I am having a hard time finding anything that addresses how LO Comp should be paid or not paid when an originator who took an application resigns, goes on medical leave or is fired at some point during the underwriting of a loan application. When the loan closes is there an obligation (other than moral perhaps) to pay the former originator for a loan they didn't stay with to closing but brought in the door? Would paying a "short" commission be allowable in that case? Obviously a second originator will have to pick up and continue the application with the customer and since that person is assuming the file and any issues associated with it and would want to be paid something. Paying the initial originator a full commission and then having to reasonably compensate a second originator to finish the job is not fiscally reasonable in these days where Originators change lenders pretty frequently. Can anyone offer some insights into how they handle this?

Bump.

That is a matter of state law and/or any contractual agreements you may have with the terminated employee.

TN, for example, is a work at will state. If you leave employment for whatever reason before the incentive payment is paid, you are not entitled to it, unless there is a contract that specifically provides for it. Most employers in TN do not issue written contracts. It would be solely left to the bank's discretion to pay it. Hourly wages/salary would only be paid for time worked. Any other commission/bonus/etc would only be paid if the person was an employee at the time the payment is made.