Market Analysis: Simplifying LO Comp

*Simplifying LO Comp*
**By Tony Garritano**

***Yes the new Loan Officer Compensation rules are behind us, but compliance is still hard at times. Technology vendors realize that lenders are struggling. As a result, PROGRESS in Lending has learned that Ellie Maehas released Encompass Commissions, an automated solution to calculate, communicate and reconcile loan officer (LO) commissions for banks, mortgage banks and credit unions using Encompass360® mortgage management software solution. Here’s the scoop on the new tool:

****Encompass Commissions is more accurate and efficient than manual processes and provides significantly greater transparency for LOs. It automates every aspect of the variable compensation workload so that sales people can stay motivated and focused on originating and back office staff can save time with more accurate commission calculations.

****Encompass Commissions enables lenders to deliver a 24/7 Web-based commission pipeline, where sales agents can continuously monitor estimates and time disbursements. Now LOs can log in at any time and see their pipeline of earned commissions and understand how they were calculated. This reduces errors before checks are cut and prevents misunderstandings that can damage sales force morale. Encompass Commissions also supports LO compensation compliance policies, documenting and providing a complete audit trail of all paid commissions.

****The solution is fully integrated with Encompass360 so it captures commission data seamlessly and on a real-time basis. Once commissions have been reviewed, managers can export the information easily into payroll and accounting systems.

****Specifically, it:

****>> Pulls data from the Encompass360 database and other sources, such as accounting ledgers, and automatically calculates the commission.  The process reduces human error and back office expenses;

****>> Sets up adjustments and draws using flexible parameters and automatically applies the net adjustment to the appropriate commission cycle;

****>> Accommodates “splits” and can automatically schedule them;

****>> Automates transmittal and LO approval workflow;

****>> Offers a configurable dashboard to help management understand past, current and future commissions pipeline—providing total transparency;

****>> Provides for error resolution prior to cutting and disbursing checks; and

****>> Can be used to test potential compensation plans against past production data to determine how each LO would be affected by the change.

****Encompass Commissions is patterned on DataTrac Commissions, an established solution that has been available since 2009 and is currently being used by a number of DataTrac’s largest clients.

****Matthew Pineda, chief executive officer at Castle & Cooke Mortgage, LLC, Salt Lake City, UT, and an early DataTrac Commissions user, said: “We pay commissions to our LOs twice a month, and before we installed this software, it took four employees the better part of four days a month to manually do the calculations, reviews and payroll adjustments. Now two employees—one in secondary marketing and one in payroll—pull the data directly from our system of record and allocate, review and pay the commissions in just a few hours.”

****Janet Fell, senior vice president, at William Raveis Mortgage, LLC, Westford, MA, said her company ordered Encompass Commissions in anticipation of complying with new federal regulations for LO compensation. “As a mortgage banker, we need to be ready to comply with the new rules that require us to document our LO compensation plan and demonstrate that we have followed it. So in the event of an audit, we’re ready. Encompass Commissions appears to be a cost-effective, affordable way to leverage technology to bring greater efficiency to the commission payment process and automate compliance.”

****“Compensation is a huge factor in attracting top performing loan officers, and it is also one of the areas that has come under significant scrutiny through new regulations,” said Jonathan Corr, chief operating officer at Ellie Mae. “Encompass Commissions automates payments to loan officers accurately and quickly, reducing back-office costs and giving lenders another recruiting and retention tool. At the same time, it documents compliance with new compensation rules and provides an audit trail.”

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at