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Lenders dangle carrots in drive for efficiency

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Mortgage Broker News | 02 May 2012, 10:00 AM Agree 0
Brokers are increasingly being judged by the efficiency of their work and not just the funded volume of their labour, with two channel players formally updating reward programs to better reflect that metric.
  • Jim T.. Advent Mortgage | 03 May 2012, 02:59 AM Agree 0
    Another lender, ING Direct, has also introduced an efficiency program last year which also compensates us for efficiencies. In theory, I like these programs as it does promote better behavior and results in the industry. It also will put more money in the pockets of the brokers who are in fact efficient.
    In reality, however, there are many issues that this causes. First, the results are based on the reporting that the lenders create. We all know that often times these reports are far from accurate. For example, applications are often double counted if you are required by the lender to re-submit the same deal twice. This can skew the funding ratios dramatically.
    This efficiency compensation can also cause problems for agents that belong to consolidators in that most of these efficiency bonuses are based on the efficiency of the entire network rather than that of the individual producer. As such, your individual efficiency is impacted by the efficiency (or lack thereof) by your association. You could personally have a funding ratio of 90% but still earn zero in efficiency bonus because your consolidator’s efficiency ratios are much lower.
    I suspect that more and more lenders will be moving to some kind of efficiency bonus which I encourage.
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