Expert: Terrence Cullen - 12/26/2007

Question
QUESTION: Hi. I have a question about commercial mortgages. What is the usual commission percentage given to a loan officer on a commercial mortgage? For example, a lot of the time with residential financing there is a 1% origination fee and 1% YSP. Is it the same with commercial financing? Thanks in advance!

ANSWER: It depends usually on the size of the deal. You used to be able to get some premium if the rates went in a favorable direction, but now most commercial originators are limited to 1% and less on large deals. From that fee there is usually between 60-70% that goes to the company.

Happy Holidays,

TC


---------- FOLLOW-UP ----------

QUESTION: What is usually considered a large deal?

ANSWER: 12M and up.

TC



---------- FOLLOW-UP ----------

QUESTION: So, is it more than 1% for smaller deals, like 1M?

Answer
The financing fee is usually at most 1%. The borrower has to sign an agreement for you to collect your fee. If the borrower decides to contract for more than 1% that would be unusually generous as the market is 1%, and if you are not direct the lender will not build extra into the yield premium.

TC

tc