Summary Plan Description Commission Incentive Plan (CIP) for External Mortgage Loan Officers (EMLOs)
Effective Date: [Insert date]
Plan Overview: This commission Incentive Plan is designed to motivate and reward the performance of EMLOs working with Credit Union (CU). Under this plan, External Mortgage Loan Officers (EMLOs) are compensated primarily through commission earnings. This summary outlines the key components and terms of the incentive plan.
Plan Participants: All EMLOs who meet the eligibility criteria, as determined by Credit Union, are eligible to participate in the CIP. Employees eligible to participate in this plan are not eligible to participate in the CU Employee Incentive Plan.
Base Compensation: EMLOs receive a low base salary, which is determined and communicated to each EMLO individually. The base salary is intended to provide a minimal level of financial security and may be subject to period adjustments, as per the company’s discretion. Note: base salary must meet the greater of WA minimum wage or City minimum wage. Determination of which minimum wage require applies is determined by where the work is performed.
Commission Structure: EMLOs earn commission based on closed loan transactions.
· A commission rate [Commission Rate] % is applied to the loan amount for each closed loan.
· Commission tiers are based on units or a combination of units and dollars.
· Existing CU first mortgage refinances are paid at $200 per loan.
· Second mortgage referrals are paid at $100 per funded loan.
Further details and an example of the commission structure is outlined in Exhibit A.
Performance Metrics: The following performance metrics are used to determine commission eligibility and amounts:
· Loan volume: The total loan originated volume by the EMLO with a defined performance period, measured as units and/or dollars.
It’s expected that an EMLO generates a Minimum Loan Production based on a 6 month look back of $3 million or $500,000 monthly. Failure to meet this goal could lead to disciplinary action and could lead to termination.
Performance metrics are defined annually, based on the calendar year. Individual EMLO performance will be reviewed monthly by the VP Real Estate Lending.
Commission calculations and payouts: Commissions will be calculated and paid once a month for the preceding month. Commissions will be calculated by the VP of Real Estate Lending and submitted to Payroll to be paid out as part of the next payroll cycle, following the month for which commissions are calculated.
Expenses and Allowances: CU may provide allowance or reimbursements for certain expenses per company policies.
Compliances and Licensing: EMLOs are expected to maintain their own licensing and adhere to all regulatory and company compliance requirements.
Plan adjustments: CU reserves the right to modify this CIP at its discretion, with advance notice to EMLOs. Modifications may include changes to commission rates, performance metrics, or any other plan components. Plans will be reviewed and updated as appropriate annually.
Non-compete and Confidentiality: EMLOs are subject to non-compete and confidentiality agreements. Violation of these agreements may lead to plan disqualification and other legal actions.
Dispute Resolution: Disputes or concerns related to CIP should be directed to CU’s Human Resources Department for resolution.
Effective Date and Duration: This CIP is effective as of [Effective Date] and remains in effect until modified or terminated by CU.
This Summary Plan Description serves as a general guide to the CIP for EMLOs. Detailed terms and conditions are outlined in the official plan documentation.
Exhibit A: Compensation Incentive Plan Performance Metrics
Tier Metric (Units & Mthly Funding Range (MFR)) Commission Basis Points
Tier 1 MFR of up to $500,000 0
Tier 2 MFR of $500,000 - $1,103,999 0.35
Tier 3 MFR of $1,104,000-$1,840.000 0.55
Tier 4 MFR of $1,840,0001+ 0.85
· Second mortgages referred via Sales Force are paid at $100 per funded loan.
· Branch generated leads are expected funneled to the internal MLO’s via salesforce.
Example under Tier 1 an EMLO closing 1 loan will receive only their monthly salary and no additional basis points in commission unless the total dollar funded loan amount exceeds $500,000.
Example under Tier 2, if they close 1 MFR of $750,000 they would receive basis point commission of 35 bps = $2,625.