The First Decision
It is not uncommon within the industry to require that an employee – and especially a commissioned loan officer – be asked to separate the day of termination. Typically, the company is afraid that this loan officer will not act in the best interests of the company, and we certainly can understand this concern. Every separation is a risk in this regard and a termination is even more important because there are more likely to be hard feelings. So, the question is—are you going to ask them to stay and/or leave? And if they stay, what actions can they take on files?
Of course, it should be specified in the commission plan and/or employment agreement whether a terminated loan officer will be paid for a pipeline in process and for how long. It is not usual for the company to pay for closings or fundings that occur within thirty days of separation and this provision discourages the loan officer from trying to move their pipeline to their new company.
With a larger company, you should get the human resources department involved. You may need a record of written or verbal warnings before you take this action. It is best to document in writing all issues leading up to taking action. Yes, there may be a blow-up which causes a termination to happen, but most of the time, the process is gradual over time and should be documented carefully.
Customers Come First
Above all else, it is the customers who must be thought of first. Therefore, no matter whether the terminated employee leaves immediately or in a few weeks, and no matter whether the terminated employee is getting paid on the pipeline of existing loans or not, the customer must be contacted to let them know about the separation. This communication must include not only assurances that their file will be well taken care of, but also include new contact information. The communication can be in writing or via the phone or email, however, in cases in which the closing is coming up in a few days or weeks, the fastest mode of communication is preferable. Making the customer comfortable will not only alleviate some customer service disasters, it may avoid loss of a pipeline.