Mortgage Officer Compensation and Pay Trends Survey
January 2011
Survey Results
Table of Contents
We conducted an online survey of Mortgage Officer compensation in Fall 2010. A total of 65 banks completed
the survey reporting on a total of 329 mortgage officer incumbents. Data is effective as of November 2010.
Total cash compensation is based on 2010 base salaries plus 2009 incentives or commissions earned.
Survey Demographics
3‐4
Compensation Structure
5
Mortgage Officer Compensation
6‐8
Variable Pay
Variable Pay – Minimum Performance Requirements
9
Variable Pay – Link to Asset Quality
10
Variable Pay Detail
11‐13
Variable Pay – Clawback Provisions
14
Variable Pay by Loan Type
15
Basis Points Paid by Loan Type
16‐19
Loan Approval Authority
20
Mortgage Officer Benefits
21
Mortgage Officer Termination Pay
22
Mortgage Manager Compensation
23‐24
Loan Workout Officer Compensation
25
Page 2
Survey Demographics
Number of Banks by Asset Size (n = 65)
1
Under $100 Million
9
$100 Million ‐ $249 Million
17
$250 Million ‐ $499 Million
21
$500 Million ‐ $999 Million
13
$1 Billion ‐ $2.99 Billion
4
$3 Billion ‐ $4.99 Billion
0
TARP Redeemed
3%
5
10
15
20
TARP Status
Ownership Type
n = 65
n = 65
No TARP 29%
Public 58%
TARP
68%
Page 3
Private 42%
25
Survey Demographics
Pay Classification of Lenders
n = 65
Non‐exempt 17%
Exempt, but considering reclassifying
28%
Exempt and Non‐exempt
17%
Exempt
38%
Retention of Residential Loan Portfolio
• Respondents reported selling an average of 83% of their portfolio in the secondary market. • Of 63 respondents, only 8 reported selling less than 50% of their loans.
Page 4
Compensation Structure
Compensation Structure for Mortgage Officers By Asset Size
n = 65
All Banks
n = 65
60%
50%
14%
40%
43%
43%
30%
20%
10%
Base salary only
Base salary plus
incentive/ commission
Commission only
0%
<$500M
n = 27
Page 5
$500M‐$1B
n = 21
>$1B
n = 17
Mortgage Officer Compensation
Compensation – Banks Paying Base Salary Only (n = 9) Entry
All Orgs Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks) n (total incumbents in position) Assets <$500M
Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks) n (total incumbents in position) Assets $500M‐$1B
Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks) n (total incumbents in position) * Base Salary
Mid Level
Senior
$ 33,387 $28,000 $28,000 $33,500 5 10 $43,139 $35,400 $38,300 $46,176 6 11 $57,235 $48,000 $52,040 $72,449 8 23 $29,833 $28,000 $28,000 $30,750 3 5 $36,400 $34,750 $35,800 $37,450 4 6 $48,533 $46,000 $50,000 $51,800 3 10 $38,718 $33,076 $38,718 $44,359 2 5 $56,617 $52,426 $56,617 $60,809 2 5 $62,455 $50,480 $72,000 $73,797 4 13 None of the banks with assets greater than $1B reported paying base salary only to Mortgage Officers.
** Some banks did not disclose the total number of incumbents in each position. If not disclosed, we assumed one incumbent.
