By Keith Dunham, Founder & CEO of Empower Transactions. Keith built Empower after running operations at HomeCity Real Estate, where he helped scale the brokerage to hundreds of closings a month before its sale to Better Homes & Gardens Real Estate. He also co-founded Opcity, later acquired by Realtor.com.
A loan officer who wants file work off their desk finds two markets quoting two kinds of number. Contract processors publish per-file rates: 1st Choice Processing lists $695 for a VA IRRRL or FHA Streamline, $895 for a HELOC, $995 for a conventional, FHA, VA or USDA file, $1,095 for non-QM, bank statement or jumbo, $1,295 for a first-and-second combo, and $1,595 and up for commercial. Support firms publish time: VirtualNexGen advertises mortgage assistants at $8 an hour, MyOutDesk publishes rates starting at $1,988 a month for managed outsourcing and starting at $2,500 for specialized roles.
The obvious move is to divide one by the other and find the crossover. There isn’t one, because in the ordinary case the two prices are not paid by the same person. The per-file fee is usually charged to the borrower and disclosed on the loan documents; the hourly or monthly fee comes out of the loan officer’s own compensation and never appears there.
Why it matters — the payer does not decide whether the person touching your file needs a license. The work decides that. What the payer decides is whose rules you are operating inside, and billing the borrower brings a second set of them that has nothing to do with the licensing question at all.
Who pays a contract processor?
Most often the borrower. 1st Choice Processing says so on its own fee schedule — “Our 3rd party processing fees are charged to the borrower on section B of the Loan Estimate and Closing Disclosure” — and its homepage sells on the same fact: “Our fees are passed on to the borrower without affecting your commission.”
Not always, though. Some contract processors bill the broker directly on a per-file basis, particularly on files that do not reach closing, and some lenders permit either route. Which one applies is set by the lender’s policy and the engagement rather than by the label on the service.
Section B sits on page two of both forms, and the two forms label it differently: the Loan Estimate calls it Services You Cannot Shop For, while the Closing Disclosure calls it Services Borrower Did Not Shop For. Placement is not automatic either. Where a processing fee belongs depends on who actually receives it and whether they are affiliated with the creditor — a fee paid to or through the broker is generally an origination charge and belongs in Section A instead. That is a question for a compliance desk, not for an article.
What attaches once the borrower pays?
Conditions the loan officer usually has not read, set by the lender rather than by the regulation. A third-party processing fee policy published on MC Funding’s site is a worked example. Read it as illustrative rather than current: it is versioned February 2018, and the document carries no letterhead, so the attribution rests on where it is hosted.
- The fee is “disclosed in Block B of the Loan Estimate (LE) and Closing Disclosure (CD).”
- The “processing fee cannot exceed $1,500.00.”
- Fees “are not allowed to vary after initial disclosure (the exception being a valid change of circumstance).”
- The processor must be either “an employee of a licensed Processing Company or an independent processor with their own NMLS number,” and the fee is payable “only to either the duly licensed processing company or individual charging the fee.”
Dig in — the fourth bullet is the one worth sitting with, and it is worth being precise about what it is. It is not a licensing requirement in the SAFE Act sense; it is one lender conditioning its willingness to let a fee onto the form on the payee holding a license. A contractual overlay, not a rule of law. But it is the overlay that decides whether a given provider can be paid that way, which makes it the operative constraint for the loan officer even though the regulation never says it.
And lender policies do not agree with each other. Caps differ, the disclosure block differs, and the permitted payee differs from one submission policy to the next. There is no market-wide answer to inherit — only the policy of the lender you actually submit to.
Who pays an hourly or monthly assistant?
The loan officer, or the branch, out of their own compensation. VirtualNexGen prices mortgage support at $8 an hour against what it describes as $25 to $35 an hour plus benefits for local staff. MyOutDesk publishes rates starting at $1,988 a month. Neither page mentions licensing or NMLS registration anywhere. VirtualNexGen does reference the borrower and the Loan Estimate — as things its assistants should understand, not as a party it bills.
Because nothing here touches the borrower’s disclosure, none of the section B conditions above are in play. The only licensing question is the ordinary one: whether the person stays inside the clerical or support duties defined at 12 CFR § 1008.23 and works at the direction and instruction of the licensed originator who owns the file. That question is genuinely unsettled at the federal level, and Texas, North Carolina and Washington have answered it in payroll and entity terms. We set the whole conflict out, against our own interest, in The Federal Rule on Unlicensed Mortgage Assistants Contradicts Itself.
So which one should a loan officer buy?
Wrong question first. The right one is who is going to pay for it.
| Contract processing | Hourly or monthly support | |
|---|---|---|
| Who pays | Usually the borrower, disclosed on the loan documents; sometimes the broker | The loan officer or branch, out of compensation |
| Priced by | The file, by loan type | The hour or the month |
| Cost when volume falls | Falls with it — no files, no fees | Continues; it is a fixed seat |
| Licensing question | Same federal test as any other file worker — but the lender’s policy may separately require a licensed payee before the fee goes on the form | The clerical-or-support-duties test, unsettled federally, with state overlays |
| What else attaches | Fee caps, no variation after disclosure absent a change of circumstance, and whether the charge is bona fide | Nothing on the borrower’s side; you supervise it, and the direction has to be real rather than recited |
| Scope | The processing function on a file | Whatever you direct, inside the clerical boundary |
If the answer is “the borrower pays it,” you are buying contract processing and you need a provider your lender will let receive that fee. If the answer is “I pay it out of my own commission to get my week back,” you are buying support and none of the section B conditions enter the conversation.
