How to calibrate mortgage employee comp for uncertain times
National Mortgage News
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Crafting a compensation package that allows mortgage companies to recruit or retain the employees they desire has to strike a balance between offering a competitive amount and ensuring it is sustainable for the finances of the business. In boom times, companies tend to make offers that in the long-term are not healthy for their own interests. In 2021 for example, Lori Brewer, who at the time was the head of a firm that provided incentive compensation technology, noted that once a certain level of pay has been reached, it is difficult to roll it back. In the future, companies can try to align the compensation policy with the shift in profitability, but that can be a difficult concept to get employees to accept, Brewer said. But incentive pay may be the way to go and not just for loan officers.
Recommendations in a new Financial Stability Oversight Council report could give nonbank mortgage servicers more of a liquidity backstop but may also lead to them being more closely regulated. The report discussed at an FSOC meeting on Friday calls for Congress to provide the Federal Housing Finance Agency and Ginnie Mae with additional authorities aimed at improving their ability to manage nondepository counterparties. It also included calls for the expansion of the Pass-Through Assistance Program that Ginnie Mae used as an emergency facility during the pandemic, congressional involvement and an industry funded liquidity resource.
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The first quarter was better for title insurers than the same period last year, as all of the five publicly traded companies posted higher net earnings. However, Doma, which announced an agreement to be acquired by Title Resource Group as the second quarter began, reported a GAAP net loss, although it was lower than for the first quarter of 2023. Meanwhile, the title industry came under attack in the first quarter from the White House and the Federal Housing Finance Agency, which is pushing a pilot program that would waive the requirements for a lender policy on certain refinancings. National Mortgage News broke down the first quarter results for the publicly traded title insurers.
The number of rate locks for purchase mortgages increased on a year-over-year basis for the first time since the Federal Reserve started hiking short-term rates in March 2022. Optimal Blue's Market Volume Index for April, which measures rate locks by dollar volume, was 103 for all product types, up 8.7% from March and 10.3% over April 2023. The purchase portion of the index was 90 points, an 11% increase from last month, and 10.8% compared with one year prior, its Originations Market Monitor found.
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