downs.  For the last 9 of those years, refinance has been the way of their business.  I have had to conform to purchases and that is fine with me.  If you don't change you will not make it.  I also find that all of our "loyal" customers have been shopping. 
  • March 08 2011
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I think everything will be fine - we have weathered the storm so far and if we stick it out we might set ourselves up for future marketshare as the real estate industry rebounds.  And it will. 

This doesn't change some LO's approach in building better share of prior customer or building lasting trusted relationships with affinity partners - - they probably get regular referrals every month so their productivity is consistent vs. Loan Officers who were transactional-focused (telemarkers who have refinanced their clients ad infinitum for example) might become very frustrated indeed.  Hopefully this Rule will help Loan Officers who are in their careers for the long haul stick it out, grit their teeth and keep moving forward.

My refinance customers are shopped to within an inch of their life right now.  So any way that I can help improve trust and raise my professional profile is a good thing.  What are your thoughts Steffnie?
  • March 08 2011
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Profile picture for Steffnie
We are licensed as well.  I understand that it is across the board.  Just seems I am getting different answers on the matter. You say, "Glad we made the effort to become licensed rather than take the easy way out and end up at a bank working for change... " does this mean that if you are a broker or use 3rd party you don't have to be compensated by the new rules.  I am just trying to understand better.  Thanks so much for the feedback.
  • March 08 2011
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The previous comment "nails" it!  Glad we made the effort to become licensed rather than take the easy way out and end up at a bank working for change...
  • March 07 2011
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Profile picture for OK State Lender
Everything will be fine.
Here is a suggestion from one of the wholesale lenders:
If you select borrower paid compensation then any YSP that you make can not go to you, so you just apply it to the third party charges, and part of the money that the borrower would otherwise pay third party fees with would come to you.
Even though it's the same thing the lender is not paying you but the third party fees and the borrower is paying you.

Any other suggestions you've heard out there?
  • March 02 2011
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