I recently received the following in my Inbox from an anonymous sender. For the sake of this article, we'll just call him "The Loan A-Ranger." I am expecting more and more of our readers to have similar reactions to the loan originator compensation rule as the April 1, 2011 enforcement date draws near. Please e-mail your thoughts to
[email protected] so that I can share your reactions with our audience. Your identity will be fully protected. Here are some thoughts from The Loan A-Ranger:
I had been waiting for this day ... and dreading it. My boss told me we need to "have a talk." I knew our new compensation plan had come in that morning and I knew what this meeting was about. Nervously, I drove back to the office wondering how the company was going to interpret the new Fed Rule. He welcomed me in to his office and then asked me to shut the door ... uh oh ... that's never a good sign.
"After reviewing your last year's production and applying the new plan, I think you will be pleased with what we have to offer you," my boss told me.
I winced instinctively in anticipation of the huge line of BS to about to come out of his mouth.
"You're actually going to get a raise. You would have made an additional $60,000 based on last years' numbers under this new compensation plan. From now on, you will be getting 100bps on every file instead of 60bps."
He has my attention. I asked, "Sure ... but how much are we going have to raise our rates so we can pay me that 100bps?" He said "about 1/8.." My mind is swirling ... but what about the other LOs I asked? Well, some of them aren't so lucky. They will make the same or less, depending upon what they normally charge. If they are charging two points or less on every deal, they will make about the same. If they were getting more than that, they will make less. Since you averaged about 130bps total, you will getting more."
He congratulated me on last year's performance and showed me the door.
I got in my car and just laughed. I had been so worried about this new rule and how it would affect my income. The last thing I expected was for my income to go UP! I have always been good to my clients and charged what I thought was fair and gotten used to that income. For once, my income will go up without any more effort.
