Do You Really Know Your Loan Officer?

Good post.  I think a lot of LO's currently do not really "respect" the business. Knowing the whole process enables one to troubleshoot and manage expectations properly.

Hi Matthew,

What a great post! You make several good points:

1. The split - any lo who believes a broker could run a shop, pay full-time processors, keep phone lines/business machines/etc in operation, pay rent, stay licensed (the list goes on....) and take a small 5 - 10% fee and be expected to survive is sadly mistaken. These are costs which I don't want to pay for and I personally am glad to split with my broker and let him(her) have the headaches! There are many fixed costs involved in operating a quality shop.

2. The processor - very few loan officers have the ability or the time to sort through lenders and programs. What I notice many times is that there are one or two very small, but important details, that send a file one way or another. A processor works day in and day out with the account execs, uw's and files from several different LO's giving them much more experience in what to look for. A good processor is invaluable and is many times the difference between making a file work or not.

I'm glad there are sharp business owners like you who are willing to take the time and the risk training new LO's! Experience, IMHO, is PRICELESS!

If you REALLY want to find out if a LO knows their stuff...ask them if they are familiar with CRA credit.  CP lending and after appraised value (or upon completion appraised value).  You might really see some heads spinning!

Some very good points made. But most Loan Officers or as you say Jr. Loan Officers have to generate their leads at their expense.  Now even if all the Jr. LO did was get the borrower, do the 1003 and send it to the processor, does this justify taking as much as 50% of the commissions? I think NOT! After all, a processing fee is charged to the Borrower. New LO's that need to be trained in every aspect, 50% might be fair if leads are provided, otherwise 75 to 80% would be more like it on self generated leads.

Michael, Thank you for your comment I don't know if I would go that far and say they don't respect it as much as I would say they don't understand it

Mary, Thank you for your comment.  It is true people believe getting the lead is all that it takes.  Yes it is a huge part but what good is it if it does not close.

Valorie, you made my head spin.  wow... thank you for your comment

Walter, Please re-read the post I never wrote Loan Officers or Jr loan officers who generates the leads. However you do make a good point but please keep in mind at the 80% first off are you 1099 or w-2.  If you are W-2 it really costs the mortgage company closer to a 90% than an 80% because of taxes. You also did not mention what happens after you get the application signed.  What next.  This is really if you handle the entire process of shopping it and running through du.(minus the processing of the loan) Than yes you do deserve a higher commission.  But just for bring a lead in and nothing else... Thank you for your comment 

What's a loan?  j/k... thanks for the shout out.

When it comes to the split issue, it is very easy.  This is what I pay, and this is what I offer.  There is no negotiating.  Everyone that I train learns everything from getting an application signed to the signing of the closing docs.  Every aspect of the loan is part of their job even if there is a processor to help them with it.  (What happens if the processor quits announced?... they can pick up right where the processor left off and still close on time.)

Sometimes the greener grass of higher commission splits has underlying problems that can't be seen at first glance (no support staff or lack of lender help in pricing deals and running scenarios just to name a few).

As for the issue at hand, a consumer applying for a loan should also be shopping for a mortgage professional that can do more than just quote a rate and take an application.  They should hire someone that can handle all aspects of the loan process and have the knowledge to ensure that the best mortgage is being done for the consumers situation.

Jason all I can say is......

and now you know why I placed your name in this post...

Matthew:

I can see your point, but just have a hard time when it comes to splits. I myself do just about everything on a loan. Generate the lead, take the 1003, run DU, Price the loan, order the Appraisal,Title, etc; Therefore I can justify my 100% Commission, that really is about 85% Net to me after taxes.

Walter,  Exactly.. you do everything.  This post was not about you, but about the people who are either fresh in the business who or have assistants do this and have forgotten how.  You do justify a higher commission not the people who expect or need help. 

How come some people don't put their picture up on their profile?  Okay, besides the point...I read all three of you guys posts.....and all of you have a tremendous amount of info to offer.  Us agents who have been in the business awhile also see right through the new ones.....just as we see through the b.s. in all other people.  I personally, help out new agents (even if on the other side ....I let them know that I know they are new and if they need help let me know....) as for new loan officers who "pretend" they know...I tell them straight up...get the correct info or get my buyer a pro who knows what they're talking about.

