Tag Archives: Borrower Paid

Mortgage Originators

Thursdays Thoughts – How Borrower Paid Works!!

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#ThursdaysThoughts – How Borrower Paid Works!! Disclaimer, today’s video does not address “how” an individual LO or Broker is paid.  Today’s video goes over the different type of compensation structures that are allowed on a Brokered loan.  My advice is only that each Broker should have a separate agreement for compensation to their loan officers written out and signed.  From a wholesale level, no LO should be able to say, I get paid more to send it to X lender than you.  That can’t exist.  What we talk about today, is the lending laws that allow a Brokered loan to be charging the borrower directly (Borrower paid) or paid by the Lender paid compensation election. (Lender Paid)

I detailed some of the advantages of being a mortgage broker yesterday, and today I go in-depth on one of those advantages a #MortgageBroker has, going borrower paid on a loan.  Some Broker’s do this all the time, some Broker’s just don’t know how.  Borrower paid is actually the best way to structure a loan for a client, only due to the enhanced tax benefits they can get.  (from a consumer stand point)  From a LO/Broker stance, you have more flexibility to adjust numbers and give a credit if there’s a need to do so.  Hence closing the loan.  ↓

The biggest thing to remember on a borrower paid loan is that the credit can only cover the actual third party costs on the loan.  It can NOT cover the compensation.  So it’s important to look at the credits as DOLLAR AMOUNTS, not fractions and percentages.  In other words, what number is really 2.5% back to the client.  And is that over the actual costs or not?  Based on the loan amount, that end number will vary.

At the end of the day it’s all about structure, loan structure and the details of the transaction will always be the heart of the equation.  When a Broker/LO goes Borrower paid, they simply have more flexibility to make the structure work that they sold to the client in the beginning.  Making loans work is how they close.  When they close that’s when every one involved gets paid.

If you have questions about Borrower paid or Lender paid transactions please feel free to email me —CLICK HERE.  I’m here to help.

As always –

#SellWell

 

Mortgage guidelines, Mortgage Originators

Whacked Out Wednesday – Borrower Paid Calculation

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#WhackedOutWednesday – This week we’ve discussed various compensation set ups, and ways a broker could have his LO’s paid.  The “how to” on a borrower paid transaction is often a question I get.  In reality there is a right and wrong way to price these out as a result of comp laws indicating that no credit on a borrower paid transaction can cover LO comp.  Hence the “borrower paid” name.  However, many LO’s and Broker’s get this wrong all the time.  Today I wanted to break down the easiest way to structure these.

Step 1 on a borrower paid transaction is figuring out the total costs.  You can’t in theory pick a rate until you know this “dollar amount”.  Or at least close to it.  So add up all your title, impound, government recording, flood certs, underwriting fees, appraisals, inspections and any and all 3rd party fees, upfront.  Once you have a number go on to step 2.

Step 2, price the loan out with your lender as a borrower paid transaction.  When looking at the credit for any given rate, it’s best to pick a rate that doesn’t “exceed” the total dollar amount in costs.  You can be within a few grand at most, but the objective is to be as close as possible.  Otherwise any 3rd party costs not covered by credit would need to be paid by the borrower or covered by concessions.

Step 3, input your commission.  The point in many cases of doing a borrower paid transaction is to “lower” the compensation from your said “Lender Paid Compensation” (LPC) selection at any one lender.  Many make the commission equal to or less than the actual costs on the loan.  Which for the most part shadows the credit for the rate.

In a real life example, the total costs are 4200 on a loan (including impound set up) and the credit for the rate is 4000.  Then the LO chooses to make 4000 and have the small left over 200 dollars from costs not covered by the credit.  Making the total in costs on the loan 4200.  Somewhat a rob Peter to pay Paul scenario, or “magic show” as I describe it.  If you find you’re accurate in estimating costs upfront on a borrower paid transaction, you will be able to price and sell this type of loan to anyone.  And WIN the deal with any shopper.

This week I am doing data entry into a CRM and expanding my Broker network big time.  I would welcome helping you! If you own a Mortgage Brokerage or know someone that does, refer them to the JUICEman.  I encourage others to Join Us In Creating Excitement about mortgages, and make this stuff fun.  I look for great broker’s that want to excel at helping others with mortgage loans.  As a wholesale AE, my role is to help facilitate these home loans to the closing table.  I act as an intermediary between the LO/Broker and the underwriter and funding teams.  The more accurate the 1003 and structure of the loan upfront, the faster loans close.  Let’s do business together this year, in fact, you can “try before you sign up.”  With great rates and 1 day turn times, we are poised to position ourselves to help many broker’s grow their business this year.  Why not you? – Shoot me a message on Facebook, I’ll send you a rate sheet and submission form.  You can experience our stellar service first hand and then sign up!   #SellWell

Mortgage guidelines, Mortgage Originators

Two for Tuesday – LO Comp and Borrower Paid!

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#TwoforTuesday – Some great conversations happening out there recently and wanted to highlight some conversations recently about LO comp and Borrower paid transactions.  Assuming you are a LO at a Broker shop, whom does TPO business, you still have to have a set compensation agreement for all loans.  The Broker is allowed to incentivize you based on volume, however, for the most part you are to be paid the same amount on all deals.  Borrower paid or Lender paid!

Now I am not a lawyer by any means, I just make sense out of these laws and attempt to spread the word.  As an AE, no LO should be in a position where they “send” loans to any one lender to be brokered and be paid “more” for doing so.  The LO should be picking the best lender for the given loan and borrowers situation.  AND that doesn’t mean the lowest rate or highest spread.  There’s customer service, there’s turn times, there’s a handful of other things that could be taken into consideration.  Rate doesn’t dictate the “best option” for your client.  Period.

Second point today, Borrower paid transactions.  If you are a LO, and you have a set comp plan with a Broker, and decide to go borrower paid, you should still be “making” enough to cover that comp plan.  OR the Broker should put a clause in their comp plan to LO’s that states they are not allowed to charge less than the agreed upon comp per deal.  That way the “house” never has to pay out of pocket to pay the LO.  That’s not good business obviously.

I am expanding and still helping new Broker’s in 2018 to grow their business.  I am not a typical AE, what I do is help my broker’s actually source business.  So not only do I help with guidelines, scenario’s and pushing your existing loans to the table, I help you learn to source new business.  And I do it online, where I teach Broker’s how to expand their referral network, and help their business grow.  More leads = More closings.  If you’re struggling with business, or just happen to be on a mission to grow this year, I’d like to work with you.  CLICK HERE and we can chat! #SellWell