How Mortgage Loan Officers “should” be paid.
August 24, 2023
We choose to boldly pioneer and lead the way, for High-Impact Solutions and benefits for MLO's.
As a 25-year veteran of mortgage banking, I always wondered “why” does everyone get paid at closing except for the Mortgage Loan Officer?
Then I became curious of how to make this a reality. And the reality came to me. Modern technology has evolved at lightning speed over the last decade. However, the mortgage industry has lagged.
For the end-user being the consumer, mortgage technology adoption has evolved. Faster digital verifications, e-signatures, automated property values and underwriting platforms such as Desktop Underwriter (DU) and Loan Prospector (LP). Certainly, these technologies have sped up the cumbersome process of obtaining a loan. For the consumer.
Still though, there has been little to no change or effort directed at rewarding the MLO. Mortgage Lenders in general have overlooked the importance of implementing new digital processes that level the playing field to deliver fast compensation for the MLO who widely depends on receiving commission income only.
Sure, there are SRP’s (service release premiums) that need to be collected once the loan has moved off the lender’s warehouse line, which at times is significant for lenders to collect some of those fees to generate payroll cash-flow. Let’s be honest though, that’s not the case today. Today I would venture to say that 95% of all fees related to the mortgage transaction is collected at closing. Not many, if any, are even able to premium price origination fees or discount points into the rate. These fees are collected at closing (in cash by the buyer, seller or builder) and immediately sent to the lender just as everyone else is paid at closing. The lender then hoards this pile of cash for weeks before actually releasing it to the MLO in the next pay-cycle. No disrespect at all to lenders. It's just a process.
I digress, but it is an arguable fact.
The two weeks, or once a month payroll process is outdated and stagnant. With the help of modern technology API (think how processing can verify income, assets and employment status immediately) through API connections which the consumer consents to in the disclosure process, so can the MLO’s compensation be confirmed just as easily and just as quickly. With the birth of digital payments such as PayPal, Venmo and Zelle most currency transactions have become digital and real-time.
So, we pioneered the "why can't" we question.
parpay has leveraged and adopted this very same process through verification of earned commissions.
We don’t need to disrupt your employer's payroll to see what you will be paid. We simply verify your funded loan, direct deposit a portion of that income by your request into the same bank account as your employer sends your direct deposit paycheck to.
We use our own balance sheet cash to fund your early distribution, so no interruption, at all, from your employer. In fact, they don’t even know you took an early distribution.
We all know how embarrassing it can be to go to your employer for an early “draw” request on an already funded loan, so we eliminate that humiliation, and the employer doesn’t have to reconcile each draw request from God only knows, how many employees actually need that request.
When your next paycheck from your employer is issued, we simply direct the portion of your parpay distribution right back to parpay , your account is settled, and the balance goes into your direct deposit account as normal. All at the same time. Split seconds.
So, I’ve let the cat out of the bag and that's okay because we believe that every employee should receive their wages as soon as earned. We see a "big-picture" need and believe we can inspire adoption resulting in a win-win for both employer and employee. The difference is, parpay, is the First-of-its-kind.
Mark E. Carlson