In the mortgage industry, Mortgage Loan Officers are the star performers of a mortgage lenders’ business. Mortgage Lenders need to keep Loan Officers happy by paying their commissions with speed, accuracy, and time. Conventional mortgage commissions systems with manually updated spreadsheets are time-consuming, and there are chances of errors. Mortgage lenders need to adopt Mortgage Process Automation. In this blog, we will discuss the efficiency of Mortgage Commissions Systems and their benefits.
Mortgage Commissions Systems
For each mortgage application, mortgage loan officers are the first contact for borrowers. Mortgage Loan Officers have unique roles in banks and financial institutions, and their responsibilities have been discussed earlier in our blogs. The commission structure for mortgage Loan officers varies. Some loan officers are paid salaries by their employers, while some mortgage loan officers get commissions. Mortgage Commissions Systems calculate payments based on the number of loans originated or repayment of loans. Loan Originator/ officers commissions are very complicated with many challenges.
These challenges include
There have been changes to loan originators’ compensation under laws such as the Truth in Lending Act (TILA) (Regulation Z). This compensation included commissions, salaries, fees, financial incentives given to loan originators by their employees. Consumer Financial Protection Bureau (CFPB) adopted rules to implement loan originator regulations of the Dodd-Frank Act. These rules restricted certain activities previously enjoyed by the loan originators before 2014. However, the laws permit seven permissible methods of compensation for loan originators
Image 1 - Permissible compensation methods
Improper calculations of Mortgage Commissions
The calculation of commissions on each loan is only a part of the problem. Accurate and timely commission calculations are vital for all the people involved in closing the deal. Tracking individual loan applications, referrals, information on bonuses, split commissions, payroll draws, and overrides are essential in calculating mortgage commissions. So, how are Mortgage Commissions calculated? Mortgage Commissions are calculated on loan amounts, loan-to-value ratios (LVR), and the quality of the loans closed. Calculation of Mortgage Commissions is according to the basis points of the loan. According to surveys done a couple of years back, 45 percent of firms pay 76-150 basis points commissions on each loan. Most Loan officers expect commissions regularly for their efforts in closing the loan. So, inaccurate calculations will lead to distrust and frustration among the loan officers. Loan officers may move to companies that pay higher commissions.
So, the solution for the above challenges is---
Creating Efficient Mortgage Commissions Systems
An efficient Mortgage Commissions System brings all the loan compensation data together. It manages the loan commissions and bonuses from one place. It brings greater transparency in the Mortgage Commissions and boosts productivity in the mortgage industry. Mortgage lenders can overcome challenges by paying Mortgage Commissions, focusing on cost-effective compensation plans, and mortgage process automation. Automated Mortgage Commissions Systems help in the tracking of the activity of loan officers. Mortgage Process Automation is vital in calculating the direct and indirect compensation of Loan Officers.
Features of an Efficient Mortgage Commissions Systems
Mortgage Process Automation plays a vital role in implementing efficient Mortgage Commissions Systems.
- Customized Dashboards with real-time information allow decision-makers in the lending companies to review individual performances of Loan Officers. Monitoring of defined workflow management gives a clear and transparent assignment of work to loan officers.
- LOS integration with the Mortgage Commissions Systems will enhance automatic calculations of mortgage compensations and bonuses. There is no untimely delay in calculating and the accurate commissions given to the loan officers. There are periodic updates of each loan officer's activities and monitoring of their compensation.
- Automatic calculations are done based on the type of compensation plans, their implementation, and assigned dates. There is a review to determine the final payout after loans close. Split commissions and overrides are also taken into consideration by an efficient Mortgage Commissions System
- Compliance with regulations is essential for mortgage lenders so that they can legally compensate the Loan Originators. It also provides audit trails for transactions carried out by Loan Originators
- Incentive programs are offered to Loan Originators regularly. These incentive programs are attractive and boost the morale of the Loan Originators.
Image 2 - Features of Efficient Mortgage Commissions Systems
Simplifying the Mortgage Commissions System by making it user-friendly will increase the productivity and growth of businesses. Mortgage Process Automation and its integrated CRM platforms ensure that incentive-related documents are visible to the right people. The dissemination of correct vital information in an efficient Mortgage Commissions System that does not get lost in bulk e-mails and tedious spreadsheets. inflooens has the best configurable Mortgage Commissions Systems that automates tedious loan commission calculations.
Mortgage Process Automation is completely changing the way mortgage lenders are working in the Mortgage Industry. Implementation of an efficient Mortgage Commissions System helps in customizing, tracking, and approving compensation-related documents. Mortgage Commissions Systems are transforming documents available as hard copies into a digital format. Mortgage Commissions Systems helps the mortgage industry build, find and retain the most talented people with good compensation processes. inflooens help you customize your company’s Mortgage Commission System and keeps you ahead of your competitors.