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In my last column, we went over company culture and trust. This time, we'll talk about a topic on the periphery, but that will have a big impact on 2016, and has the potential to have a big impact on your mortgage company.

Recently, Kate Berry wrote an article about the CFPB's enforcement agenda for 2016. What topped the list? Loan officer compensation.

Having been through Dodd–Frank and the associated changes to LO compensation plans in 2010, some of us felt that this sort of risk was behind us. It now appears that in addition to warning the industry about marketing services agreements, the Consumer Financial Protection Bureau will be taking a good look at the sales process and pay, as well. So, now is a good time to ask whether we are designing compensation plans that are meant to build the kind of culture that we really need or are simply building compensation plans based on short-term gains.

For example, when we perform loan officer compensation studies at Stratmor, we sometimes speak to lenders who tell us, "I can't participate in your LO compensation study because I have so many plans." Having multiple compensation plans can make sense when the lender has multiple origination channels or is targeting certain markets, such as for Community Development purposes.

However, we're still finding companies offering loan officers a choice of compensation plans, based on the LO's preference. These plans are fondly referred to in the industry as "Pick-a-Pay" plans and allow the loan officer to decide how much money they want to earn, and then price to the consumer adjusted accordingly.

It should be obvious these are plans that the CFPB is likely to have problems with because they potentially create a climate in which two different but financially similar consumers in the same market for the loan with the same lender may be charged differently, based on the LO on the deal. That's not what the CFPB wants to see, so these plans are probably not going to be deemed compliant. Plus, it leads to the creation of a very odd corporate culture.

Certain loan officers who have the ability to overcome borrower price objections will want to be paid more. Loan officers who cater to certain clients that are not as price-sensitive will want to be paid more. It also gives the LO the power to choose a lower compensation plan in order to be more competitive in a given market. These pricing decisions should be made at the corporate level and should be part of the company's strategic plan, not handed down to the retail level.

The second item of concern in compensation plans is that so many of them do not have clear quality metrics in their plans. In our studies, very few companies are building quality into their compensation plans, so they are not taking an opportunity to build a culture based on quality.

We know lenders care about customer satisfaction. But they pay based on the LO's ability to get the loan and get it to closing regardless of whether the consumer had a particularly good experience throughout the process or whether the loan officer might have done a particularly good or bad job in the origination process.

This is problematic in the long-term because delivering high satisfaction levels is what earns repeat customers, bank cross-sell opportunities, and satisfied referral sources, who drive future business. In fact, our customer satisfaction research confirms that the overall satisfaction with the mortgage process has a very high impact on these behaviors. Establishing quality as a metric of LO pay is a way to show that this matters. In fact, really progressive companies use the same customer's satisfaction measurements for a range of staff, including operations and sales, creating a corporate alignment between those that work with the customer throughout the process and the customer's satisfaction with the process.

Lenders who are committed to this concept but don't base their employee's pay on it are missing an opportunity. We all know that incentives drive behavior within the organization. Not basing compensation on the behavior you want to see sends an entirely different message.

One more word on the critical importance of culture, and this is very simple one: we say that all consumers are the same. We say that each one is important to us. We say that they're all people and need to be treated in a certain way in order to ensure they're happy. Then we pay based on the dollars involved in the deal, i.e. the basis points. In fact, it's so prevalent in our industry that when we ask about comp plans, the answer is usually given in how many "bips" someone gets.

This has a huge impact on culture because it teaches employees that bigger loans are intrinsically more valuable and thus they get more attention than smaller loans. This strikes to the very heart of the potential Fair Lending issues and other Home Mortgage Disclosure Act-related issues that banks might face. Paying people on dollars and basis points may align you with the P&L, but it doesn't really align you with the communities that you're trying to serve. Ultimately, that's the sign of a culture that is missing an opportunity to participate in social capitalism, a system in which all stakeholders are taken into consideration in every transaction, and one consumers and regulators are both currently embracing.

This may not be an easy change for our industry to embrace. It will certainly lead, in the early days, to some loan officer attrition. However, we have high attrition now, averaging over 40% annually, according to our studies. But failure to take our compensation plans into consideration before the CFPB does will be far more costly in the long term.