Originator Pay Practices at Call Center Mortgage Shops: Are You in Compliance?

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We recently visited a mortgage company that originates loans through direct marketing campaigns to consumers.  Leads are allocated to loan officers who work in the company’s call center.  Loan officers follow a script to help them convert leads to loan applications. Loan officers are closely managed and must meet specific lead-to-loan conversion rates each month. Each loan officer must be in the office to work their leads on a specific schedule.  If they don’t meet their production milestones, the ax is constantly hanging over their heads.

In our travels, we’ve reviewed many companies that have similar origination models.  Most get the word out using television ads, radio, telemarketing,  or old-fashioned snail mail. Nowadays many shops are turning to the Internet as a lead source because it is seen as the starting point for most consumers. 

What jumped out to us during this visit: the CEO informed us he had recently requested a full audit from the Department of Labor to ensure his compensation practices met current regulations and labor laws.  Yes, you heard me right. He requested the audit.  Seldom do we see managers extend an open invitation to regulators.  Let me explain why this CEO was compelled. 

This company is very conservative and takes compliance very serious.  For example, every loan has a pre-funding compliance review and a post-funding review.  The shop is licensed in 20 states and has received impeccable feedback from each state examiner.  Because he proactively manages his company, he decided to bring in the DOL to scrub his loan officer compensation policies. 

Call center loan officers are treated differently from outside loan officers.  Because they are required to spend their time working in an office and follow specific processes and procedures, there are specific compensation requirements.  I did not have access to the DOL regs, but here is what I heard from the CEO:

  • Loan officers must be paid a minimum wage.  Commissions can be included in the minimum wage.  This company paid each loan officer a minimum wage of $2K per month.
  • Loan officers are required to use a time sheet to track the number of hours worked each day.  If they work over 8 hours, overtime is due to the loan officer
  • Overtime is based on total compensation paid to loan officers, not on the minimum wage.

Anyone originating loans through a call center should either request an audit by the DOL or seek legal advice from a labor attorney.  It’s better to be proactive today with “all eyes on the mortgage business.  Wrongful terminations and compensation claims can be costly.