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Incentive Plan

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Incentive Plan

Post  Pete2002 on Mon Jan 25, 2010 3:32 am

Wachovia Corporation and World Savings have recently merged, and we’ve become the 4th largest bank in the nation. Wachovia is a financial services company, with retail and commercial banking operations in 21 states from Connecticut to Florida and west to Texas and California, and nationwide retail brokerage operations under the Wachovia Securities brand name manage client assets through offices in 48 states and service affiliate offices in Latin America. (1)

I’m working as a Mortgage Loan Consultant in one of our major operations centers in California. I am working in the customer retention department. World Savings is one of the nation’s few remaining portfolio mortgage lender, we keep our loans rather than selling them on to secondary markets. This allows us to promise and deliver on a high standard of customer service. The ultimate goal for our department is to increase portfolio retention through outbound calling. The campaigns involve contacting existing customers to review their loans and ensure that the loan still meets the customers’ financial needs. (2) In addition, we also introduce new products and offerings to clients to expand and grow sales among the existing customer base.

During the merger transition period, our department goal has shifted toward like a loan origination department. Generating new business is one of the main goals now. Our focus is almost changing everyday. Being a Mortgage Consultant, our incentives are based on hourly rate, commission, and bonuses. During the last three months, our incentive structure has changed quite a bit because of the merger. To retain our existing customers, we have to do loan modification to help them lowering interest rate and convert their adjustable rate mortgage to a fixed rate. To our company, do loan modification for existing borrower is losing money because we lower borrower’s interest rate without any closing costs, appraisal fees, title and escrow fees. As a Mortgage Consultant, we get a flat fee out of each loan modification. We used to get paid when borrower committed to do the loan modification and pay the one time upfront fee. Since now our department is focusing on new business, so now we don’t get paid until the forty-five days loan modification processing period is done. We have a slogan in our department, which is “REM”. It stands for Refinance, ELOC, and Modification. When dealing with existing customers, our management would like us to go for Refinance first, then Equity Line of Credit, and lastly Loan Modification. The company plan is when there is a two months delay on the pay for doing a loan modification, we will do more refinance for borrowers.

Focusing on new business is our main goal now, so our company has set up a new incentive plan for encourage us to do more new business. If we do a new business, our incentive will be based on the loan amount, and we will get 30 basis points with $6,000 maximum limit per loan. This new incentive plan is so attractive compare to retaining existing customer and getting pay a flat fee of each transaction. This motivates us to work harder and try more ways to obtain new business. After one month, our company has eliminated the maximum limit, so we will get 30 basis points from the loan amount and will not be capped at $6,000. This incentive plan has driving our department so excited and everyone work overtime with no complains. We started to do new business for two months now, and our new business funding is keep growing and growing.
On the other side, our underwriter gets paid based on the loan units that they’ve underwritten. Funding or not is not effecting their paycheck. I really think the incentive plan for our underwriters needs to be improved. They’re too easy to reject a file and they don’t know how hard it is for the mortgage consultant to get the business. I know one of our company’s objectives is to only approve the people who can really afford the loan. We cannot only pay our underwriter if the loan is funded, it will create a big problem. I’m thinking is they will get paid more when the loan is approved, and they’ll get less is the file is denied. The result shows that a good incentive plan will drive an organization to complete their objectives.


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