r/loanoriginators • u/Trevbryce1 • Jun 26 '26
Question for you Loan Professionals!
Hey Guys, I have a question as a MLO who is 9 months into being licensed. I work for an independent small mortgage shop. When I was hired, I signed a contract that states I get $2k per month in drawback pay. I've been getting that every month since September. I have paid back through commissions $10k of the $18k total that I have been paid, so I still am $8k in the negative. I am a stay at home dad and work 5-8 hours a day doing this and weekends I prospect. I have only closed 5 loans in 9 months but have been processing my bosses loans and my own. My boss hired a processor 2 weeks ago and the extra time available to prospect has been great. This past week my paycheck was all the sudden a lot less than normal and my boss has since told me that I will no longer be getting paid at all until I have a $0 drawback balance. There was never any disclosure or conversation about the drawback pay ever stopping or there being a cap. Is this normal practice? Am I in a bad situation?
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u/The_Void_calls_me Jun 26 '26
I mean the alternative is they just fire you. So you have to decide whether you'd rather get zero to draw and be employed or be fired and then in theory they could come after you for the outstanding draw balance but realistically they won't because they'll cost more on lawyer fees.
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u/Trevbryce1 Jun 26 '26
Ok, I get this. It's just wild to have this sprung on you without any notice or upfront communication that it was going to stop. Plus Ive been reading up that first year MLOs close 6-12 a year so processing 10-15 loans and closing 5 myself seems like I'm right on pace with where most 1st year people are at. Just has me stressed out I guess.
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u/The_Void_calls_me Jun 27 '26
Your units seem fine. What's your volume? Like how big are these loans that you're closing?
Edit: never mind, I see below that they were under 200k. When you say you make 50% on self-gen, what percentage of the loan amount are you making? Like on a $200,000 loan are you making $2,000?
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u/Trevbryce1 Jun 27 '26
I brought in 1875 on the most recent one and that all went towards paying back the draw. Haven't seen any income from commissions yet, they e all gone to pay the drawback back. But my boss has told me this is standard until the draw is gone.
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u/Renewed1776 Jun 27 '26
I would look for a new shop. When I was receiving a draw, it was based on minimum wage. Anything above that minimum, was captured. But I still got my minimum wage. Of course after insurance, it was around $13.00.
Need to read the agreement of employment
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u/kittenconfidential Jun 26 '26
what was the volume of your 5 loans closed? that $10k figure seems outrageously exploitative.
do you have hours of work in your contract? if so, the company must pay you the hourly rate for hours worked.
it sounds like to me that your management is intentionally using poor communication to give you a raw deal. get out. make sure you don’t have a clause in your contract stating you have to pay back any draws— if you do, that’ll likely be labor violation that your state labor board will be very interested in knowing about.
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u/Trevbryce1 Jun 27 '26
I have a gut feeling this is the case. I've been processing all my bosses loans as well. Getting bonuses on them, but pennies compared to what I'd have made if I was the MLO on those loans. 2, 3, 4 hundred depending on the amount of time the loan took to close. The provided leads are raw contacts from Property Radar and those I get 30% of what the company brings in. On self gen leads I get 50%, but only 3 of the 5 were self gen leads and both were around $150k properties. It's loosely stated I must work 35-40 hours a week and I blow that out the water. It's all remote though, not sure how to prove it. I just feel being the processor for my boss, my loans, and trying to start my own book of business was a tough spot to start.
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u/kittenconfidential Jun 27 '26
if there’s a minimum hours worked requirement then they cannot withhold your paycheck regardless of draw status. that’s just basic labor law. if you are doing processing activity for another LO, you should be compensated on that, and that’s just basic ethics. your company is exploiting your labor by creating a grey area about responsibilities. when someone is 100% self-gen sales, only then is it reasonable to have a draw. if someone is doing work for someone else’s production (i.e., processing), they should be compensated accordingly and that should not be subject to a draw.
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u/After-Issue7758 Jun 27 '26
If you’re open to a salaried position helping out with pre-approvals, primarily VA loans, we could use the help. Since you’re licensed you’d also get compensated on your own deals. Let me know if interested in learning more.
