So......how much money SHOULD a SoCal broker make from a loan?

LOAN SIZE

R2u, 

How much should a doctor be paid in SoCal?  

Its ok to get a 2nd opinion in both cases. 

The real question is not what the person "makes" but did he or she get the job done correctly. 

That being said, if between two quality "doctors" or brokers, which delivered the better solution to your needs?  I wouldn't mind paying more for the doctor who delivered the right cure.

R,,

Comp for an "A" paper SOCAL loan which is larger in size... between 75bps and 150bps depending on the loan size would nto surprise me or offend me.  I know the answer is vague, but  the question gave nothing to go on.  also,  you could simply agree upon comp upfront and then you know exactly what is what and what your LO is getting paid for his labor.  Hope that helps and with specifics, we can get closer.

Martin is one of the few straight shooters on the board so give him the loan size and I'll bet dollars to donuts he will give a straight answer range, not an inane comparison to doctors, lawyers, teachers or police.

I'm interested to see the answer too.   I think $4500 - $5500 range in total loan overhead costs including bank commitment fees... but not including appraisal and title fees... is the ballpark.

Doze,

1st of all, thank you for the compliment.. the tip jar is on the edge of the piano.  Actually, it is very appreciated as I give my best to any here and hope I have done my homework.

That comp plan should work all day long and regarldess of that.  I think you should be able to "decide" upon compensation and anything above that is returned as lender/broker credit at HUD-1 (kepeing within guidelines).. Easiest loan to U/W and approve... FNMA.. restrictions and all.. Loan clean, appraisal clean... good2go..  Easy, minimal processing, etc.. takes very little time to do when the borrower is clean.  As stated, have no issues with deciding on that, but what happens usually is the borrower wants that +............ play the market outside for an l'it sumtin' sumtin' if you know what I mean..  So we are back at  the impasse sometimes.  Broower wants to nail down broker.. play field.. broker wants to nail down wholesaler, play the field...  This is like a bad discoteque in the 70's...  It works with a commitment on both sides.  I am not afraid to do it, but it does make some uncomfortable...  Keep rockin'.

If it is a jumbo loan I won't go below Par +.75, above $417,000 if it is a conforming loan I won't go below par +1.25.

It makes no difference to me how I get to those numbers the borrower can pay that directly and I will give them par pricing or I will build it into the rate.  I am sure someone will work for less...Always will be.  Less is not always more!

Dozer, I don't know if you are fronting again for "Upfront.."  or not. Reality is if it's a difficult file, it requires more work = charge more. If it's an easy file with less work = charge less. If you do the work you deserve to get paid. Don't you agree thats fair? How about a range of $500 - 10k?

Would you be happier with "free"? Would it help to have "no mortgage payments for the first 30 years? Should we say "no hidden fees and no broker fees" and then in small type start at 2 points like ditech? Or that we only make a quarter point to try to trick people into thinking by innuendo that brokers are really raking it in.

"LOAN SIZE"

I wasn't sure if/how loan size would make much difference, which is why I was looking at a fixed value and not a percentage, but lets just use the lower end of the spectrum as if we're talking about the average first time buyer.  Let's say.......200-400k or so.

Also, to simplify things, let's not factor in the "you get what you pay for" variable, and focus on averages, as if were talking a deal that is fair for both broker and borrower.  Trying to keep things simple.

Also, between the various loan types, if loan "A" was the easiest to process, and loan "B" was the most difficullt, about how much more time might a broker expect to spend on loan "B" over loan "A"?

Oh, and we're talking about a new loan, not refi.

Thanks!

MM:  Why not skip the nonsensical hysteria and give a straight answer to a straight question?    You and Danny are off your heads with that notion that I'm spamming - it is nonsense.   I'd never have ventured onto this board if I had realized how it was.   I thought it was a chance for honest dialog between mortgage pros and regular guys so some knowlege would be shared... but a wierd nerve was touched and I'm sorry for that - don't know what to say.    But just read the black print of the question and answer honestly and directly if you can, and it will all be ok.

Good lord if I went to a roofer and asked for an estimate and he said "well it depends... after all do you want a competent brain surgeon to work on you, or an intern?... you will see my full compensation on your invoice which I will present after I have completed the tearoff but before I finish the job (ie 3 days before closing) - it is completely transparent..."   well to me that is akin to some of what I hear from y'all.

I can understand how it gets this way... buyers are liars I guess.    But come on with the spam acccusations that is just stupid.

Dozer,

What your missing is if you went to a roofer and they quoted $3500 for the roof and you had another roofer that came in at $3700.  Assume the workmaniship and the job is Identical.  If Roffer 1 was making more money because they have faster workers are you going to give the deal to roofer 2 because his profit margin is less?

No of course not you will go with the lower bid...

I can't understand why what a loan officer is getting paid matters in the decision making process.  I have posted exactly what I am willing to work for.  Making that decision on how much I get paid rather than what you will spend makes no sense!

