Account Executives – TPO Growth Strategy

We wanted to have working document in the hands of both our internal partners engaged in growth as well as our external partners working to grow production for Union Home Mortgage. In most conversation scenarios a standard few questions come to mind. Below are a few straight answers to help guide the conversation. Additionally there is a high level overview of our compensation strategy, there are plenty of additional details involved but this is a good place to start.

What type of TPO (Third Party Originations) lending is UHM looking to do? Primarily table funded wholesale. A traditional wholesale model where we are doing the disclosure process, underwriting, closing documents, and providing the funds for closings on behalf of our broker partners.

Will UHM offer Mini-Corr (Emerging Banker) business channel? We are rolling out this delivery process in the 2nd quarter of 2015. We are referring to this channel internally as our “Emerging Banker” model. We are in the process of getting approved with many of the most popular warehouse line providers to be an approved take out investor. We have a strong desire to add community banks and credit union partners during the year and recognize this channel is their preferred method of delivery. We also see many of our broker partners going down the path of self-funding their loans via a warehouse line. With that in mind, we wanted to have this delivery option in place to ensure our Account Executives do not lose their relationships as our broker partners continue to grow their business.

Will UHM offer full Correspondent business channel? We will certainly look at Correspondent customers on a limited basis, not bulk sales. If we had an Account Executive who wanted to have a few Correspondent customers in their book of business we would certainly entertain that option. We have a few active partners in this channel currently.

Do we have defined territories? Yes we do have defined territories. While we would encourage our reps to focus on their backyard and keep a tight footprint, we certainly understand it is a people business. We will certainly have a defined footprint for most Account Executives as their primary footprint; we absolutely recognize we will have some overlap and a handful of exceptions. One A/E per state would be typical, but we will have some exceptions. Our primary focus is the Mid-West and Southeast, then moving west. We plan to move into the West Coast arena during 2015.

Do we have an opportunity for Regional Managers with a core group of A/E’s? We have that position in mind and the job description and comp structure in a rough draft. We would entertain it for the right person with a clearly defined team in place, but that group would have to hit the ground running with no less than $20m a month collectively in production. Our priority now is individual A/E’s. Regional opportunities are available but our goal with this opportunity would be that those Regionals are producing managers that have a few active accounts of their own that they would continue to service.

What is our product menu for our TPO partners? We are a seller/servicer with the agencies. We sell some product lines on occasion to the big banks and other servicers, but primarily we look to sell agency direct to both FNMA and GNMA. We have recently added FHLMC to our product menu as well. This delivery method allows us to go to market with a very robust product menu. We have a minimum FICO of 640 regardless of product. That may evolve, but we are not looking to be a niche lender of any type.

What is our Growth Appetite?

We want to add quality Broker Partners with a “purchase focused” business model. We are focused on getting to first base, which is roughly $500m a year in production via our wholesale effort. The not too distant horizon sees a production goal for wholesale of around $5 billion annually – obviously we need to walk before we run. We would consider a big step forward in production with a full team that included ops support, but that would have to be a very easy fit in regards to goals and culture for us to even consider. We would be looking to absorb a group, not purchase one.

Technology approach?

We use Encompass by Ellie Mae. We are in a paperless environment for wholesale that is very dependent on imaging and our broker partners following our process. We utilize underwriters who work remote as well as remote A/E’s, will only partner with Brokers that have the right internal technology to work with us in a paperless process.

Account Executives Production Expectations?

We would expect each A/E to fund (via their approved brokers) volume of no less than $12m per quarter. This will be measured each quarter, missing our minimum production goal at any point after the initial quarter you were hired would be problematic and require a specific action plan to get corrected.

Minimum Standards relating to active Broker Partners? We would expect each A/E to have no less than 21 active accounts after 4 months of employment. We would expect no less than 2/3 of the active client base to have loans in process during each quarter without exception.

Minimum Standards relating to new Broker Partners We would expect each A/E to add no less than 9 new broker partners to UHM on a quarterly basis until minimum production standards are exceeded. Not all broker partners are a good fit, we must always be adding new partners.

Broker Performance We will generate scorecards for individual brokers on a monthly and quarterly basis that measure their performance operationally. Measuring lock pull through, percentage of submissions closed, post-closing issues, and all the typical performance metrics will be tracked and shared. We want to ensure our broker partners are delivering us quality business in a consistent manner for the benefit of all involved.

Training for new brokers, the ability for loan officers to discuss files direct with the underwriter, high touch service not solely dependent on email, these are all high priorities for UHM. We want to be a good “partner” to our brokers, not just another investor to sell loans to.

Our ideal candidate is an experienced A/E that will join us with a solid broker partner base of 20 – 40 brokers that could reliably fund $4m - $16m a month in agency type production. An A/E who calls on smaller brokers, typically a single branch model that wants a true partnership with their investor. Our ideal candidate has some longevity with an employer or two along the way and not 10 stops in the past 5 years. We only want career minded professionals. We will be collecting production data, income data, and doing background checks on any candidate that seems promising and has interest. Candidates can reach Jim Wickham directly at 248.318.8553 or connect via LinkedIn.

It is our goal to have one compensation strategy to ensure we are fair and consistent with our partners. We will have production incentives in place to provide additional income opportunities for those who perform at an elevated level.

Guarantee during first 90 days – Initial Employment Period Union Home has a strategy that includes paying a minimum guarantee of income against

production during an AE’s first 90 days. Not a minimum in addition to commission, but a minimum consistent with your previous 6 months TPO commission income.

Salary after Initial Employment Period Subsequent to the initial period, you will receive a bi-weekly salary of $692.30 per pay period,

approximately $18,000 per year. This is a salary, not a draw against commission.

Base Commission on Closed Loan Volume Partners who are approved as Correspondent, that funded production will be compensated at

a rate of 10 basis points. Our base commission rate will be 15 basis points for all brokers in either the Emerging Banker or Wholesale channel.

Quarterly Volume Incentive We will compensate our account executives with an additional commission plan paid quarterly for

elevated closing volume as follows: $18m - $24m per quarter – additional 3 basis points over base commission rate

$24m - $36m per quarter – additional 4 basis points over base commission rate

$36m + per quarter – additional 5 basis points over base commission rate

Expenses Account Executives will receive a monthly auto allowance of approximately $400 and a

technology allowance of $100. This is to cover the anticipated costs of seeing customers but keeps all involved away from wasting valuable time filling out expense reports. We will adjust the auto allowance as needed for folks calling on larger or smaller geographic footprint. Insurance and Benefits We have a full insurance and benefits package the offers optical and dental in addition to a variety of health insurance plans. We have a full time health care coordinator at the company that is available to all employees as needed to help with health care questions and concerns. We also have a 401k plan that includes an employer match.