Posted on Friday, February 4, 2011
Winston Churchill said, "The Americans will always do the right thing...after they
> have exhausted all the alternatives." An article recently by Kate Berry in American
> Banker points out that most banks are expected to switch to a flat compensation
> model for loan officers and will have to put more management controls in place if
> they pay incentives based on the volume of loans produced. The controls would be
> necessary to ensure that such awards don't create a perverse incentive to make
> risky loans. "Banks also are expected to revise branch managers' compensation,
> because they can no longer share in the branch profits generated by mortgages.
> Meanwhile, mortgage banks see an opportunity to poach high-producing loan officers
> or add brokers as affiliates with promises to find ways to preserve their income.
> But loan officers that work for banks are in a bind, since they are exempt from
> state licensing requirements in working for a traditional bank and would have to
> become licensed in individual states to join a mortgage bank. The mortgage banks
> likely will tie compensation to the volume of loans produced, a flat fee per loan
> or even a combination of both." crisman