How to become A Loan Officer

Whether it is an individual who has yet to establish a credit history or a business in the process of overcoming a severe financial blow, competent Loan Officers will be able to find a loan arrangement that serves the best interests of the borrower and the lending institution.

• Mortgage Loan Originator 
• Mortgage Loan Officer 
• Lending Officer 
• Loan Counselor

What do Loan Officers do?

A Loan Officer would typically need to:

• Evaluate, authorise or recommend the approval of commercial, real estate or credit loans that are in the best interest of the lending institution and the loan applicant
• Set credit policies/lines/procedures/standards in conjunction with senior managers
• Sell business loans, mortgages and other financial products to customers
• Contact businesses or individuals to check if they need a loan; assist in the selection of financial award candidates using electronic databases to certify loan eligibility
• Inform individuals and groups about the financial assistance available to college or university students
• Meet with loan applicants to gather relevant information, explain to them the different kinds of loans, their terms and assist with the completion of paperwork
• Obtain, verify and analyse the loan applicant’s credit rating, income and property evaluations to determine the feasibility of granting the loan
• Review loan agreements to ensure they are complete and comply with government regulations and organisational policies
• Submit loan applications to credit analysts for verification and recommendation
• Approve loan applications within specified limits and refer those outside those limits to management for a valid decision
• Develop and maintain relationships with the loan applicants and manage their loan portfolios; identify their financial goals and find ways to reach them
• Authorise or sign mail collection letters; calculate the amount of debt and funds available to plan methods of payoff and to estimate time for debt liquidation
• Prepare reports to send to customers whose accounts are delinquent and forward irreconcilable accounts for collector action
• Handle customer complaints and take appropriate actions to resolve them 
• Maintain, review, update and categorize loan files and credit documentation according to the status change
• Stay abreast of new types of loans to meet customers’ needs better
• Analyse potential loan markets and develop referral networks to locate prospects for loans
• Manage and monitor loan personnel

Often, Loan Officers who specialise in consumer loans work in offices. Mortgage and commercial Loan officers may work outside the office and meet with clients at their homes or places of business.

Most Loan Officers work full time; some may need to put in more than 40 hours per week.

Finding a new job might seem challenging. Loan Officers can boost their job search by asking their network for referrals, contacting companies directly, using job search platforms, going to job fairs, leveraging social media, and inquiring at staffing agencies.

Loan Officers are generally employed by:

• Commercial Banks
• Savings Institutions
• Mortgage Companies
• Commercial Lending Institutions
• Credit Banking Companies
• Credit Unions

Professional associations and organisations, such as Mortgage Professionals Worldwide, are crucial for Loan Officers interested in pursuing professional development or connecting with like-minded professionals in their industry or occupation.

Membership in one or more adds value to your resume while bolstering your credentials and qualifications.

• Physically and mental exhaustion due to travel across long distances and large portfolios
• Pressure to meet deadlines and portfolio targets
• Stress due to powerful hierarchical pressure and management of delinquencies
• Long work hours with occasional time away from family
• Troubled personal and professional life due to lower productivity and confidence and job dissatisfaction

It is possible to become a Loan Officer without a bachelor’s degree if you have related work experience in banking, customer service or sales. It is especially true of organisations that specialise in specific fields, such as mortgage companies; they prefer to hire candidates with expertise in residential mortgage or real estate.

Read about the profession and interview/job shadow experts working in the loan industry to prove your commitment to course providers and prospective employers.

Most Loan Officers require a bachelor’s degree in business administration, economics or finance to secure an entry-level position with advancement potential. Knowledge of general business/financial accounting will help you read financial statements.

Ideally, your programs should give you an in-depth insight into business law, financial management, macroeconomics, business strategy, investment management and international finance & credit management.

Take advantage of math, statistics and economics while in high school to cultivate the right skill set. Word processing and spreadsheet software, psychology, public speaking and communication courses will help you manage significant interaction with clients and other professionals such as real estate developers, builders and agents.

Voluntary certification in management/business accounting, business/consumer lending, mortgages, real estate financing and Microsoft Office Suite from an objective and reputed organisation show dedication and expertise and may consequently enhance your employment opportunities.

Successful certification programs protect public welfare by incorporating a Code of Ethics.