Page 6
Mortgage Officer Compensation
Compensation – Banks Paying Base Salary Plus Incentive / Commissions (n = 28)
Base Salary
All Orgs Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks) n (total incumbents in position) Assets <$500M
Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks) n (total incumbents in position)
Assets $500M‐$1B
Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks) n (total incumbents in position) Assets >$1B
Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks) n (total incumbents in position) Cash Comp
Entry
Mid Level
Senior
Entry
Mid Level
Senior
$30,319 $24,002 $30,000 $36,003 19
36
$34,243 $30,000 $34,000 $38,000 17
41
$43,087 $35,975 $41,000 $55,000 24
73
$42,547 $34,350 $42,766 $46,250 16
28
$58,198 $46,329 $54,750 $69,875 14
34
$91,546 $63,750 $85,000 $118,750 20
67
$31,917 $30,000 $30,000 $35,625 6
9
$39,179 $31,875 $37,750 $46,679 6
11
$48,086 $36,000 $55,000 $57,400 9
16
$45,131 $42,800 $45,000 $52,000 5
8
$49,058 $40,763 $50,500 $53,375 6
11
$76,443 $56,200 $64,200 $85,300 7
13
$29,008 $23,832 $30,000 $34,000 7
7
$30,509 $23,746 $29,002 $35,500 6
11
$41,700 $29,830 $40,000 $55,925 7
19
$42,833 $36,750 $42,500 $44,500 6
6
$69,375 $60,875 $67,250 $75,750 4
9
$98,717 $82,500 $98,000 $112,750 6
18
$30,251 $25,000 $30,750 $35,375 6
20
$32,801 $30,000 $32,000 $36,005 5
19
$38,676 $35,979 $39,000 $42,750 8
38
$39,618 $32,400 $40,960 $42,732 5
14
$60,731 $43,829 $55,386 $72,289 4
14
$100,502 $65,369 $100,000 $141,065 7
36
* Some banks did not disclose the total number of incumbents in each position. If not disclosed, we assumed one incumbent. Page 7
Mortgage Officer Compensation
Compensation – Banks Paying Commission Only (n = 28)
Cash Comp
All Orgs Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks) n (total incumbents in position) Assets <$500M
Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks) n (total incumbents in position) Assets $500M‐$1B
Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks) n (total incumbents in position) Assets >$1B
Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks) n (total incumbents in position) Entry
Mid Level
Senior
$45,650 $32,500 $47,500 $57,500 10
25
$82,583 $49,500 $68,095 $83,061 12
42
$145,721 $82,500 $100,648 $150,448 14
62
$45,000 $37,500 $45,000 $52,500 2
2
$54,333 $41,500 $48,000 $64,000 3
4
$103,000 $60,000 $100,000 $160,000 5
6
$53,038 $45,000 $50,000 $60,000 5
19
$66,449 $50,000 $70,000 $75,000 5
24
$114,400 $90,000 $100,000 $107,000 5
36
$33,770 $25,655 $40,000 $45,000 3
4
$123,939 $64,643 $92,879 $152,175 4
14
$238,272 $95,971 $111,544 $253,845 4
20
* Some banks did not disclose the total number of incumbents. If not disclosed, we assumed one incumbent.
Page 8
Variable Pay – Minimum Performance Requirements
A majority, or 86% of respondents, reported paying commissions and/or incentives. Some banks
require minimum performance requirements before incentives or commissions are earned.
Banks requiring minimum volume requirements before paying incentives
n = 56
Banks requiring a minimum yield on loans before paying incentives
n = 53
Require
23%
Require
32%
Do Not Require
77%
Do Not Require
68%
• For those reporting a minimum yield, the average loan yield ranged from 0.5% to 1.8%. • Eleven banks reported a monthly loan minimum with a range from $50,000‐
$500M; median = $500,000/month.
• Other reported methods include: Commission calculation must exceed quarterly salary received, or must exceed base salary.
Page 9
Variable Pay – Link to Asset Quality
• Eleven percent of respondents* reported modifying or reducing incentive or commission payments based on
asset quality measures and three percent plan to implement this type of feature in the near future.
• Five percent of banks* hold back a portion of incentives until the end of the year to assess asset quality and
another five percent plan to implement this type of deferral feature in the near future.
• The chart below depicts common asset quality measures used by banks that reported using or planning to
use these going forward.
Asset Quality Measures
n = 9
60%
50%
56%
44%
44%
40%
30%
22%
20%
10%
0%
Non‐performing
assets
Past dues
Classified loans
Other
• 22% of banks used more than one asset quality modifier.
