How is margin compression affecting the industry?
We keep hearing about Margin Compression but how is it affecting Mortgage Companies and most importantly, Loan Officer compensation?
What is Margin Compression in the mortgage industry? It’s pretty simple. Higher rates are not returning the profits necessary to maintain profitability at some companies paying higher compensation. (MBA Article) If the company is making less and the loan officer the same as when margins weren’t compressed, something might need to change.
At companies where Loan Officer Compensation is high, we haven’t seen anything happen yet. We are seeing companies hold the line on cutting commissions and sales staff because No One wants to be the first to cut compensation. In the past, higher rates covered the additional compensation, compression has hurt that.
Did Margin Compression spur any of these sales of companies?
In the midst of all of the busiest origination period of the year, the sales of a number of companies comes at a time when margin compression is also occurring. We’ve seen the of sale of 52 Wells Fargo Offices, Castle & Cooke Mortgage, Franklin American Mortgage, Midwest Mortgage and Peoples Home Equity Mortgage Lending. Since negotiations had to have been in process for a long time, it’s not likely compression caused these sales but it could have speeded up the process for a few of the purchases.
The market goes on
Whether Margin Compression did or didn’t affect the sales of these companies isn’t important, what is important is how your company handles margin compression. If your company has you on a high rate sheet model to either allow for a lot of sales assistance in the way of staff or to earn higher compensation be careful, your world could be changing.
At Stockton Mortgage we have strived to put our loan officers in the position to earn good commissions but with rates that are competitive in their market place. Consider calling and checking us out.
If you are a Loan Officer and looking to go to a company that can help you grow your business, the right way, Give me a call:
Rick Koenig is a lifelong Cincinnati, OH native involved with the housing industry his entire adult life. As a Mortgage Banker the past 25-years. Rick has worked as an Originator, Branch Manager, and Regional VP in the mortgage industry. Rick is currently the Director of Recruiting and Business Development for Stockton Mortgage. Rick is very active in the housing industry having served as past president of the Cincinnati Mortgage Bankers Association and the Greater Cincinnati Home Builders Association. You can contact him at 513-382-5861 or by email at rkoenig@smcapproved.com
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