UMortgage launches flat-fee model to recruit 1,000 loan officers

"Under the structure, LOs earn 275 basis points per loan but pay a $995 flat fee, a $300 closing quality control fee, and 10% in administrative and payroll taxes per transaction. Once an originator funds 50 loans within an anniversary year, the $995 flat fee is eliminated. The company is also offering a $500-per-loan recruiting incentive, capped at $25,000. If a LO recruits another originator who produces 36 loans annually, the recruiter would receive $18,000, funded from corporate margins."

"Unlike some competing platforms, the model does not rely on commission splits. That's not unique to us there are other flat-fee broker models out there, UMortgage president and CEO Anthony Casa said in an interview with HousingWire. Where we are focused on creating our own niche in the market is by putting an annual corporate margin cap in place at $49,750 50 units multiplied by the $995 fee after which 100% of the revenue stays with the loan officer."

"Previously, UMortgage operated with a 50-bps corporate margin. On a $500,000 loan, that equated to about $2,500 in company revenue, or roughly $250,000 annually from an originator who closes 100 loans. Under the new structure, revenue in that same scenario would total about $49,750 roughly 20% of the prior level. Casa said the model mirrors approaches long used in residential real estate and is designed to attract high-producing originators, even at the expense of company margin."

UMortgage implemented a flat-fee broker compensation model where loan officers earn 275 basis points per loan while paying a $995 flat fee, a $300 closing quality-control fee, and 10% in administrative and payroll taxes per transaction. The $995 flat fee is eliminated once an originator funds 50 loans within an anniversary year. The company offers a $500-per-loan recruiting incentive capped at $25,000 and will fund recruiter payouts from corporate margins. An annual corporate margin cap of $49,750 means 100% of revenue stays with the loan officer after that threshold, reducing company revenue materially compared with the prior 50-bps margin. The model targets high-producing originators and supports sales-force growth.

Read at www.housingwire.com