Top-producing Draper and Kramer LOs spurn NAF

Most of last year’s top-producing loan officers at Draper and Kramer Mortgage Corp. (DKMC) are not transitioning to the company’s acquirer, New American Funding (NAF), according to multiple sources and available public data.

During their departure, DKMC sales staff who are not joining NAF were informed by leadership that they will have to wait a few months before receiving all of their compensation tied to any loans closed before the M&A deal, per documents reviewed by HousingWire.

California-based NAF on Thursday confirmed the acquisition of the residential mortgage business of Chicago-based Draper and Kramer Holding, a financial and real estate services provider, with the aim to enhance NAF’s presence in the Midwest and along the East Coast. (HousingWire reported on the late-stage negotiations in January.)

“The acquisition will bring a majority of DKMC’s loan originators as well as operations and support staff to NAF and enables NAF to fill existing open roles in various departments with experienced personnel from DKMC,” NAF stated in a news release.

Sources indicated, however, that most of the top-producing LOs from DKMC have decided not to join NAF. This is reflected in data collected by the mortgage tech platform Modex and the Nationwide Multistate Licensing System (NMLS).

A spokesperson at NAF did not respond to a request for comments.

The data shows that 10 of the top 12 LOs at DKMC have either transitioned to other companies or are currently in between jobs.

In total, the production of these originators represented about $424 million last year, a sizable share of DKMC’s total origination volume of nearly $2 billion, according to Modex. NAF, founded in 2003 by Patty and Rick Arvielo, originated $8.4 billion in mortgages in 2023.

According to the NMLS, two top DKMC originators not transitioning to NAF are not licensed with any lender. The remainder transitioned to CrossCountry Mortgage, Synergy One Lending, Capital Bank, First Home Mortgage Corp. and NFM Lending.

A former Draper and Kramer LO who is not joining NAF said that sales staff began leaving in November 2023, and some top LOs announced their transition to other companies earlier in January. He spoke anonymously for fear of retaliation.

“[NAF] is just a different culture of business, and a lot of people don’t like working with a huge company because then they get lost,” the LO said.

Another former Draper and Kramer LO on the East Coast said that even though the list of products and programs at NAF was impressive, he didn’t join because he anticipated another layer of “approvals and bureaucracy.”

“The credit officers on our side and underwriting managers that previously had a large amount of discretion on their decisions, we started to suspect that they would not have final say anymore lost,” he said. “They’d have to sort of report into the credit officer on the NAF corporate side.“

Founded in 1893, DKMC holds the country’s oldest active Federal Housing Administration license. It will be rebranded as New American Funding.

From Jan. 22 to Feb. 2, DKMC’s active LO count decreased from 170 to 79. Meanwhile, NAF increased its headcount by 68 to 1,952 in the same period, per NMLS data.

Sources told HousingWire that Draper and Kramer Holding’s board of directors pushed for the move, with chief financial officer Jim Hayes serving as the driving force behind the deal with NAF. DKMC President Matt Patterson will be joining NAF, but it’s unclear whether CEO Paul Lueken will be transitioning to the California-based lender.


According to a letter the DKMC human resources department sent in late January to sales staff that declined to join NAF, originators will receive compensation for any products funded within 30 days. 

Commissions, however, are to be disbursed within a “reasonable timeframe following the expiration of the investor recapture period published on the Company’s intranet,“ the letter read.

In addition, DKMC will also withhold certain costs and fees, including early payoffs and early payment defaults, “that may occur after the termination when calculating the final compensation payment to the Loan Officer.“

Some former LOs said they are expected to be paid in June or July.

“The company said they’re not going to pay you until the early payment default period ends, which is six months,” one of the former LOs said. According to that source, the deferred compensation ranges anywhere from $7,000 to $70,000 per LO, depending on their production.

Early payoff (EPO) fees serve as a means for investors to recoup a portion of their initially projected returns. These penalties are usually imposed on lenders when a borrower pays off their loan within four to six months of closing, but in some cases, it can be up to one year. In turn, lenders charge the EPO fees to their branches and/or loan officers, depending on the company’s structure.

Richard Andreano, practice leader of Ballard Spahr’s mortgage banking group, said that lenders have updated their LO compensation arrangements to make clear the loan officer doesn’t earn the commission when the loan closes but when the early payoff period ends. The Regulation Z loan originator compensation rule does not govern this issue. 

“Whether or not compensation must be paid immediately or when the EPO term ends will depend on what is provided for in the employment agreement, compensation plan and/or employer policies that are incorporated into the agreement or plan, and also on state law,” Andreano said.

At least one top-producing DKMC loan officer who did not join NAF intends to explore legal options on the basis of his state’s employee laws, HousingWire has learned.

Two industry veterans said they’ve seen branch managers on a profit-and-loss model wait months to receive compensation but not “regular” loan officers.

“Loan officers earn their income when they fund loans. Maybe they get paid a month later or something like that if they resign,” said one affected former DKMC originator. “But it’s unheard of for them to have to wait over six months.”

Several DKMC loan officers said they were caught off guard about the timeline of the acquisition, even if there had been whispers of a sale for months. DKMC employees weren’t informed until a virtual meeting with NAF sales executives on Thursday, Jan. 18, and the deal closed two weeks later.

“It’s one thing to close a company because you just don’t want to do mortgages anymore. But it’s another thing to keep it from everyone and not give them enough time to really go find a job,” said a former DKMC loan officer on the West Coast. “So, I think that Draper and Kramer made a pretty serious mistake and should have said something potentially six months ago. But the reason they didn’t is because they wanted to make as much money as they could until they sold.”