Sally that is the problem so many loan officers just think filling out an application is it.  I think the person at Burger King can do that.  

Mortgages are tough!  I currently get 100% and pay $350 per loan.  I have a processor I have hired on my own that is approved through my company.  I had to set up my fannie mae account, credit reporting agencies and Caylx templates.  I get 100% because I know how to do those things.  I am not given leads nor help on any of my files.  I work from a home office and do not use any computers, paper or space.  I pay for everything.  I could open my own mortgage company, but I don't want to deal with the headache of dealing with brokers wanting 100% straight out of broker school!  Now, if I went to a company that gave me computers, paper, supplies, paid for my credit reports, credit updates (I don't think I have had a file in ages that hasn't needed a credit update!) and fannie findings...90% is not bad!  That's basically what you net on a smaller loan size!  If someone is complaining about splits...beware!  I am sure that you have a graduated system.  New brokers get x...as you get more experience you move to y...when you prove your really serious move to z whatever z may be.  If they are going to be good, they will be hungry for knowledge and move up the ladder.  If they just want to halfway learn the industry, you will hear lots of crying.  Now with the housing market like it is, it will be hard for new brokers without much experience.  Glad to hear that Fannie Mae is swooping in to save the sub prime lending industry on the 16th of this month with not requiring collections to be paid off!  Yippie for that!  Things could get interesting.  Fannie and FHA are coming in to save the day....................Oh and P.S.  CRA credit is an incentive that many companies give you for lending in low to moderate income areas since a certain percentage of their loans have to be low to mod.  Everbank and SunTrust sometimes offer these incentives.  Everbank is currently offering .5 which is in addition to their FL state incentive.  The incentives run anywhere from .5 to 2 points depending on how bad the banks need the loans! 

Valorie, Can I clone you?  I am serious..... I don't mind paying out when you deserve it.  If it was'nt illegal I would install cameras so I could play back what some of these people say.  Fresh out of school never did a loan and they expect huge commissions.  Thank you for making some great comments

Yes Matthew I have to say that I really know my #1 loan officer. She has saved my clients in at least 25 deals. It's nice to know that when she works with them it's like having a pit bull in their corner. I'm a believer! What a relief when going to a closing. She goes to all of those too.

i would test them to see if they know how to do simple math. when you're dealing with savy borrowers they want numbers broken down in front of them. if you can't do simple math, you'll get borrowers in bad loans.

Lizette,  Thats fantastic.. glad you she does

Jay,  Ok.. I can't argue that one.  Thanks for your comment

It is very interesting to see the different splits of commission across the nation!  I am in Mississippi and the split with our company is 50/50 for all loan officers(1 yr experience to 15 yrs experience).  Of course take into account all expenses are paid by the company and it is a pretty good deal!  We do not pay for office space, supplies, internet, or anything.  We also use Encompass, which is more advanced than about 90% of other mortgage brokers in our area.  Our originators also get the benefit of VPN into a T1 which is definately more advanced than the dial up most other companies here use!  Not to mention the benefit of me, their "bull dog" processor/ underwriter!!!  Okay, enough of tooting my own horn, but seriously, your processor is your backbone.  If they cannot close your loans and treat every client and real estate agent like they are top priority, you can lose a lot of business.  I make it my personal goal to make sure that every loan officer gets top shelf treatment and that their clients are "super" excited to work with our company!  I am probably not the "ordinary" processor, but it matters to me that my loan officers (7 total) are always satisfied and that their loans close with as less stress as possible.  Thank God for good loan officers!!

Matthew, what is DU? Is that a text abbreviation?  I guess the names mentioned is a Florida thing.... lol

Matthew... you mentioned some key points. But I think one of the bigger points brought up is what Jay M. mentioned... Simple math and breaking down numbers and scenarios.  Sure, do I want to see how you do when it comes to filling out a 1003... you bet. But my next issue and not DU or LP  (lazy people?) lol... ...  but communication, follow up, etc etc. I think this is more important than DU... if anything, the processor can do this. This can be taught later. I would rather have someone with personality, communication skills, and math/creative skills... knowing actual programs, not so much what lender that it can go to...unless it was a specialty loan. Just my .02.