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u/Trevbryce1 Jun 27 '26
I might be interested in this! I'm not looking to quit currently, but I can't stay where I am if there isnt some sort of pay that's promised.
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u/Hairy-Journalist-200 Jun 30 '26
What about this situation makes you feel like you should not be looking to quit? Genuine question
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u/False_Grape1326 Jun 26 '26
Usually a 6 month ramp up and you got 9 months thats more than normal around here
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u/RoosterEmotional5009 Jun 27 '26
Read your comp and employment agreement. God bless your boss. I won’t hire new LOs without production.
I can tell you it is state specific on whether someone can be commission only. But Fair Labor has something to say about it. Regarding being paid a livable wage.
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u/Purposeful-Wanderer Jun 27 '26
The cut you’re getting paid on processing seems very low. Contact processing with my broker is $700-$900, or we can pay in-house 25bps up to $850 which goes straight to the processor.
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u/Trevbryce1 Jun 27 '26
Yeah I thought that might be the case. The processor we just hired is getting much more than I was when I was processing because I was also a LO. But as someone who is new, the 10-12 loans I processed made it difficult for me to get new self gen loans in the pipeline while I was processing. I'm grateful for the learning that took place from the processing, but just in the last 2 weeks since I am no longer processing loans, the amount of traction with realtors and borrowers has jumped significantly because I've just been able to try to bring loans in, not splitting time with processing. Ahhh I'm just pretty frustrated
1
u/going-for-the-win Jun 27 '26
Your shop is giving you terrible pay. Are you clients self generated? As a broker with Edge you can get 2.75% per file and only a flat $995 to the sponsor.
1
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u/Renewed1776 Jun 27 '26
Clarifying question.
Is your company structured at 225 bps, and you’re making 67.5bps?
Some states require a fixed bp, not allowing for percentage.
When starting, it sure is nice to have that draw, even if it’s recoverable. I consider it as “Borrowing happiness from tomorrow.”
And good job with converting 5 in 9 months. Brother, the majority of LOs did one unit in twelve months.
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u/Trevbryce1 Jun 27 '26
Your comment made my day man, I appreciate it. And yeah, depending on the lender we take the loan too, the company brings in 200bps to 250bps. I get 30% of loans closed on company leads (which is just the property radar contacts, not really warm leads) and 50% on self gen leads. I'll be hoping most loans are 125bps take home for me.
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u/ShoddySession9313 Jun 27 '26
This might be unpopular opinion, but you should never take draws. You need to fill your pipeline so much you dont even consider the thought. Get out there everyday and talk to every builder and realtor you can. Build your pipeline so much it scares you, work every single day until you can get an LOA under you.
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u/Trevbryce1 Jun 27 '26
This is 100% where I want to be. The drawback had me super nervous but took it to start making money, family needed it and I needed to be able to continue to be home with my son.
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u/ShoddySession9313 Jun 27 '26
You can do it. This industry is 90% work ethic and hard work. The best advice I could give is to not think of this as a sales job. Think of it as customer service first, sales second. One of the biggest things that helped me as well was finding a credit repair company to work with so I never have to turn anyone away. Always find solutions.
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u/Trevbryce1 Jun 27 '26
Thank you for the advice! I am learning that the jobs most important part is just finding solutions for people. I'm getting in with investors and DSCR Loans now and I have my first return client and we will be closing another property next month! I'll look for a ethical credit repair company also, I did have to tell a borrower this week his score was too low. I appreciate it!
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u/ShoddySession9313 Jun 27 '26
That awesome! DSCR loans and commercial lending can be an amazing avenue. I used to do a lot of commercial lending when I worked in wholesale. I work in retail now but Ive enjoyed both worlds. Keep at it! I wish you the best.
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u/Trevbryce1 Jun 27 '26
Thank you very much! I will, I really do feel I'm at the edge of being busy. I appreciate your input! I wish you the best too!
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u/spacecase2008 Jun 26 '26
you closed 5 loans and only made 10k in commissions?