Hello, LOs!
Do you wish there were fewer cooks in your company kitchen? According to the latest LO compensation figures by LBA Ware, LO commissions fell in the second quarter to an average of 101.3 basis points, down from 103.1 a year ago. The average LO commission per loan in Q2 2021 came out to $2,876, a 6% drop year-over-year.
One major reason for the drop? Lenders simply have a lot of mouths to feed, said Lori Brewer, CEO of the analytics vendor.
There are more LOs at shops than there were a year ago, but quite a few more processors and underwriters, too. In fact, lenders added processing manpower at "almost 10 times the rate they added LOs in Q2," according to Brewer, who cautioned that "it remains to be seen if that level of operational staffing will be sustainable over the long term."
Processor staffing grew 49% from Q2 2020 to Q2021, but they processed 27% fewer loans per month in Q2 2021 (15.7 units) compared to Q2 2020 (21.7 units).
Per LBA Ware's data, there was a 5% uptick in the number of LOs in Q2 2021 (up to 11,862) but total units funded declined 6% year-over-year to 267,628. The average commission earned per LO per month fell 6%, to $22,659, for a total quarterly commission of $67,978.
The long story short is, LOs are making less money now than they did a year ago because there are more LOs and more processors. It's important to note that these are still historically great figures for LOs, but a decline nonetheless.
LOs – I'd like to hear from you. Are lender staffing levels appropriate for the volume of work to do? While they are processing fewer loans overall, the majority of volume in Q2 2021 was on the purchase side (67%), which is generally trickier than refis. Shoot me an email anonymously at jkleimann@housingwire.com.
James Kleimann
Managing Editor, HousingWire
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