March 15th, 2011

• Current Originator Compensation Models

• Originator Compensation Rules
• Allowable Compensation Plans
• New Originator Compensation Models
• Things To Look For In Your Technology
• How PriceMyLoan Supports Originator
Compensation Rules and Models

©2011 LendingQB
  PriceMyLoan is a technology provider
 The information provided in this webinar is
not to be considered legal counsel in any
way
 PriceMyLoan’s goals:
– Enable lenders to maintain compliance with
regulatory requirements
– Develop technology solutions that enhance the
management and implementation of originator
compensation strategies

©2011 LendingQB
  Fixed Margin
 Example:
 Lender = 100 bps
 Originator = varies based on final sales price
 Percentage of Originator Profit
 Example: 70/30 split
 Rate sheet price = 300 bps
 Lender = 90 bps
 Originator = 210 bps
 Combination of Fixed Margin + Percentage of
Originator Profit

©2011 LendingQB
  Originator compensation cannot be based on
loan terms and conditions
 Originators cannot receive compensation from
both borrower and lender
 Mortgage brokers are prohibited from steering
borrowers to loans with less favorable terms in
order to increase compensation

©2011 LendingQB
  Pay originators a fixed fee
 Pay originators a proportion of loan amount
 Pay originators a combination of fixed fee
and proportion of loan amount
 Compensation plans can be adjusted over
time

©2011 LendingQB
 How to create a compliant
compensation plan while keeping the
benefits of existing compensation
plans.

©2011 LendingQB
  Pass-Through Compensation Model
 Borrower receives or pays any amount that is above or below
par (after originator compensation)
 Profitability is fixed per loan
 Volume-driven strategy
 Performance Tracking Model
 Allow originators flexibility on a per loan basis while
protecting lender overall profitability
 Flexible profitability model
 Sales-driven strategy

©2011 LendingQB
 Loan Amount = $500,000
Rate Investor Investor $ Lender $ Originato Borrower $
Points (0.5 points) r comp $
(0.5
points)
6.375% -2.500 $12,500 $2,500 $2,500 $7,500.00
6.250% -2.250 $11,250 $2,500 $2,500 $6,250.00
6.125% -2.000 $10,000 $2,500 $2,500 $5,000.00
6.000% -1.750 $8,750 $2,500 $2,500 $3,750.00
5.875% -1.500 $7,500 $2,500 $2,500 $2,500.00
5.750% -1.250 $6,250 $2,500 $2,500 $1,250.00
5.625% -1.000 $5,000 $2,500 $2,500 $0.00
5.500% -0.750 $3,750 $2,500 $2,500 ($1,250.00)
5.375% -0.500 $2,500 $2,500 $2,500 ($2,500.00)

 Lender makes fixed points per loan

 Originator makes fixed points per loan
 Excess points are used to either a) to pay down closing costs or b) as discount
points to the lender
©2011 LendingQB
 Loan Amount = $500,000
Cash Toward Closing Costs = $3,125
Performance Basis = 70 percent of gross profit
Rate Investor Investor $ Lender $ Credit to Net profit Performan Originator Performance
Points (0.25 borrower ce Basis $ comp $ Account $
points) (for closing (0.5 points) (basis - comp)
costs)
6.375% -2.500 $12,500 $1,250 $3,125 $8,125 $5,687.50 $2,500 $3,187.50
6.250% -2.250 $11,250 $1,250 $3,125 $6,875 $4,812.50 $2,500 $2,312.50
6.125% -2.000 $10,000 $1,250 $3,125 $5,625 $3,937.50 $2,500 $1,437.50
6.000% -1.750 $8,750 $1,250 $3,125 $4,375 $3,062.50 $2,500 $562.50
5.875% -1.500 $7,500 $1,250 $3,125 $3,125 $2,187.50 $2,500 ($312.50)
5.750% -1.250 $6,250 $1,250 $3,125 $1,875 $1,312.50 $2,500 ($1,187.50)
5.625% -1.000 $5,000 $1,250 $3,125 $625 $437.50 $2,500 ($2,062.50)
5.500% -0.750 $3,750 $1,250 $3,125 ($625) ($437.50) $2,500 ($2,937.50)
5.375% -0.500 $2,500 $1,250 $3,125 ($1,875) ($1,312.50) $2,500 ($3,812.50)

 Lender “can” make fixed points per loan + Performance Funds

 Originator is paid fixed points per loan
 Originator can accumulate funds into a Performance Account to apply to future skinny deals
 Transaction costs for loans that don’t close can also be deducted from the Performance Account

©2011 LendingQB
 Source: http://realestatemarbles.com/tomestes/files/2011/01/MBA-Fed-QandA-122010.pdf

©2011 LendingQB
  A way to manage originator compensation
plans on an individual basis
 A way to automatically track changes made
to compensation plans
 A way to generate compensation reports for
 Auditing purposes
 Profitability analysis
 Originator performance
 Tools to help the originator make the
optimal decision

©2011 LendingQB
©2011 LendingQB
©2011 LendingQB
©2011 LendingQB
©2011 LendingQB
©2011 LendingQB
©2011 LendingQB
  PriceMyLoan (www.pricemyloan.com)
 Sales Contacts: (714) 957-6335
 West: John Campbell, x2472
jcampbell@lendingqb.com
 Central: Gigi Campbell, x2471
gcampbell@lendingqb.com
 East: Susan Sheffer, x2473
susans@lendingqb.com

©2011 LendingQB