What Is a Non-Commissioned Loan Coach?
- October 5, 2019
If you’ve read through our site then you might have seen Achroma employs non-commissioned Loan Coaches to guide borrowers through the mortgage process. But what exactly does that mean? Let’s start with the second half of that phrase, the Loan Coach. The standard industry term for this position is Loan Officer, but I’ve seen other variations including Loan Advisor, Loan Expert, and Loan Originator. Regardless of title, their primary job is the same:
- Be your main point of contact at the Lender
- Educate you on the various loan products available
- Match you up with the best pricing and loan product for your particular financial situation
The first part of that phrase, non-commissioned, means that your Achroma Loan Coach is not compensated based on loans that they close. Across the mortgage industry, most Loan Officers receive sales commissions, as a percentage of the closed loan amount. If your Loan Officer is an employee of a direct Lender or Retail Lender then they are probably making 1% on your loan. If your Loan Officer is an independent Mortgage Broker then they are probably making at least 2% on your loan, possibly more. That means on a $400,000 loan your Loan Officer stands to make anywhere from $4,000 to $8,000, or more.
Is it bad if your Loan Officer is paid a commission? Well, maybe. If their commission increases with your loan amount it’s in their best interest to get you into the largest loan amount possible, even if that’s not what’s best for you. It also incentivizes Loan Officers to prioritize larger loans and easier deals. So, if your loan amount is small or your financial background is complicated, you would likely be a lower priority for a commissioned Loan Officer or mortgage broker.
Mortgage brokers who typically make twice as much as retail Loan Officers will have a pipeline of wholesale lending partners to price out your loan. Each wholesale relationship comes with a compensation agreement where the broker chooses how much to be paid on each loan. This agreement can be changed every 90 days. There is no rule that says a broker has to have the same level of compensation across all of their wholesale partners. This setup allows for the possibility that you will be offered rates from a lender based on the broker’s compensation and not what’s best for you.
How can we avoid the pitfalls of incentive-based pay while not losing that drive to get your loan closed?
Achroma’s solution is the non-commissioned Loan Coach. Every Loan Coach at Achroma is paid a competitive salary so they have no incentive to increase your loan amount beyond what is best for you, or prioritize one loan over another. We also gather information on each loan to see if the Loan Coach is meeting your expectations for the things you care about. This information includes the following:
- The time it took to close your loan
- Accuracy in the documents, including fees and costs
- Overall satisfaction
Each Loan Coach receives an annual incentive based on this feedback, which aligns their interests with yours and provides motivation for them to get your loans closed.
Achroma also receives a below-market 1% compensation from every one of its lenders, ensuring that the best loan for you is the best loan for us.
Achroma ensures that our Loan Coaches don’t favor any particular lender by standardizing our compensation agreement across all of our partners. This way, we get paid the same amount no matter which lender or product is best for you.
Because of our non-commissioned pay structure as well as our technology, Achroma can afford to receive below-market compensation on our loans, and ultimately pass those savings to you in the form of below-market rates. If your current lender employs commissioned Loan Officers this may not be feasible for them.
Our best advice for you is to always ask your Loan Officer how they are being compensated. This way you will have a good sense of where their motivations lie.