A new report from mortgage fintech LBA Ware shed light on loan personnel compensation for both the fourth quarter of 2020 as well as the entire year, revealing that originators averaged more than $27,000 in monthly commission during 2020’s last three months.
“Low interest rates flamed an increased demand for mortgage activity, which in turn benefited LOs and processors,” said LBA Ware founder and CEO Lori Brewer. “They were rewarded for their long hours with robust compensation checks.”
Average individual production for the quarter was $2.6 million per month, a whopping 63% increase from $1.6 million in the same quarter one year prior. During that time, originators averaged 105.2 basis points (BPS), a scant annual downgrade from 105.4 BPS in Q4 2019. The big jump in production, however, meant a 62.2% annual bump in average monthly commission, up from roughly $16,900 in the same quarter of the preceding year.
Commissions on fourth quarter originations came in at 99.3 BPS per refi, essentially flat from 99.2 BPS in Q4 2019, and 111.1 BPS per purchase loan, up from 109.1 BPS in Q4 2019. For all of 2020, originators averaged 100.2 BPS on refinance originations and 110.6 BPS on purchase loans, coming to a full-year average of 105.5 BPS in overall per-loan commissions.
With loan volumes soaring, companies went on the offensive in upscaling, resulting in originator head count increasing 27% and processor head count jumping 51% year over year. As a result of the growth in the workforce, processors were able to handle 99% more loan files in 2020’s fourth quarter compared to the same period one year prior.
Per-loan bonus compensation earned by loan processors was also up, growing 21% to $128 per loan during the fourth quarter and earning processors an average production bonus of $2,503 per month.
Loan volumes are expected to remain solid given strong momentum going into 2021, although with the historically low rate environment anticipated to see some increases this year, Brewer counseled lenders to start considering the balance of their loan volumes.
“As rates are predicted to rise in 2021 and for several years to come, loan teams that wish to maintain their earnings would do well to put a strategy in place that enables them to offset waning refi volume with more purchase volume,” she said.
To calculate its findings, LBA Ware reviewed account data for lenders who used its CompenSafe compensation platform. The data set consisted of first-lien retail production from originators and processors with at least six funded loans during the three-month period from October to December 2020.