Results are NOT spread based

! A mortgage division is like a manufacturing company with direct and indirect costs. NIM is ignored. Gross margin is an important KPI. 

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What is your mortgage division's gross margin percentage?

Interest Income Ignored (Mostly)

! Interest income is not a significant comparison metric. ​

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Did you know that when comparing your mortgage division to an IMB, net interest margin is usually excluded?

Philosophical Gap is HUGE

! IMBs are transaction-focused, while depositories are relationship-focused. Mortgage Loan Originators (MLOs) see themselves as independent contractors deserving of special consideration for the volume they generate.

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Is your MLO compensation more or less than 1% of the loan amount?

What happens when your MLO gets a 7 figure W2?

Regulatory Risk

Did you know each ECOA error could be a $10,000 fine if customers are not called and documented each 30 days, even if the applicant has not locked?​

Gain on Sale is Largest Revenue

! Loan sale gain is the largest source of revenue for a mortgage division. ​​

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Is your mortgage division's Gain on Sale KPI metric greater than 3%?

ROA & ROE

! We've seen the mortgage divisions increase a banks ROA by 1%

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Are your Cost of Funds allocated to your mortgage division?
 

What is your division's forecasted ROA contribution from gain on sale activity?

Speak Mortgage to MLO

How does your head of mortgage attract a new MLO branch?​​

How is pricing exception authority delegated to the head of mortgage or the MLO?

FAS Capitalization distorts Gain

!Accounting for loans available for sale (AFS) is different from (AFI). AFS is MTM while AFI capitalizes cost. This difference can be very confusing.

Is AFS capitalization distorting your gain on sale calculation?

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