• The “other” category in the above table includes: financial distress, need to buy back secondary mortgage
loans, loan closing /early payment exceptions, and other policy exceptions.
* Based on 62 responses to this question.
Page 10
Variable Pay Detail
Additional Pay for Overages?
Reduce Payments for Underages?
n = 45
n = 47
Yes
22%
Yes
27%
No
73%
No
78%
Twenty‐two percent of respondents reported
paying for overages or above PAR pricing.
Twenty‐seven percent reported reducing
payouts for underages or sub PAR pricing.
• For those that pay for overages, the majority split
the profit with the mortgage officer. The range is
from 20% ‐ 60%, with the most prevalent being
50%.
• Two banks mentioned paying 5 basis points for
overages.
• For those that reduce payments for
underages, all of the banks mentioned
reducing pay/commission by some amount.
• The majority of mortgage officers are
responsible for either 50% or 100% of the
underage.
Note: The Mortgage Compensation Guidelines
released by the Federal Reserve and the Dodd‐
Frank Act prohibit paying incentives for overages.
Page 11
Variable Pay Detail
Incentive for Deposit Generation
Incentive Paid for Referrals
n = 56
n = 56
Yes
16%
.
No
62%
No
84%
Yes
38%
38% of banks pay incentives for referrals.
Of those, most paid between $25‐$500 per
referral, with most prevalent being $50.
Most required the referral lead to a closed
loan.
16% of banks pay incentives for deposit
generation. Of those, some pay as part of
their bonus calculation, others paid
between $10‐$50 per new account.
Page 12
Variable Pay Detail
Incentives Payout Schedule
Incentive Plans Capped?
n = 60*
n = 56
Quarterly
8%
Annually 13%
Yes
9%
Biweekly 18%
Monthly 61%
No
91%
The majority of banks with a
commission or incentive structure
report having uncapped plans. This is
fairly common for the mortgage officer
position.
The majority of banks pay commissions
on a monthly basis. We anticipate
more banks will lengthen the pay
schedules or add a deferral
or
holdback feature to help mitigate risk.
* Three banks noted paying commissions monthly and incentives quarterly or annually.
Page 13
Variable Pay – Clawback Provisions
Twenty‐five percent of respondents* currently have clawback provisions for their
mortgage officers and another five percent are implementing clawbacks in the near
future. Forty percent of banks with clawback provisions reported their recovery periods
are under one year, while one‐third reported having indefinite recovery periods.
Clawback Recovery Period
n = 15
27%
33%
40%
Indefinite
One to three years
* Based on 63 responses to this question.
Page 14
Less than a year
Variable Pay by Loan Type
How are Incentives/Commissions Paid on Different Loan Types?
Based on loan
portfolio/profitabilty
Residential
1‐4 Family
Residential
Multi Family
Basis points based on
loan production/volume
Percent of Fees
Jumbo
Refinances
Construction
FHA/VA
Second
Mortgages
0%
10%
20%
30%
40%
50%
60%
70%
Residential 1‐4 Family
Residential Multi Family
Jumbo
Refinances
Construction
FHA/VA
Second Mortgages
n = 53
n = 38
n = 51
n = 53
n = 39
n = 48
n = 27
Loan Profitability Methodology
‐ For those that paid a percentage of loan profit the range of profit shared is between 45% and 60%. ‐ Other methodology includes: 20% of income (fees and yield spread), brokered loan profit multiplied by incentive percentage of 2.5%‐10%. Loan Basis Points Methodology ‐ 52% of banks (n = 54) use a tiered approach where basis points vary by loan volume. See next page for additional information. Loan Percent of Fees Methodology ‐ For those that paid a percent of fees, the percentages ranged from 6% ‐ 75%. The median percent of fees paid is 50%. ‐ Various qualifiers: total income after taxes, fees earned in excess of lender's quarterly salary, percentage varied based on loan volume and/or experience, refinances received 10% less than new loans.
