LO Commissions Increased 59% Year-Over-Year in the Second Quarter

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A significant increase in refinance volume in the second quarter resulted in a 59% increase in total loan originator (LO) commissions compared with the second quarter of 2019, according to LBA Ware’s Mortgage Loan Originator Compensation Report.

The average LO originated and funded 63% more volume in in the second quarter ($2.4 million per month) compared with the second quarter 2019 ($1.4 million per month). The report is based on data from LBA Ware’s CompenSafe ICM platform.

The refinance share of transactions increased to 56% in the second quarter, according to the firm’s data.

LOs averaged $1.4 million in funded refinance volume per month during the quarter, an increase of more than 230% compared with the second quarter of 2019.

Although LOs’ paychecks were larger in the second quarter compared with the second quarter of 2019, the uptick in refinance production contributed to a 2.7% decrease in per-loan commissions from 108 basis points in the second quarter 2019 to 105 basis points in the second quarter of 2020.

Refinance leads are more likely to be company-generated versus self-sourced, so they tend to pay out at a lower rate than purchase loans, averaging 100 basis points in the second quarter compared to 110 basis points paid out for purchase loans.

LO Commissions Increased 59% Year-Over-Year in the Second Quarter

Purchase volume held steady year-over-year with LOs averaging $1.08 million in funded purchase loans per month versus $1.16 million in the second quarter of 2019 – and receiving on average 109.9 basis points per purchase loan versus 109.7 a year earlier.

“In this year of bleak economic news, surging refinance volume and steady home purchase business have been bright spots,” says Lori Brewer, founder and CEO of LBA Ware. “Low rates have fortified lenders’ pipelines and put more money in originators’ paychecks. LO commissions paid out during the three-month period are up 59 percent over 2019. I just hope some of that hard-earned money gets set aside for the rainy days that are bound to follow expected increases in unemployment and loan defaults.”

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