Underwriter Fee

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    In addition to salary, management wants to start paying our mortgage underwriters a fee for each loan file that they underwrite (both secondary market and portfolio). The proposed fee is a flat amount that will be paid regardless of whether the loan originates or not. The only guidance that I have found is in HUD’s Handbook, which states that “the mortgagee must not compensate employees who perform underwriting or Quality Control (QC) activities on a commission basis.”

    I came across an article that discussed a mortgage company that got into trouble with the DOJ for paying their FHA underwriters based on requirements to complete a minimum number each month. If the minimum was met, they received a bonus. The bonus was based on the total number of loans underwritten rather than the quality of the underwriting.

    Management does not believe that the per file fee is considered commission because it is not tied to volume/quantity. I’m hesitant to agree with that because it still incentivizes underwriters to produce more without considering quality. I don’t feel like it’s a risk worth taking and feel like rewarding underwriters based on quality makes more sense.

    Does anyone have experience with paying underwriters above and beyond a salary? Or any opinion on how to properly structure such compensation?



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