Page 15
Basis Points Paid by Loan Type
Residential 1‐4 Family Loans
Residential Multi‐Family Loans
45%
70%
40%
60%
35%
50%
30%
40%
25%
30%
20%
15%
20%
10%
10%
5%
0%
0%
<30 BPS
30‐39
BPS
40‐49
BPS
Retail/Retained Portfolio
n = 21
50‐59
BPS
60‐69
BPS
70‐79
BPS
Retail/Secondary Market
n = 27
>100
BPS
Wholesale
n = 7
* None of the banks paid basis points between 80‐99 bps
<30 BPS
30‐39
BPS
40‐49
BPS
50‐59
BPS
60‐69
BPS
70‐79
BPS
Retail/Retained Portfolio
Retail/Secondary Market
Wholesale
n = 10
n = 3
n = 13
* None of the banks paid basis points greater than 80 bps
Page 16
Basis Points Paid by Loan Type
Jumbo Loans
Refinance Loans
45%
40%
40%
35%
35%
30%
30%
25%
25%
20%
20%
15%
15%
10%
10%
5%
5%
0%
0%
<30 BPS
30‐39
BPS
40‐49
BPS
Retail/Retained Portfolio
n = 20
50‐59
BPS
60‐69
BPS
70‐79
BPS
Retail/Secondary Market
n = 27
>100 BPS
Wholesale
n = 5
* None of the banks paid basis points between 80‐99 bps
<30 BPS
30‐39
BPS
40‐49
BPS
Retail/Retained Portfolio
n = 21
50‐59
BPS
60‐69
BPS
70‐79
BPS
Retail/Secondary Market
n = 28
>100 BPS
Wholesale
n = 6
* None of the banks paid basis points between 80‐99 bps
Page 17
Basis Points Paid by Loan Type
Construction Loans
FHA/VA Loans
40%
40%
35%
35%
30%
30%
25%
25%
20%
20%
15%
15%
10%
10%
5%
5%
0%
0%
<30 BPS
30‐39
BPS
40‐49
BPS
Retail/Retained Portfolio
n = 19
50‐59
BPS
60‐69
BPS
70‐79
BPS
Retail/Secondary Market
n = 20
>100
BPS
<30 BPS 30‐39
BPS
Wholesale
n = 5
* None of the banks paid basis points between 80‐99 bps
40‐49
BPS
Retail/Retained Portfolio
n = 14
50‐59
BPS
60‐69
BPS
70‐79
BPS
80‐89
BPS
Retail/Secondary Market
n = 27
Wholesale
n = 6
* None of the banks paid basis points between 90‐99 bps
Page 18
>100
BPS
Basis Points Paid by Loan Type
Second Mortgage Loans
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
<30 BPS
30‐39 BPS
Retail/Retained Portfolio
n = 10
40‐49 BPS
50‐59 BPS
Retail/Secondary Market
n = 12
* None of the banks paid basis points between 60‐99 bps
Page 19
>100 BPS
Wholesale
n = 4
Loan Approval Authority
Loan Approval Authority?
n = 54
Yes
15%
No 85%
• Fifteen percent (15%) of banks reported their mortgage lenders have loan approval
authority ranging from $75,000 ‐ $400,000.
• Some banks indicated having different limits based on secured loans vs. unsecured loans.
• Five banks indicated having an underwriting department or senior lender who has various
levels of loan approval authority.
• Four banks indicated using a secondary market for underwriting decisions.
Page 20
Mortgage Officer Benefits
Benefits Offered to Mortgage Loan Officers
n = 65
100%
80%
60%
40%
20%
0%
Methodology
• Most banks offered several types of benefit to their
mortgage lenders.
• The “other” category in the above table includes ten banks
that indicated loan officers have cell phones and four banks
that provide some sort of transportation benefit to their
mortgage loan officers.
