LO Compensation

White Paper: Managing Loan Originator Compensation

The LO Compensation tool is used to calculate and show how the loan originator compensation is being documented in the loan file. The tool consists of two main sections that show:

Loan Officer Plan Details - The compensation your company is paying to the loan officer (used for loans in your Banked-Retail loan channel). This section is also used to show the compensation being paid to the loan officer when your company is acting as the broker (used for loans in your Brokered loan channel).
Wholesale/Broker Plan Details - The compensation your company is paying to third party originators (brokers) or the compensation a lender is paying your company if it is acting as the broker (used for loans in your Banked-Wholesale and Brokered loan channels).

LO compensation is not applied to loans in the Correspondent loan channel.

Access to the LO Compensation tool is based on persona. The administrator must grant users access to the tool using the Personas setting in Encompass Settings.

To View and Use the LO Compensation Tool for use With a Loan Officer

Open a loan file, click the Tools tab, and then click LO Compensation.

The LO Compensation tool displays. The fields inside the tool may be empty at this point. If your administrator has set up default values to apply to all compensation plans, those values will be populated to the appropriate fields in the tool. In order for the LO compensation plan assigned to the loan originator to be populated to the LO Compensation tool, the following loan data is required:
- Channel (field ID 2626)
- Loan Originator - This is the loan officer (field ID 317) who originated the loan (Banked-Retail, Brokered loans) or broker (field ID LCP.X2) who originated the loan (Banked-Wholesale and Brokered loans).
- The Trigger Basis field - By default, this field is the Application Date (field ID 745; however the administrator may use a different date field to determine when the compensation plan will start). The date in the Trigger Field Date field must occur on or after the LO compensation plan’s start date (and before the end date if one exists) in order for the plan to be applied to the loan.
In the Compensation Plan Details section, select the Channel for the loan. When working with compensation for a loan officer, the loan is usually originated in the Banked-Retail channel.

If all three required fields are populated accordingly, the LO compensation plan currently assigned to the loan officer for the loan is populated into the Compensation Plan Details, Loan Officer Plan Details, and Plan Calculations sections of the LO Compensation tool.
Once the default compensation plan data is populated, you can change the editable fields and enter new data as needed (if authorized by your administrator).
- In the Plan Calculations section, click the blue Lock icon to make a Base Plan field editable, and then enter the new value.
Use the Bonus Comp fields to enter any additional compensation owed to the loan officer.
Use the Adjustment Credit fields to apply portions of the compensation towards fees owed by the borrower. Enter an explanation for the for adjustment in the Adjustment Description field.

Using the Reset Comp Button

If a different loan officer is assigned to this loan before it closes, click the Reset Comp button to recalculate the compensation fields to reflect the LO compensation plan assigned to the new loan officer.

If there is no LO compensation plan available to assign to the new loan officer, a warning message displays. If you choose to continue with the update, all the fields in the tool will be cleared.
When the Reset Comp button is clicked, the Last Applied Date, Trigger Field, and Trigger Field Date fields are updated with the latest information. These fields are updated even if there is no LO Compensation plan available to assign to the loan officer, if the compensation is being paid by the borrower, or if the loan is exempt. For logging and auditing purposes, Encompass tracks how often the compensation data in the LO Compensation tool was evaluated and applied, even if there was no actual compensation data populated to the tool's fields.

If there are no LO Compensation plans available to assign to the loan officer, you can manually enter compensation amounts in the LO Compensation tool to apply to the loan. Your system administrator controls whether or not the Base Plan fields in the tool are editable.

To View and Use the LO Compensation Tool for use With a Lender or Third Party Originator (Broker)

Open a loan file, click the Tools tab, and then click LO Compensation.

The LO Compensation tool displays. The fields inside the tool may be empty at this point. If your administrator has set up default values to apply to all compensation plans, those values will be populated to the appropriate fields in the tool. In order for the LO compensation plan assigned to the loan originator to be populated to the LO Compensation tool, the following loan data is required:
- Channel (field ID 2626)
- Loan Originator -This is the broker (field ID LCP.X2) who originated the loan (Banked-Wholesale and Brokered loan channels) or loan officer (field ID 317) who originated the loan (Brokered loan channel).
  
  When working with loans in the Brokered loan channel, you must also indicate the lender (field ID LCP.X2) in the LO Compensation tool.
- The Trigger Basis field - By default, this field is the Application Date (field ID 745; however the administrator may use a different date field to determine when the compensation plan will start). The date in the Trigger Field Date field must occur on or after the LO compensation plan’s start date (and before the end date if one exists) in order for the plan to be applied to the loan.
In the Compensation Plan Details section, select the Channel for the loan. When working with loans originated by your company and then brokered to a lender, the loans are usually originated in the Brokered loan channel. When working with compensation for a third party originator (broker), the loan is usually originated in the Banked-Wholesale channel.

If all three required fields are populated accordingly, the LO compensation plan currently assigned to the loan originator is populated into the Compensation Plan Details, Wholesale/Broker Plan Details, and Plan Calculations sections of the LO Compensation tool.
- When working with a loan originated in the Brokered loan channel and then brokered to a lender, these sections are populated with the compensation plan data assigned to the lender, enabling authorized users to view and manage the compensation being paid by the lender to your company. In addition, the Loan Officer Plan Details and Plan Calculations sections of the tool are populated with the compensation plan data assigned to the loan officer who originated the loan, enabling authorized users to view and manage the compensation being paid to the loan officer. Refer to the View and Use the LO Compensation Toolfor use With a Loan Officer section above for instructions for viewing and updating loan officer compensation data.
Once the default compensation plan data is populated, you can change the editable fields and enter new data as needed (if authorized by your administrator).
- In the Plan Calculations section, click the blue Lock icon to make a Base Plan field editable, and then enter the new value.
Use the Adjustment Credit fields to apply portions of the compensation towards fees owed by the borrower. Enter an explanation for the for adjustment in the Adjustment Description field.
To change the lender or third party originator associated with the loan, click the Lookup icon (magnifying glass) for the Company Name field in the Wholesale/Broker Plan Details section.
- When the channel is Brokered, all lenders set up by the administrator in the External Company Settings setting are listed when the Lookup icon is clicked. Choose the lender you are associating the loan with, and then click Select. Click the Update Comp button to update the LO Compensation tool with the compensation plan assigned to the selected lender.
- When the channel is Banked-Wholesale, all third party originators (brokers) set up by the administrator in the External Company Settings setting are listed when the Lookup icon is clicked. Select the third party originator you are assigning the loan to, and then click Select.

Using the Reset Comp Button

LO Compensation

See Also