Roofer...Sorry still having typing issues!

Andrew- good answer!

On a 800k loan, there is NO reason to make 2 points. Sorry guys, but the paperwork is the same... why make 16 grand? <1% on a jumbo and 1-2% on a conforming loan size. Pretty simple, and VERY fair.

Rooskie,

You

Rooskie,

Youare

R,

part of what goes into compensation is paying the lo for knowledge.  Knowing how to structure a loan is part and in a lot of cases the only part of the process that allows one loan officer to offer a better option than another.

I am not to keen on telling a borrower how I am structuring a loan before they commit to me.  If I do they can take the loan structure and go to a guy that will do the loan for peanuts.  I can't blame the borrower for going with the guy working for peanuts.  I just don't like doing the work to have someone else make the money!

This question is hard to answer, I do not charge the same dollar figure on every loan.  Nor do I try to meet the same dollar figure with a percentage on every loan.  I try to look at the overall picture, like the difficulty of the loan. 

I have had purchases close in 10 days, I have also had very very very diffcult purchases take 90 days.  If I see that the loan file will be thicker then a phone book, then you bet I will charge more. 

But I dont have a sheet in front of me that says "if you fit this hole, I will charge you this $ amount"

I have a floor for very small loans. i.e. 25k to 100k which are usually 2nds, or HELOCS.  That floor is $1k in profit.

Rooskie must be concerned about it since there is no competition in the mortgage biz...

dozer, WE ARE MORTGAGE PROFESSIONALS and I doubt that you are a "regular guy"!

You also avoided answering (in the thread YOU started previously) why you would recommend "UPFRONT" that anyone can get for a $300+ fee. You are not being straight with us- thus the hysterical nonsense comment.  Do you see any of the L/O's who tout the "upfront" association also saying they paid a fee to get it? Do you think it might be a $300 way to fool borrowers into thinking they are going to get a low cost mortgage? Do I think you are doing something "funny" here? Yes!!   Dave

Depends on the amount of work involved and how much value the broker actually adds to helping the customer obtain the best available financing.

A good test would be to compare what loan a customer might get if they were entirely on their own, compared to what loan the broker might be able to get based on knowledge and expertise.

If the broker gets the customer a loan far superior to what they might have been able to do on their own, I don't think it is wrong to take a cut of the improved amount.

R,

LOan size matters in the respect of this:  If I were to say I work for a 1% commission and then you told me it was a $25,000 loan...  I would not be happy... In the same light.. Working for $2500 and you have a $50,000 loan, you  would claim you were ripped off.  The loan "A",  FNMA is the easiest to handle, but the truth is:  they all are just 1003's and disclosures and sent to "A" , "B" or JUMBO or "C" lenders.  Average loan sizes in central FL were around $200,000 and I would say that $2,000 - $2,500 is fair, even regardless of paper quality.  If you set the expectations with your LO to receive 1% total fees including their internal "SOFT" costs, I would be just fine with that.  The 2nd question about is there more work for other loans.  Yes and no.  Yes, because softer credit loans have more twists and turns with them (they  are usually massaged to get them done) and are worked a little more, but it really is just a fax machine, email or overngiht just like "A" loans.  I don't like "B" loans because I simply did not want to be the "person wh gave me a rate of "X" and be known as the toughloan guy.  I want the great loans and then I was/am sure of exactly what will happen.  Easy stuff.  Are you having issues getting an agreement with an LO for compensation?

Dave you nut, I did not even hire a broker who wears the "upfront" badge and I have decided to let that other thread sink to the bottom because it was so poorly received.  

All I did was ask my broker (who does not advertise on the website in question and would never) if he would do business with me "that way" for this loan.    So we looked at his list of junk fees which stayed the same for simplicity, added a fair fixed negotiated origination which calibrated the total markup to just about $5K total (regardless of loan size but it was known that I was looking at properties in the $450-550K range), he shared the rate sheet with me and appraiser's actual invoice, the written rate lock, and agreed to rebate all to me (although for reasons of my own I took a par loan with no rebate and a fraction of a discount point).

He had to trust me not to nickle him by asking another guy to do the same deal for $4900.... but I was already going to him in the first place because I knew him to be top notch so I had no temptation to shaft him.   In fact I intend to tip him nicely if my deal sails through because I was lucky enough to lock on May 20 - a good day for it.

I was only asking for opinions from you guys in terms of "a way to do business in general".. not a brand name badge on a broker. Was only asking if people approached you and asked for this arrangement.

I had not the slightest idea it would meet such defensiveness and hostility. My point was never about whether any of you did or should link or advertise on another site, or pay for a particular branding.

Anyway the whole topic went over like a lead balloon here... what can I say... oops - sorry. I really did not mean any harm. Apparently the concept is not commonly embraced by the broker community and not commonly demanded by the client community. That's kind of all I wanted to know

Andrew:  it all presumes that all brokers purchase  the same wholesale rate and breaks down if one broker has access to a "superwholesale" rate that lets him pass along better pricing.  I will give you that.

