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Loan Originator Commissions Increase in Q1

UnderwritingDespite some year-over-year decline in basis points paid per loan, loan originators and processors saw higher commissions during Q1 2021 thanks to refinance and purchase loan volume, according to a report from LBA Ware, which provides incentive compensation management and business intelligence software to the mortgage industry.

LBA Ware Founder and CEO Lori Brewer weighed in on the results of the Q1 report.

“They say ‘many hands make light work,’ and in the first quarter of this year we definitely saw lenders sharing the workload,” Brewer said. “Lenders employed 32% more originators and 58% more processors than this time last year and paid incentive compensation to an average of three to four individuals per loan. So far, volume remains brisk across purchase and refi, but as refi volume wanes it could prove difficult to sustain this level of staffing. This is a trend we will be monitoring closely in the coming months.”

Some key takeaways from LBA's report follow:

  • Compensation for loan originators in Q1 increased 52% since last year, according to LBA, because the average loan originator funded 55% more loan volume this year.
  • Loan originators averaged $1.43 million in funded refinance volume per month, an increase of more than 87% over Q1 2020 ($764k), and received an average of 96.332 basis points paid per refinance loan (versus 96.944 in Q1 2020).
  • The annual purchase volume grew 22%, with originators averaging $1.11 million in funded purchase loans per month (versus $912k in Q1 2020) and receiving on average 109.091 basis points per purchase loan (versus 108.251 in Q1 2020).
  • Although originators saw larger paychecks in Q1 2021 than Q1 2020, the uptick in refinance production and slight downward pressure on basis points paid for refinance loans contributed to a 1.79% decrease in overall per-loan commissions from 103.564 basis points in Q1 2020 to 101.709 in Q1 2021.
  • Loan processors handled 29% more loans per month in Q1 2021 compared to Q1 2020, fueling a 51% increase in average incentive compensation earned from $1,451 per processor per month in Q1 2020 to $2,194 in Q1 2021.
  • Loan teams grew significantly from Q1 2020 to Q1 2021, with the average lender increasing its originator headcount by 32% and processor headcount by 58%.

About Author: Christina Hughes Babb

Christina Hughes Babb is a reporter for DS News and MReport. A graduate of Southern Methodist University, she has been a reporter, editor, and publisher in the Dallas area for more than 15 years. During her 10 years at Advocate Media/Dallas Magazine, she published thousands of articles covering local politics, real estate, development, crime, the arts, entertainment, and human interest, among other topics. She has won two national Mayborn School of Journalism Ten Spurs awards for nonfiction, and has penned pieces for Texas Monthly, Salon.com, Dallas Observer, Edible, and the Dallas Morning news, among others. Contact Christina at christina.hughesbabb@thefivestar.com.
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