• Wellness benefits, tuition reimbursement, laptops, and
business entertainment or expense accounts were also noted
by individual banks.
Page 21
Equity Benefits
• None of the banks reported paying a
portion of cash incentives or
commissions in equity.
• Only five percent of banks provide
equity to their mortgage officers as an
additional incentive.
Mortgage Officer Termination Pay
Incentive/Commission Payout Schedule at Termination*
n = 55
Pay according to next payout
schedule
Pay out after 30 days
16%
40%
20%
Pay out after 60 days
Pay out after 90 days
20%
Incentive is forfeited
0%
Other
4%
Most banks (40%) reported they will pay according to their next payout schedule and
twenty percent of banks have commission or incentive forfeited in case of employee’s
termination.
* Does not include termination for cause or fraud.
** None of the banks reported pay out after 90 days.
Page 22
Mortgage Manager Compensation
Mortgage Manager Compensation (n = 52)
All Orgs
Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks)
Assets: <$250M Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks)
Assets: $250M‐$499M
Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks)
Assets: $500M‐$1B
Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks)
Assets: >$1B
Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks)
Base Salary
Cash Compensation
92,295 66,875 80,500 110,000 52
111,986 72,000 100,000 125,033 49
65,629
53,700
60,000
72,500
7
76,233
63,800
74,000
95,000
6
74,288
65,000
72,000
80,000
13
92,883
63,000
74,500
94,938
12
103,705
78,750
85,297
122,500
16
124,893
78,172
105,000
138,750
16
107,182
79,867
101,755
117,500
16
128,868
102,900
116,567
132,517
15
Page 23
Mortgage Manager Compensation
Manager Incentives Criteria (n = 53)
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Overall
department
volume
Individual portfolio Corporate goals
Departmental
profit
Basis point
override
Other
Methodology
Incentive Plans
• Many banks chose more than one category. Seven banks
did not have incentives for mortgage managers;
therefore, are not included in the table above.
• The “Other” category includes five banks that base
incentive on overall bank and/or departmental goals; two
banks that indicate it is a discretionary bonus and three
banks that use quality measurements (i.e. compliance,
risk management, service quality).
• Of fifty‐three respondents, 60% reported
not having a cap on manager incentive
plans at all.
• A third (33%) of banks reported having a
cap on the manager incentive plans as a
whole, and six percent (6%) reported
having a portion of the manager incentive
plan capped.
Page 24
Loan Workout Officer Compensation
Loan Workout Officer Compensation (n = 20)
Base Cash Salary Compensation
All Orgs
Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks) n (total incumbents in position) Assets: <$500M
Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks) n (total incumbents in position) Assets: $500M‐$1B
Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks) n (total incumbents in position) Assets: >$1B
Average
25th Percentile
50th Percentile
75th Percentile
n (number of banks) n (total incumbents in position) Loan Workouts
73,168
49,775
70,815
92,500
20
42
73,318
50,000
70,815
94,375
20
42
• Only 12% of banks’ loan officers are responsible for
loan workouts. In 6% of banks, loan officers are
responsible for some of the loan workouts. Fifty‐two
banks responded.
63,000
45,000
50,000
65,000
5
7
65,000
45,000
50,000
65,000
5
7
• 44% of banks have separate loan workout officers.
The table to the left represents the compensation of
these separate loan workout officers. Four banks
reported having separate loan workout officers;
however, did not report their salary. Therefore, these
four are not included in the table to the left.
77,020
49,100
90,000
100,000
5
5
79,220
54,100
90,000
100,000
5
5
• 25% of banks with separate loan workout officers pay
incentives for loans worked out. Incentives used for
loan workout officers include: performance against
individual and/or corporate goals, board discretion,
incented per workout, and as a percent of re‐capture.
76,327
58,303
76,709
84,125
10
30
77,527
58,303
76,709
90,625
10
30
Page 25