An MLO called us convinced our pricing was off. He'd quoted a borrower, compared it to what the borrower was seeing elsewhere, and decided we couldn't compete.
We pulled up his scenario in ARIVE. He had compensation set to lender paid. For the deal he was structuring, broker paid was the right setting. Then he was reading the base rate and stopping there.
We fixed the comp type and had him read the final price. A few minutes later he said, “Oh. I can beat the competitors.”
That's the whole story. The lesson underneath it is worth more than the story.
If the quote looks wrong, check the inputs first
We have access to 100 lenders across broker and correspondent channels. When an MLO tells us our rates aren't competitive, 99 times out of 100 we're winning or competitive once the scenario is set up right.
When something is off, it's almost always an input field.
That matters if you're weighing a move. A bad quote during your first week can make a good platform look like a bad one. Most of the time the pricing engine is fine and the scenario needs another look.
Comp type moves the price before anything else does
Lender paid and broker paid aren't interchangeable toggles in a pricing engine. They change how compensation is built into the price you see.
Work it on a real number. On a $400,000 loan, 275 bps is $11,000. If the comp setting doesn't match how you're actually structuring the file, that $11,000 lands in a different place in the pricing. The rate or the points you show the borrower can shift enough to look uncompetitive on a deal that isn't.
Which comp structure applies to a given file is a compliance question as much as a pricing one. If you want the rule side, our post on the LO comp rule and how a flat fee broker handles it covers it. The practical point here is simpler. Set the comp type to match the file before you read a single number.
Read the final price
The base rate is where pricing starts. Adjustments for credit, LTV, occupancy, property type, lock period and everything else stack on top of it, along with compensation.
The final price is the number your borrower actually gets. It's also the only number worth comparing against another quote.
If you compare a base rate on our side against an all-in quote from somewhere else, it won't mean anything.
Where quotes go wrong: 20 to 30 fields
Depending on how complex the deal is, there are 20 to 30 fields in a quote. Each combination changes the result. The ones we see set wrong most often:
- Compensation type and comp amount
- Loan purpose, especially rate-term versus cash-out
- Occupancy and property type, including unit count
- Credit score and LTV/CLTV
- Lock period
- State and county
- Escrow waiver
- Documentation type on Non-QM files, such as bank statement or DSCR
- Prepayment penalty terms on investor files
- Loan term and amortization
Change one of these and the eligible lenders change, the adjustments change, and the final price changes with them. Two quotes that look identical on the surface can price differently because one field was off by a single selection.
A 60-second checklist before you call a quote uncompetitive
Run this before you tell a borrower you can't match a number:
- Confirm the comp type matches how you're structuring the file.
- Confirm the comp amount is the one you elected for the quarter.
- Re-check purpose, occupancy and property type against the application.
- Match the lock period to the quote you're comparing against.
- Compare final price to final price, with points and credits included.
If it still looks off after that, send it to us. We'd rather look at your scenario than have you walk a borrower over a field setting.
Why this matters when you move your license
Every platform has a learning curve, and the pricing engine is where it costs you. That's why we train every week, and why our processing and operations support includes walking through scenarios with you in ARIVE. ARIVE training also sits in the Originator Support portal.
You can be up and running in 24 hours. Getting the inputs right in your first week is part of that.
You keep 100% of the compensation you elect, minus the $695 flat fee per funded loan. That math only works if your quotes win the borrower first.
If you've got 3 to 10 years in and a book of business, bring a scenario you lost on price recently. We'll price it with you. Start with the Interview Us questionnaire.
Innovative Mortgage Services, Inc. NMLS ID # 250769 (https://nmlsconsumeraccess.org/)