Employment Agreement for Loan Officers and Finance Staff

What a good one includes

• A detailed breakdown of the commission structure, including draw-against-commission terms, tiered volume bonuses, and the exact definition of a closed loan.
• Explicit provisions requiring active NMLS licensing and immediate notification to the employer of any regulatory investigations or disciplinary actions.
• A clear trailing pipeline clause specifying exactly which commissions are paid out—and which are forfeited—for loans in progress after employment ends.
• Strict definitions of proprietary data, establishing that all borrower leads, CRM databases, and loan files remain the exclusive property of the lending firm.
• Enforceable non-solicitation covenants preventing departing staff from recruiting your active clients, referral partners, or fellow team members for a specified post-employment period.
• Detailed guidelines regarding marketing cost-sharing, co-branding compliance with RESPA, and pre-approval requirements for loan officer marketing materials.

Common mistakes to avoid

• Failing to define the exact milestone—such as funding, securitization, or the rescission period expiration—that triggers a loan officer's right to a commission.
• Incorrectly classifying loan officers as independent contractors instead of W-2 employees, which violates federal FLSA standards and invites severe tax penalties.
• Leaving the ownership of active, unfinished loan files in limbo when a processor or officer abruptly resigns or is terminated.
• Overlooking joint marketing and expense-splitting rules under RESPA, which can expose the entire firm to severe federal regulatory violations.

Frequently asked questions