Overall... you bring up some good points. I am just glad that I learned in the early 90's and just learned myself, how to look at all the types of PMI loans and learning FHA. These two things have been neglected in our business in the last 6 years...or longer. So many think combo loans are better than a single loan. So many factors that go into this decision... but you need to be able to do the math.

Walter... I looked at your profile. A national lender to me would be someone that has office presence in each state. Just being licensed in each state doesn't classify this for me as much.  Why do I say this?  Unless you do a lot of loans in this state, there is so much to know. example... Florida and refi's or MD purchases....  so many miss the basics for those states. Cash -out refi's for Tx. One thing I had the privledge of when working for a true national lender was that we had an office in each state.. so if I had a question about a certain type of loan or about title, I could call that office. It might not sound like a big deal, but as I mentioned....  unless you have done many in that state or large cheat sheet... the rest are just words to me. Just when lenders say that they have over a 100 lenders to shop with. Me?  who cares.... you only need no more than 20 at the most. Just my .02.

Shelly,  Sounds like you have a good system working.  What most people fail to realize that what ever the split is it still cost money to run an office.   Thank you for your comment

Jeff,  First off ever here of the readers digest version?  just kidding...I disagree with you about the du/lp I don't think this is the processors job.  It is not something that you run once.  The processor has many responsibilities.  You are right about a personality but you need to have a good closer.  I had one loan officer who had a great personality but would never stop talking. He would talk his way in and out of loans.  Thank you for your comment though..:-)

Matthew...   lol     I thought mine was the cliff notes to Reader's Digest. But if you see what I wrote, I said DU can be taught later. All I was trying to explain since these were questions that you ask a loan officer when hiring them. I said that DU you can be taught later. Meaning if they can take a great 1003, DU is very simple to learn. Worst case, about a week to get familiar with it, if they have a few loans to turn in. I agree, you need to know DU so you can run multiple scenarios. I was just talking about from a hiring standpoint, that I would have this on the top of my list, because you can't truly teach math and being creative while knowing the actual programs. Just my .02 1/2 cents. yea, I had a train run over a penny.... lol

Jeff I understand what you wrote but the people that are applying where demanding huge amounts of commission.  That is not a bad thing but you must earn that type of split.  Would you pay out 90% commission and have to teach them Du/LP, process, fill out a proper 1003? Of course not.  My point of the article is do you really know your loan officer?  Did they just sign up for big split and can't do anything? Are they a great sales person?  Or Do they really know what they are doing?

I'm with you on this one.  If you don't know all of the aspects that go into processing a loan to closing, you can't expect to reap a lion's share of the money.

If you need support to get your loans to closing (and we all do to some degree) it costs money.  You need to pay commensurate with the support you need.

Steven, Exactly! thank you very much for your support

Matthew.....    I was just talking about the difference between meeting someone that has DU experience as opposed to some other things that I hold important. I apologize for getting off topic, since you were talking about splits. But I never did say what kind of split that I would give anyone based on my comments.

Overall... you are right....  again, I am sorry that I got off topic. Too many loan officers want a high split just because others are getting it. This does tick me off, so I will 110% agree with your statement. I don't think it always has to do with how long that you have been in business, but what you know. And I worked with a few guys that would go some where else when a boss of mine would not pay them what they thought they deserved. What's sad is that there will always be a company that will pay them that. What's funny about this is.... is this a good company? Are they there just for the money?  What about their client?  Is their client going to get a good deal because of that company that they joined?  I have seen this more than once. 

Matthew,

Thanks for your comment.  I treasure my company and have not found any other in this area that I would rather work for.  The key to our success as a company is having honest loan officers who understand their profession and treat their clients and associates with respect.  Sounds like you've got a wonderful company as well!

Shelly,  Thank you for the compliment.  I reallly try.