 Doze & R,

1st of all,  your questions and inquiries do not bother me at all.  Sometimes we feel that peeps come here to strip us naked and poke around for noting else other than fun.  I along with the msjority of the responders here have nothing to hide at all.  I still think it comes down to commitment and the desire to "employ" someone over someone else.  I don't think there is a great premium for me over anyone else, but I am already less expensive than LieTech, CHASE retail Elaons, etc. so sometimes it is who the comparison is to that's all.

There really is not any more work on any loan with good or bad credit that is not "funny".. If you don't have good credit scores, but verify income and assets... you end up with a "B" full doc loan.  The "hard" ones are made up in the lab between the LO and the A/E and U/W as no borrower knows how to do them.  Therefore, "those" loans are marked up as they were made up.  But for everyday loans for borrowers that have jobs... especially ones that have savings and can qualify for some type of automated U/W approval of some sort... I along with others would have no problem with affinity pricing...  Easy stuff...  keep rockin'.

Dozer,

"he shared the rate sheet with me and appraiser's actual invoice, the written rate lock, and agreed to rebate all to me"

So he is sending you his paycheck for you to cash?

Doze,

You did well in your agreement and Kudos to that.  I personally hate Borker Junk Fees as I think it is a juvenile way of asking for money and the expectations that clients are dumbe enough to not see througy it.  $500,000 loan for $5,000..... All day long without even thinking twice... fair to you... fair to him.. mystery solved.. If the offer had come out as "Will someone agree to do the best work and be a stud for me and tell me all I want to know about my home loan for $5,000... it would look like a bunch of chicks from a huge nest all chirping at the same time and would have resmbled a reverse ebay nightmare.  There is some dude in CA who claims to do loans at 10 bps or 25 bps as well..  My clients and I'm sure the other repsonders here are similiar, know what their choices are and that the pay structure for all loans is exactly the same.. no shells..  I think if I average my gross income per file divided by the loan size...  probably 1.4% ish..  Average loan size $200K....  2800/file..  Hope that helps with mystery and trust with any or all of us.  Keep rockin'.

Dozer, For your information - a good loan officer sits down with the borrower and explains line by line each and every charge on a Good Faith Estimate in advance. I go to all closings and have had the pleasure many times of hearing my customer tell the closing agent, as each mortgage doc is reviewed

" I know Dave allready told me". The customer should always see all charges upfront and also know clearly which if any are estimates and what are the chances they could change and by how much. All good L/O's know and do these things. My customers get this upfront. No fine type that they can miss. Defensive and hostile - hardly, I didn't try to use "nonsensical hysteria' to try to deflect attention from what I was really about. Your description of your "mortgage" doesn't show me anything that the rest of us don't allready do and have been doing for a long time. 

While you are in a talkative mood, why don't you ask about "superwholesale" rates and find something out for a change instead of acting like you know something that no one else knows.

Dave 

Apparently the concept is not commonly embraced by the broker community and not commonly demanded by the client community.

Hey Dozer, there's a good reason for that.  Clients are concerned about their rate, monthly payment & costs, and that's how they shop us.  Who here has ever been asked how much they are making on a deal prior to the client deciding on who they are working with?  Not once for me.  In a competitive marketplace, how much we make is irrelevant to the client.  Some of us get better pricing than others for the same rate.  Plus, how many "up-front brokers" are actually LENDERS who do not show any YSP, and just claim that they're only making money on their fees/points?  I'm not yet sold on the "up-front" thing.  In fact, after hearing about the $300+ "certification" fee, it totally looks like a farce!

I've been asked.

I have no problem sharing that info with my client.  They can choose to work for someone that will work for less.  If I am offering the best deal regardless of what I am getting paid I close the loan.  The best deal is not solely about rate and or closing costs.  If you get a 4% rate with no closing costs and the lender isn't around at closing time it turns out it wasn't such a good deal after all.  Don't focus on what we get paid focus on what you are paying!

Andrew,

You're on fire today!  ;)  I think that every point that you've made in this thread is helpful, important, and to the point.  

Good thread overall, I think this type of open discussion can be very enlightening when everyone is being so open.  And it can be hard - no one likes having their sensitive spots poked with sticks.

R2u,
Hopefully at this point you have answers for the rough numbers you were seeking. As you can see, though, there is much more to the equation than what the LO makes.

Fees are often mixed into multiple slots. With each offer you consider, review the Good Faith Estimate the LO submits. The details of each will be different. As the responses show, the total amount can be very different depending on the details of the loan.

My earlier point is that it does not matter how much the LO is paid, but whether the offer presented meets your needs and is in line with other offers you receive. Ie: get a 2nd opinion as you have done here.
So if both offer you nearly the same, accept the offer from whomever you are most comfortable. Feel free to ask for references, for those may be worth.

Certainly glad I had an appointment and missed all the nonsense!
Hope your offer is to your satisfaction. Best Regards.