There’s been a slow but sure trend in our business. Lenders are very gradually cutting back on sales compensation.
Reverse mortgage provider HomEquity Bank is an exception. It has just boosted the referral fee it pays brokers by 30%, regardless of their volume.
“We value the business and want to ensure that advising consumers on the CHIP Home Income Plan is worthwhile for brokers,” Greg Bandler, SVP of Sales & Marketing, told us.
“In the past there’s been a perceived disparity in the fees we pay, despite the small amount of work that’s involved for the broker. We want to correct that perception.”
This news follows an 18% slide in second quarter CHIP originations. HomEquity says that drop was largely due to competition from “low priced” mortgages and HELOCs.
This change should improve CHIP volumes, of which broker referrals have account for 22.8% year-to-date. On a per deal basis, reverse mortgages are one of the most lucrative products for brokers. That’s because the compensation is equivalent to selling a regular 3- or 4-year fixed mortgage, with a tiny fraction of the time commitment.
For the broker, there is virtually no application taking, no underwriting, no paperwork and no document collection required. HomEquity Bank essentially takes the leads from brokers and does the rest. Given that, we’re a little surprised it pays what it does—but who’s complaining?