Debt Originations Comp/Lifestyle
Interested in pursuing a debt originations position but wondering how comp is typically broken out. Base + commission + volume based bonus? What does an average producer bring home? Any insight would be appreciated.
If you're at a national brokerage shop it's essentially eat what you kill.
We get comped a $50k - $75k base salary to stay alive but this gets paid back in the means of a 100% split to the house. After you cover your salary, it's a tiered waterfall split which eventually caps out at 51% / 49% (I'm sure the big rainmakers are able to negotiate a better split).
No way to really tell you what an "average producer" makes - every food group is going to be different. Standard loan brokerage fees range anywhere from 0.25% - 1.00%. If you work at a shop that does its own servicing, you can make anywhere from an additional 0.30% - 0.70%.If you're lending a securitized product, you can earn an additional fee as a yield premium.
On a standard $10M agency deal, you'll make ~ 2.00% all-in. You do 10 of those a year, you're looking at ~ $700k gross?
Hope that helps.
Agreed. But good luck closing 10 $10mm agency deals without paying a couple analysts along the way. Plus the tax man is taking half of that 700k. And not saying it’s impossible but taking 2% (im assuming 1% origination fee and 1% on the back end) is not a guarantee. Might get squeezed by competition to give up the point on the back or something like that which will eat into that gross income figure
This is helpful. Currently on track at a Lifeco (PGIM/Nuveen/NYL) in an analyst role and really enjoying it so far (culture, deals, experience/responsibility) so thinking I want to stick around and make a career out of it, with the end goal of being a producer for the team. Naive to think I’ll stay at the same shop? Maybe, but one can dream.
Life cos don't usually comp straight "eat what you kill," because there is a lot of "good for the firm" mentality. Meaning you might bring in 10mm in fees, but only take home 500k yourself and the rest goes to pay for overhead like treasury or accounting.
The agency's really pay brokers 1% for bringing them a deal? That seems insane.
The agency isnt paying it, the sponsor/equity side of the transaction will pay the lender 1% (oftentimes more) for financing the loan through fannie/freddie (at least that's typical in multifamily deals). The agency makes fee money through s&g fees and loan app fees.
Forgot to add, the lender will split the origination fee with the broker usually 50/50 split for bringing them the deal. Sweet gig for the broker since they do almost no underwriting of the deal
Echoing above, but I'll add some specific nuance (from the perspective of working at direct agency lender):
1) Borrower will pay the lender a direct origination fee. Fannie & Freddie both have their own minimum origination fee schedules that their direct lenders (seller/servicers) have to charge & retain. So, if you are using a 3rd party loan broker to source your agency debt, you're paying the 3rd party broker their fee (to basically do nothing) + the seller/servicer's minimum fee (if it's not listed on the settlement statement, it's baked into your rate). Not to talk my own book, but it's almost always going to cost you more to use a loan broker for agency because the direct lender MUST earn their minimum origination fee (~1% up to $7.5M / 0.75% up to $20M / 0.50% up to $50M, etc.). Rough math is that 1% fee = + 12 bps to your spread.
2) Direct agency lenders will almost always perform the role of primary servicer. This is a reoccurring revenue stream and is paid out via a portion of the rate stack (it doesn't get broken out to borrowers, but it's a component of your spread). At our firm, we get paid an upfront portion of that revenue stream at closing. Assuming a Freddie loan includes 12 bps of servicing for a $15M loan, we as the originator get paid a lump sum equal to ~ half of the loan term ((12 bps * 5-yrs = 60 bps)) * $15M). This is a side agreement between loan originator and servicer and has no real adverse effect on the borrower - it's just an additional revenue stream & a benefit of being at a direct lender that also acts as loan servicer.
3) Freddie in particular will directly compensate their lenders ~ 25 bps once a loan is placed into a securitization pool. This hits your account ~ 60 - 90 days after a loan closes.
4) Fannie & Freddie will both allow you to arbitrarily increase your quoted spread to generate additional fee income (something utilized in the above scenario when a borrower uses a 3rd-party loan broker & the originating lender's fee isn't included on the closing statement). This is the "dark side" of lending that is essentially hidden in plain sight. There's really no way to know if your lender is milking you for additional fee, but I can tell you that it happens more often than you think.
Following - im on track to be an originator at a lifeco and curious as to what 'normal' comp is at the higher levels. Judging by cars in the garage + where people live they are doing well.
What does your pathway look like and ballpark comp?
Used to work at one of the largest life co’s. VP was ~$300k. Director was 400-500K. MD was 600-700K.
Any idea on Aso? Its a promote year for me just curious.
Other data is super helpful thank you!
I’m in CMBS originations and my base is $115k and bonus is 25% of that. 2nd year analyst.
What is the extent of your responsibilities? And what is your deal flow looking like in the new year so far?
In terms of responsibilities, I do everything from initial loan sizing, underwriting, digging into market/collateral, sending transaction summaries into pricing desk for pricing guidance, putting together quotes for borrowers, overseeing closing process, etc.
Honestly, market outlook is very mixed between pessimistic and optimistic. A lot of the originators in my group went to CREFC in Miami last week and market sentiment is more optimistic than we thought. Big concern will be the Fed and how much longer they will raise rates. We need to see some stabilization in rates for market activity to pick up again. There is a lot of dry powder that needs to be deployed although the majority of it is opportunistic and value-add capital. There is a record level of CMBS loans maturing this year and next year, so there will be a lot of borrowers that need to refinance. 5 yr term loans are becoming more and more popular as market participants don’t want to lock in 6%+ rates for 10 years. Overall, market sentiment is that we will have another shaky, but possibly good year. Our group is actually pretty busy right now and have signed up a couple deals this month already.
What metro are you working in?
Los Angeles
For data point, recently saw a job post for a VP originator role at PGIM with base 225-275k. Assuming solid producers can take home 100% bonus in good years once you get to that level. I’d imagine that the MDs doing 1B+ in origination volume a year are doing very very well.
Been at my debt shop for two years, current comp: $100k; bonus target: 70-80%+
Any prior experience?
Yes, about two years exp
What asset class?
All of them but mainly focus on multi + mixed use
Are y’all making $100k+ base salary based out of nyc or somewhere else? I might be getting underpaid lol
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