In today’s competitive mortgage industry, effectively managing loan originator (LO) compensation is crucial for maintaining compliance and ensuring fair practices. Encompass 360 offers a powerful LO Compensation tool that simplifies this complex process. This comprehensive guide will walk you through the key aspects of setting up, managing, and utilizing the LO Compensation tool within Encompass 360.
Understanding LO Compensation in Encompass
- The LO Compensation tool in Encompass enables companies to set up and track compensation paid to loan originators, including loan officers, lenders, and third-party originators (brokers).
- Encompass 360 provides administrative settings for creating and assigning LO compensation plans, ensuring consistency and fairness across the organization.
- The LO Compensation tool allows authorized users to view and manage compensation details, including who is being paid, how much, and how it is documented in the loan file.
Configuring and Activating LO Compensation Plans
Setting Up Default Plan Settings
- Access the LO Compensation settings by navigating to Encompass > Settings > Tables and Fees > LO Compensation.
- Configure the default settings in the Default Plan Settings section to apply universally to all compensation plans.
- Save the changes to ensure consistency across all future plans.
Creating and Activating a Plan
- Initiate a new plan by clicking the “New” icon in the LO Compensation Plans section.
- Assign a unique name and description to the plan for easy identification.
- Specify whether the plan applies to loan officers, brokers, or both using the Loan Officer/Broker Value drop-down list.
- Set the minimum duration for the plan’s effectiveness in days.
- Choose rounding options for compensation amounts if desired.
- Define the compensation percentage based on either the total loan amount or the base loan amount.
- Establish minimum and maximum compensation amounts to ensure fair and compliant payouts.
- Activate the plan by selecting the “Active” checkbox at the top of the window.
Assigning Compensation Plans to Originators
Assigning Plans to Loan Officers
- Navigate to Company/User Setup > Organization/Users to access user profiles.
- Locate the appropriate organizational folder and double-click the loan officer’s name.
- In the Assigned Compensation Plans section, click the “New” icon to add a plan.
- Select the desired compensation plan from the LO Compensation Plans window.
- Finalize the assignment by clicking “Select” and then “Save.”
Assigning Plans to Lenders or Third-Party Originators (Brokers)
- Access the External Company Setup > Company Details settings to manage external entities.
- Double-click the company or branch in the Lender or Third Party Originator folder hierarchy.
- Click the “New” icon in the Company Details window to add a compensation plan.
- Choose the appropriate plan from the LO Compensation Plans window.
- Complete the assignment by clicking “Select” and then “OK.”
Utilizing the LO Compensation Tool within Encompass 360
Understanding the Tool’s Structure
- The LO Compensation tool calculates and displays loan originator compensation data within the loan file.
- It consists of two main sections: Loan Officer Plan Details and Wholesale/Broker Plan Details.
- The Loan Officer Plan Details section shows compensation paid to loan officers in Banked-Retail loan channels and can display compensation when the company acts as a broker in Brokered loan channels.
- The Wholesale/Broker Plan Details section presents compensation paid to third-party originators/brokers or compensation received by your company when acting as a broker.
Accessing and Using the Tool
- Open a loan file and navigate to the Tools tab, then click on LO Compensation to access the tool.
- Certain fields may be auto-populated based on the Encompass 360 administrator’s configuration.
- Required fields for plan data population include Channel, loan officer or broker information, and the Trigger Basis field.
- Authorized users can modify editable fields and enter new data as needed.
- Utilize the Bonus Comp fields to enter additional compensation owed to the loan officer.
- Apply portions of the compensation towards borrower fees using the Adjustment Credit fields.
- If a different originator is assigned to the loan before closing, use the “Reset Comp” button to recalculate compensation based on the new originator’s plan.
Integrating LO Compensation with Other Encompass Features
- Enable the “Use LO Comp Tool” checkbox on the 2010 Itemization input form to automatically pull relevant broker compensation data into the form’s Broker Compensation fields in sections 801 and 802.
- This integration ensures consistency between the LO Compensation tool and other areas of Encompass, streamlining the workflow and reducing the risk of data discrepancies.
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