Which is better: Salaried Loan Officer or Commissioned Loan Officer?

There's long been a heated debate in the business community about which is better: Sales people who are paid a salary, sales people who are paid 100% commission, or sales people who are paid a base salary plus commission/inventive pay. The mortgage industry is no exception when it comes to this debate.

There are, I believe, valid arguments for all of these arrangements. For most issues (not all, mind you), there generally are solid arguments for all sides of said issue. However, as it relates to the mortgage industry, it's not uncommon to hear advertisements on radio and television telling the consumer they'd be much better off working with a lender/broker who "only uses salaried loan officers".

The implication here is clear: by using a salaried loan officer you are less likely to encounter a rogue loan officer trying to squeeze extra money out of an unsuspecting borrower. I'd argue that you are not at all less likely to encounter this scenario with a commissioned LO. The truth is, a shady loan officer will be shady no matter how he or she is paid. Furthermore, a loan officer is likely to feel just as much pressure to perform if they are on salary as they are if they are on commission, albeit for different reasons. In fact, the loan officer who is paid on salary is more likely to feel pressure from their managers to perform, given the company is on the hook for the salary regardless of the loan officers production. You may, however, find that a commissioned LO is willing to work harder for you, though again, the hope is that the LO will work hard for the borrower regardless of how he or she is paid, simply because they understand the value of serving the client to the best of their ability.

As owners of our mortgage company, we obviously cannot escape the truth that we are by definition 100% commission. Why would that be a good thing for us (or any other business owner), but a bad thing for the LO's who work for us? The point is that it is more an issue of who you work with than how they are paid. We take great care in making sure we only hire LO's who we believe are committed to doing things the right way, with the highest level of integrity. That way, whether they are paid a salary or commission, we can have confidence that they will treat you, our clients, the same way we would.