What is the mistake to avoid?
Buying support by the hour and then billing the borrower a per-file processing fee for it. A fee charged to a borrower has to be a bona fide charge for services that party actually performed; marking hourly labor up into a file fee raises questions under RESPA section 8(b), which addresses unearned fees, entirely independent of anyone’s license. It can also change how the amount is treated in the qualified-mortgage points-and-fees calculation, and it may breach a lender condition on who may receive the fee. Three separate problems, and the licensing one is the least of them.
The cheap version is not a cheaper contract processor. It is a different product bought by a different person. Whenever a provider quotes an hourly rate and a per-file pass-through in the same conversation, ask which number lands on the borrower’s disclosure and who is entitled to receive it.
What to watch — every figure here is quoted from one firm’s own published page, read in September 2026, and vendor rates change without notice. The lender policy is a single eight-year-old example and lender requirements vary on exactly the points it settles. Nothing here is a TRID, RESPA or qualified-mortgage opinion; where a fee may sit and whether it is bona fide are questions for your lender’s compliance desk and your counsel. And we sell one of the two columns, which shapes how we see the comparison — disclosed below rather than buried.
The bottom line — there is no crossover point between $995 a file and $8 an hour, because in the ordinary case the borrower pays one and you pay the other. Decide who is paying first. It does not change whether a license is needed, but it decides which additional set of rules you are inside, and every provider comparison that skips it is comparing two things that were never alternatives.
Our disclosure, as of 2 September 2026. Empower Transactions sells the second column: unlicensed clerical and support work on mortgage files, performed at the direction of and subject to the supervision of the licensed originator who owns the file, paid for by the loan officer or the branch. That is also why we frame the comparison this way, so weigh the source. We are not a licensed contract processing company. We do not hold a Texas independent contractor loan processor/underwriter company license, a North Carolina Mortgage Originator Support Registration, or a Washington mortgage broker license, and our fee is not a borrower-charged processing fee disclosed on the loan documents. If what you need is a fee the borrower pays, we are the wrong provider and a licensed processing company is the right one.
Empower Transactions is not affiliated with, certified by, or endorsed by the Consumer Financial Protection Bureau, the Nationwide Multistate Licensing System, the Conference of State Bank Supervisors, 1st Choice Processing, MC Funding, VirtualNexGen, MyOutDesk, or any federal or state regulator. This is not legal or compliance advice. Requirements vary by lender and by state and change — verify with your lender’s compliance desk and your own counsel before you structure a file-support arrangement.
Sources. 1st Choice Processing fee schedule · Third-party processing fee policy, ver. 02022018 · CFPB, Loan Estimate explainer · 12 CFR § 1008.23 · 12 CFR § 1026.32
Frequently Asked Questions
What is the difference between a contract processor and a mortgage virtual assistant?
Usually the payer, and what follows from it. A contract processor is most often paid by the borrower and disclosed on the Loan Estimate and Closing Disclosure, and is priced per file by loan type; some bill the broker instead. A virtual assistant or administrative support provider is paid by the loan officer or branch out of their own compensation, is priced by the hour or month, and does not appear on the borrower’s disclosure.
Does who pays decide whether a license is required?
No. Licensing turns on the work performed, not on who is billed. Under 12 CFR 1008.23 an unlicensed person may perform clerical or support duties under a licensed originator’s direction and instruction but may not take an application or offer or negotiate terms. What billing the borrower changes is that a lender may separately condition its willingness to disclose that fee on the payee holding a license, which is a contractual requirement rather than a rule of law.
Can a loan officer charge a processing fee to the borrower?
Lender policies govern this and they differ. One published example requires the fee to be disclosed in block B of the Loan Estimate and Closing Disclosure, caps it, forbids it varying after initial disclosure absent a valid change of circumstance, and requires the processor to be an employee of a licensed processing company or an independent processor with their own NMLS number. Other lenders set different caps, blocks and permitted payees. Verify with the lender’s compliance desk; this is not compliance advice.
Is a contract processor cheaper than hiring a virtual assistant?
The comparison does not hold, because in the ordinary case the two costs are borne by different people. A per-file processing fee charged to the borrower does not come out of the loan officer’s compensation, while an hourly or monthly assistant does. The per-file cost also falls when volume falls, whereas a dedicated assistant is a fixed seat. Decide who is paying before comparing the numbers.
What is the most common mistake when outsourcing mortgage file work?
Buying support by the hour and then billing the borrower a per-file processing fee for it. A charge to a borrower must be bona fide for services actually performed by that party; marking hourly labor up into a file fee raises RESPA section 8(b) unearned-fee questions regardless of licensing, can affect how the amount is treated in the qualified-mortgage points-and-fees calculation, and may breach a lender condition on who may receive the fee.
