What is a common structure for a mortgage loan originator’s compensation?

A common structure for a mortgage loan originator's compensation being based on a percentage of the loan amount reflects industry standards and practices. This method aligns the loan originator's earnings with the value of the loans they facilitate, incentivizing them to secure larger loans as their commission grows with the loan amount. By linking compensation directly to the loan size, it encourages mortgage loan originators to work effectively to meet the needs of borrowers while also promoting the overall financial performance of the institution they represent.

In contrast, while a flat fee for each loan closed offers predictability, it may not drive the same level of engagement or encourage originators to pursue higher-value loans. An hourly wage, regardless of loan outcomes, does not align the interests of the originator with successful loan closing, potentially leading to less motivation. A bonus based on customer satisfaction ratings could promote good service, but it typically does not form a primary compensation structure for loan originators, as it may not reflect their financial performance in terms of loan volume generated. Thus, a percentage of the loan amount is a widely accepted and effective means to compensate mortgage loan originators.