In Countrywide’s pomp, its President’s Club and Chairman’s Club trips were so over-the-top they’d make a Saudi prince blush.

The lender would lock down luxury resorts in Maui or Palm Springs for 9 straight weeks, rotating its 11 divisions through. Roughly 1,300 winners were treated to private concerts from Jackson Browne, Elton John, or the B-52s. One year, Andrew Lloyd Webber flew in the original casts to perform every one of his Broadway shows for about 120 Chairman’s Club winners.

“People were gap-jawed at the end of it,” said fmr. Countrywide exec Brian Hale. “You get some guy out of Iowa—he & his wife just don't get to see that kind of thing.”

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Countrywide spent millions a year on the festivities. Executives justified it as smart business—regardless of how Angelo Mozilo’s firm ultimately ended.

“I always looked at it as compensation,” said Hale, who now runs Mortgage Advisory Partners. “We had two tiers. It was about $10,000 to $12,000 per winner. Think of it as extra comp for your best people—the top 12%. If you’ve got a producer doing $100 million in purchase business, would you spend $12,000 to keep or recruit them? Of course you would.”

The trips also gave top producers face time w/ senior management & a chance to swap strategies with other heavy hitters.

But excess comes w/ risk. President’s Club events—booze-soaked & sometimes casino-adjacent—have a long history of ending badly.

“We did Vegas one year. That’s a freaking mistake,” Hale said. “We had people arrested. We got sued because a guy lost $35K at the craps table & his wife said we should’ve stopped him. People showed up at the awards dinner w/ 2 hookers. Stuff like that. We sent people home every year for bad behavior.”

No lender today comes close to Countrywide’s pre-Dodd-Frank excess. Still, most large lenders run some version of a President’s or Chairman’s Club.

Winners are picked different ways—units, volume, revenue, product mix, customer satisfaction—but as a rule of thumb, purchase-heavy LOs in the top 10% usually qualify. Most trips are domestic or to Mexico or the Caribbean, though Rate recently took its top producers to Marbella, Spain, which one attendee described as “quite classy.”

These days, the trips are increasingly a family affair, w/ spouses (and sometimes kids) encouraged to come along.

“That’s because the trip isn’t really for the producer,” said one top IMB executive. “It’s for the spouse. I spend more time w/ them than the LO, making sure they’re having a great time so they go home saying, ‘Wow, your boss is really nice. You know that, right?’”

Some lenders have ditched President’s Club altogether in favor of broader sales rallies. Others skip both.

“We don’t do it,” said an executive at a mid-sized IMB. “I think it’s all manipulation. I want people to be intrinsically motivated. Would you rather make a lot more money—or go to Cabo while I jack up the margin?”

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On LinkedIn, West Cap’s Andrew Moon claims that over 25 LOs at the SoCal lender are on pace to clear $1M in revenue from their own production by year’s end. It’s pretty rare to get such insights on a public LinkedIn post, so let’s dive in. Some LOs generated up to 443 bps in revenue on production while others were under 100 bps, according to the raw data he shared.

The post spurred a lively conversation on actual profit. One broker commented that the post was “misleading” w/o knowing the LOs’ P&Ls. “I’d like to see P&L’s because #2 & #7 generating 443 bps & 424 bps respectively probably are more profitable than #18 generating 97 bps,” he wrote. “Your post implies the Total Revenue column is equal to commission, which seems like it may be misleading (I.e. splits).”

Moon shot back that there’s no way for him to know the P&Ls of every LO, but posting total revenue was the next-best thing. “Most of the people you see on here have teams underneath them, which will typically offset any cost associated w/ their personal production…I assure you everyone on that list is HIGHLY profitable whether they average 400 bps or 80 bps.”

You may recall that loanDepot in a recent lawsuit accused WestCap of compensating LOs under a plan that offers them a "lucrative split" of loan revenue—typically 10% to 15%—which is a violation of LO Comp rules & "creates a perverse incentive for LOs not to provide the best terms to a customer in order to increase their own compensation."

The lawsuit, which WestCap says is frivolous, also hasn’t stopped the broker/non-del shop from recruiting heavily from LD…

This one has quietly gone under the radar—mortgage tech vendor Evolve is being sued by a former employee for allegedly not disclosing a massive cyber security incident that occurred in October. 

NMN reports that hackers from a ransomware gang allegedly took 20 terabytes (that sounds like a lot!) of customer data in the attack. In response to the employee’s lawsuit, Evolve, formerly known as MRN3, “largely denied wrongdoing & demurred on the attack details.” Evolve is a pretty small player, fortunately.

You’ll recall that SitusAMC was hacked last month & there are industry concerns that other prominent vendors will follow. Speaking of, we reported last week that it’s tough for SitusAMC customers to simply pick up & go following the hack. That’s true, but some rivals in the due diligence space believe they’ll be vulnerable as contracts come up for renewal. SitusAMC has roughly 2/3rds market share...

​​Fannie Mae & Freddie Mac have increased their retained portfolios by more than 25% in the 5 months through October, lifting their combined positions to $234B, Bloomberg reported. The expansion of their portfolios is fueling speculation that they’re trying to push down lending rates & juice profitability ahead of an IPO. Analysts estimate that the GSEs could add as much as $100B more to their portfolios next year, which could compress MBS risk premiums & lower lending rates. Check out the full story here (gift link).

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