do loan officers keep the 2% commission or is it like R/E

8 Replies

Do Loan Officers keep the full 2% of the mortgage loan or do they have to split it? In real estate I know the 6%-5% is split between both sides of sale (sellers/buyers) and then the remaining amount is split with the agency, so typically a real estate agent makes 1.5% of a deal. What is the real amount a LO makes. I'm looking to either get back int R/E but am consider the LO road.... Thanks for any and all help/insights ahead of time 

~Alex 

I’ve met commercial loan brokers that charge 2% to setup the deal. I didn’t think it was worth it. Loan officers don’t earn 2% on origination. They are commission-based but not anywhere near that.

Originally posted by @Dennis W.:

I’ve met commercial loan brokers that charge 2% to setup the deal. I didn’t think it was worth it. Loan officers don’t earn 2% on origination. They are commission-based but not anywhere near that.

 I should of been more specific, my mistake, I'm referring to & asking about Residential Loan Officers? So they don't make 2% of the mortgage loan? What is their % commission? 

Originally posted by @Alexander Levit :
Originally posted by @Dennis W.:

I’ve met commercial loan brokers that charge 2% to setup the deal. I didn’t think it was worth it. Loan officers don’t earn 2% on origination. They are commission-based but not anywhere near that.

 I should of been more specific, my mistake, I'm referring to & asking about Residential Loan Officers? So they don't make 2% of the mortgage loan? What is their % commission? 

 When I was an independent Loan Officer in the nineties I had a desk in an office along with about 110 other LO's, I could charge anywhere from 1% to 5% (or more) depending on the deal. The Broker charged a reasonable fee for the transaction which I passed onto the client. Since it was entirely commission based only about 20% of us actually made a living at it. You have to meet a lot of people to have enough business to keep things going.

A good interest rate at the time was 8% for a refinance for good credit and good work history. The other 80% of LO's came and went and there were always new people there to make their fortunes as Loan Officers. It's a tough business and I have regard for those on BP that still do single family financing with all of the new laws since the melt-down of 2008.

I got involved in Fixing and Flipping houses as a result of the leads I got from my "refinancing" clients way back when. Some didn't really want to refinance. They deep down wanted to sell but didn't have the money to fix the house up to list it in the MLS. I helped them with their problem by buying the houses Subject To and with Wraps, giving the seller cash for their equity, fixing the property up and selling the house. That solved all kinds of problems for all kinds of people. These days I hold on to the properties for cash flow instead of selling them but the idea is the same.

So, bottom line, there is a lot more to be made doing real estate (when done right) than there is in being a Loan Officer and I wouldn't begrudge a 2% commission if it helps YOU be successful.

Not all loan officers charge 2% commission, in fact that's somewhat on the higher side. But yes, they'd typically keep that commission unless they have an assistant or something of that nature that they divide up their splits with.

RMLO comp is a highly guarded secret.. they also make yield spread premiums and servicing release premiums that you will not see..  NO way a LO only makes 1% on a deal.. maybe after DF .. there is other comp they receive.

I was loan officer (lo) for a while during the recent refi boom for a couple of different companies.  I worked in Kentucky but was licensed in most states and did the majority of my business everywhere but Kentucky.  With the first company I worked for (Discover ((yes the credit card company))) I was paid in bps.  That amount was a fraction of the loan amount, but nowhere near 2%. Our commissions increased based on the number of loans closed per month, and the volume of those loans.  The rate we charged along with origination charges had no bearing on my commission so I was always offering our best rate possible.

The second company I worked for is a smaller family owned company that operated rather differently.  I was still paid bps on the backend of the deal, but I was also able to sell higher rates in order make more money on the front end.   Basically any money I could make for my broker, I got to keep a percentage of it (ie more interest, more money). This was a similar model to the pre-2008 market collapse, but with many more restrictions.  

Different companies/brokers operate differently but if you are dealing with big banks then they are not making 2% on your loan.  Small banks and brokers aren’t making 2% either, but are most likely making some money based on your rate and fees.

Hope this helps,

Barrett