Weighing The 100% Commission Split

By ERIN FLYNN JAY

Mortgage companies are fighting to recruit and retain top performers, even offering 100% commission splits. Could these programs gain traction as the industry continues to change?

NEXA Mortgage, one of United Wholesale Mortgage’s top partners, made headlines when they announced in May that they are creating partnerships with loan officers where the LOs keep up to 100% of commission splits. The program is titled NEXA100.

Michael Neill, director of correspondent lending at NEXA, said: “This is probably the boldest program we’ve launched because it goes against the fear that, if you give too much of the split to loan officers, you do not have anything left to run the company. We don’t believe that.”

Founder and CEO Mike Kortas said in a statement that “NEXA100 is the most competitive game changer in the mortgage loan industry.”

“It gives our loan officers a shot at making 100% of the loan commission, including a reinvestment into their business. And the greatest thing about NEXA100? Our loan officers will still be giving our clients the best mortgage rates in the industry,” Kortas said.

According to a press release, 100% percent of the commission can be obtained after fees to the loan officer are factored in, including money that goes to marketing and other costs for the loan officer.

Is this commission split something that other brokerage firms will start doing? 

Andy Kolodgieowner of Sell My House Fast, spoke with The Mortgage Note about some of the motives behind this change.

“With a 100% commission split, NEXA hopes to draw in seasoned and productive loan officers,” he said. “Those with an established clientele who want greater income retention and are at ease with administrative duties will find this model especially appealing.”

Kolodgie said NEXA differentiates itself from rivals who continue to employ conventional commission structures with this model. In a crowded market, it can be a potent selling point for attracting and keeping employees.

“This model appeals to loan officers who value independence and the chance to manage their own company within a brokerage framework,” said Kolodgie. “It enables them to work with the least amount of supervision possible while optimizing their earnings potential.”

Commissions on the loans brokers originate have historically been used to pay loan officers. Kolodgie said some companies have recently implemented hybrid models that combine base pay with smaller commissions or bonuses based on performance. This provides greater financial stability and matches incentives to service volume and quality.

Now, Kolodgie said, compensation schemes are under closer examination and have changed as a result of regulatory reforms like those brought about by the Dodd-Frank Act. By ensuring that compensation structures do not encourage the promotion of higher-cost loans, these regulations seek to prevent risky lending practices.

“More and more companies are linking employee compensation to performance indicators like customer satisfaction, loan performance, and compliance adherence, in addition to loan volume,” he said. “This incentivizes loan officers to prioritize enduring client relationships and provide high-quality service.”

Some of the roles and responsibilities of loan officers have changed because of the lending industury’s adoption of technology. Kolodgie said compensation structures now reflect a greater emphasis on advisory roles and client relationship management rather than processing, as some tasks become automated.

According to Kolodgie, four factors will determine whether NEXA’s strategy will be adopted by other brokerage firms. They include:

1) Demand and Market Dynamics

“The market’s demand and businesses’ capacity to maintain this model will probably determine whether or not a 100% commission split model is adopted,” said Kolodgie. “Skilled loan officers with autonomous revenue generation potential could encourage other businesses to implement comparable strategies.”

2) Costs of Operations

Businesses must assess if they can offer a 100% commission split and still cover operating costs with transaction fees or some other method. Kolodgie said for this model to be profitable, a careful balance is needed.

3) Services and Support for Brokers

Not every company will be able to switch to this model, particularly those that offer their loan officers a lot of assistance, training, and marketing services. Kolodgie said some companies might keep providing conventional or mixed compensation plans to demonstrate the value they bring to the table.

4) Regulation and Compliance Consideration

Businesses need to make sure that their compensation plans adhere to legal and regulatory requirements. Kolodgie said the switch to 100% commission splits shouldn’t encourage actions that put the industry at risk or bring it under regulatory scrutiny.

Donald Olhausen Jr., owner of WeBuyHousesInSanDiego.com, said after speaking with loan officers in his area, he thinks NEXA’s business structure is unlikely to gain traction at other companies.

“Traditionally the commission does not go 100% to the loan officer, as some of it needs to go to the supporting staff and loan originator for operational uses and future lead generation,” said Olhausen. “This makes a 100% commission split seem impractical for many reasons.”

Olhausen said that in today’s market, most lenders offer the lowest mortgage rates possible to stay competitive. At the same time, loan officers are taking smaller commissions to pass along savings to their clients, often working on a tiered commission structure with each tier passing along more savings to their clients.

“The part of the commission that is being passed on to the client would have originally been invested into lead generation and other marketing materials that the office can use,” said Olhausen. “Companies who are offering 100% commission splits must be deriving profits from another source.”

Since its founding in 2017, NEXA has processed over 85,000 home mortgages. Company leaders say they have over 2,500 loan officers working throughout the country.

At NEXA, money that goes to marketing and other costs for the loan officer are factored into the commission split under the new system.

United Wholesale Mortgage’s marketing toolbox provides loan officers and branch managers with ad kits, marketing calendars, social media posts, and emails for every day of the week. UWM also monitors past borrowers and alerts loan officers when they’re back on the market, according to NEXA’s website.

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