Mortgage Loan Officers must have a mortgage loan originator (MLO) license. To obtain the license, they must complete specific courses, pass a national exam and undergo background/credit checks. Check with your local licensing agency for more details.

There is more than one lucrative career trajectory for Loan Officers with adequate professional qualifications, experience and performance.

Top-performing Loan Officers close dozens of cases a month and thus earn more than those in senior banking positions. Most move up the chain of command to become Regional Branch Managers.

Make the shift to commercial or corporate banking as a Credit Analyst, Relationship Manager or Investment Banker. Those who wish to put their ability to sell products/services to optimal use may move to other sectors in the economy where they can thrive.

Last but not least is the option to become an Independent Loan Originator or a self-employed Loan Officer, especially if you wish for greater job flexibility. 

Candidates with lending, banking or sales experience, established contacts, and a referral network should have the best job prospects.

Continuing professional development (CPD) will help an active Loan Officer build personal skills and proficiency through work-based learning, a professional activity, formal education, or self-directed learning. During the first few months of the job, you will receive formal, company-sponsored instruction in areas such as loan risk and loan and informal on-the-job training. 

CPD allows you to upskill continually, regardless of your age, job, or level of knowledge.

Invest in an MBA to be able to move into senior management roles. Loan Officers who wish to freelance or become self-employed should make sure they meet the requisite educational and licensing standards and get proper insurance coverage.

Which One Do You Wish To Be?

You could be a commercial loan officer specialising in larger and more complicated loans to national/international businesses. Sometimes you may have to work with multiple banks and put together a package of loans to meet the complex needs of the client.

Consumer Loan Officers, on the other hand, focus on simple consumer loans to individuals for buying a car or paying college tuition. You will guide the applicants through the process, regardless of whether the accompanying underwriting process is automated or manual.

If you wish to target loans used to buy real estate for business and residential purposes, your position as a mortgage loan officer will give you access to real estate companies who can refer prospective borrowers.

Credit banking companies employ loan officers solely responsible for consolidation loans, while other organisations have loan officers who specialise in underwriting educational loans.

What Constitutes Underwriting

Loan Officers use underwriting to assess whether an applicant qualifies for the loan. They collect, verify and evaluate the required financial documents to understand why the applicant needs a loan as well as their ability to repay it. 

The current trend is to use underwriting software that produces a loan recommendation based on the applicant’s financial status. Loan Officers put together the software recommendation and their own evaluation of an applicant’s financial information to arrive at a final decision.

Current Scenario

With the advent of online applications, individuals/businesses in need of a loan can access diverse loan institutions rather than rely on their local bank alone. 

With an increasing number of businesses and individuals seeking credit to fund commercial investments and personal spending, it looks like Loan Officers have promising job expectations.

However, a steady decline in bank branches and increased use of productivity-enhancing technology in loan processing points towards a slowdown in employment growth. 

Payment “On The Front” or “On The Back”

“On the front” refers to visible settlement costs paid by the borrower for processing the loan. Loan Officers make money “on the back” if they receive a sort of commission from the bank for selling the loan. Although the officer might claim to be giving the borrower a “no-fee” loan, the lending institution will charge a higher annual percentage rate to make up for lost fees.

Potential Pros & Cons of Freelancing vs Full-Time Employment

Freelancing Loan Officers have more flexible work schedules and locations. They have full ownership of the business and can select their projects and clients. However, they experience inconsistent work and cash flow, which means more responsibility, effort and risk.

A full-time Loan Officer, on the other hand, has company-sponsored health benefits, insurance, and retirement plans. They have job security with a fixed, reliable source of income and guidance from their bosses. Yet, they may experience boredom due to a lack of flexibility, ownership, and variety.

When deciding between freelancing or being a full-time employee, consider the pros and cons to see what works best for you.

A red door means the house is mortgage-free. The Scottish people paint the front door of their houses red once they have finally paid off the mortgage.

What can be more satisfying than being able to make a positive difference in people’s lives and help them achieve their goals? That's the primary reason why Loan Officers put up with all the inherent challenges in the job, the toughest one being the unsavoury reputation they are usually saddled with.

One of the simplest ways to expand your business is by word of mouth.