Mortgage Loan Compensation Report Shows Decline in LO Commissions, Volume

LBA Ware, Macon, Ga., said mortgage industry loan compensation per loan originator declined in the second quarter despite a marginal increase in loan volume from Q2 2020 to Q2 2021.

But loan processor workload over the same period also decreased by about a quarter, the firm’s analysis of data from its CompenSafe incentive compensation management platform showed. Loan processor staffing grew by 49 percent from Q2 2020 to Q2 2021. As a result, loan processors handled 27 percent fewer loans per month in Q2 2021 (15.7 units) than in Q2 2020 (21.7 units).

The drop in workload led to a 26 percent decrease in quarterly bonus compensation earned from $2,684 per processor per month in Q2 2020 to $1,999 in Q2 2021, LBA Ware said.

The report found commissions earned per loan originator in Q2 2021 decreased 6 percent from Q2 2020. During the same period, loan volume per LO dropped 4 percent on average.

Loan originators averaged $0.9 million in funded refinance volume per month, a decrease of more than 36 percent over Q2 2020 ($1.4 million), and they received an average of 91.679 basis points per refinance loan, a significant decrease of 6.94 percent from the average of 98.517 basis points in Q2 2020.

Purchase volume grew 49 percent year-over-year, LBA Ware said. Individual loan originators averaged $1.52 million in funded purchase loans per month (a 41 percent increase over the $1.08 million funded per loan originators in Q2 2020) and received on average 107.649 basis points per purchase loan (compared to 108.836 basis points in Q2 2020).

Overall, loan originators saw a 1.76 percent decrease in per-loan commissions from 103.119 basis points in Q2 2020 to 101.308 basis points in Q2 2021, the report said. Loan originators in the sample dataset took home an average of $2,876 in commissions per loan, or roughly 35 percent of the $8,243 it costs to originate a retail loan per Mortgage Bankers Association data.

Lori Brewer

“Loan originators continue to benefit from a strong purchase market buoyed by low rates, flex work opportunities and millennials moving out of their parents’ homes,” said LBA Ware Founder and CEO Lori Brewer. “If the macroeconomic environment stays strong for the second half of 2021, Loan originators could have another banner year.”

Brewer noted lenders added processing power at nearly ten times the rate they added loan originators in the second quarter. “It remains to be seen if that level of operational staffing will be sustainable over the long term,” she said.