The retail residential mortgage market includes the multiple roles that make the market function. In general loan officers “evaluate, authorize, or recommend approval of loan applications for people:
The job outlook is bright as the economy recovers.
- 2014 Median Pay: $62,620 a year
- Education Requirements: Bachelor’s degree plus any required licenses
- Number of Jobs in 2014: 303,200
- Outlook: 8% growth (on pace with average)
Source: United States Department of Labor, Bureau of Labor Statistics
If you like numbers and working with people then being a loan officer is an excellent opportunity to earn financial freedom.
Definitions of Mortgage Career Opportunities
Depending on the locality, most individuals engage in mortgage lending need to be registered and licensed as a mortgage originator. There are exceptions to this statement such as individuals that are acting on behalf of a depository institution that is registered. Licensed attorneys may also be exempt when acting in the name of a client (exceptions are when the lawyer is acting on behalf of a lender and not for the customer receiving the loan.)
Real estate brokers may also be exempt from certain regulations under the terms of their license.
- Mortgage Loan Originators: this refers to people who in exchange for a profit encourage customers to fill out loan applications. They also negotiate the terms of the loan.
- Mortgage Broker: The broker is the person who is paid to find a mortgage for the customer. They will negotiate on behalf of the lender and encapsulates lenders that table fund loans (see below for definition) or who are FHA loan correspondents (an institution that performs services for a firm that is funding a loan. This would be a bank or investment bank.)
- Mortgage Lender: This person (also referred to as a residential mortgage lender) is someone that originates (offers) to put together a residential mortgage for the customer.
- Registered Mortgage Loan Originator: Individuals that are employed in a depository institution that is regulated by either the Farm Credit Administration or a Federal banking agency are referred to as a registered mortgage loan originator. These organizations are listed with the Nationwide Mortgage Licensing System and Registry.
- Reverse Mortgage Counselor: These individuals counsel people interested in obtaining a reverse mortgage. Borrowers are advised on the impact of unexpected events (medical or otherwise) that could affect the loan. Counselors also discuss any alternatives available. They will also review the loans suitability for the use, such as the financing of catastrophic repairs to a home. Loans also have tax obligations that need to be reviewed.
- Loan collection officers: these individuals get involved when borrowers fail to make the required payments.
- Estate Planning Attorney: Individuals that help clients structure real estate and other financial transactions in order to meet client goals such as tax efficiency.
Other Job Titles in lending include:
- Bank Manager
- Commercial Loan Officer
- Financial Planner
- Investment Banker
- Lending Coordinator
- Money Manager
- Real Estate Broker
- Loan Officer
- Mortgage Officer
- Real Estate Analyst
Related occupations include:
- Financial Examiners: ensure compliance with any regulations
- Real Estate Brokers: Help individuals purchase homes or properties
- Loan Underwriter or Processor: This is a person that does not represent loans to the borrower. This person supports the loan process with activities that are often more clerical in nature or who work in setting the terms of any offered product.Job Responsibilities:- Loan analysis
– Information processing
– Receipt/collection and organization of documents
– Document distribution
– Customer communication when it facilitates loan underwriting or processing. This person cannot negotiate terms.
Institutions to Research for a Job
There are several types of organizations involved in the loan process.
- Direct Subsidiary: these are divisions of a legal entity, trust or association that is owned by a regulated and registered company. These institutions must own 100% of the direct subsidiary and are known as:
- Commercial Banks
- Savings Banks
- Savings and Loan
- Limited Liability Companies
- Credit Unions
- Loan Associations
- Indirect Subsidiary: These are 100% owned by a direct subsidiary. They direct subsidiary is 100% owned by one of the institutions mentioned above.
Requirements for Licensing
Several requirements are needed before an individual is licensed to offer mortgages. The individual cannot have pled guilty to a felony within a certain period of years (7 years in some states).
Depending on the state these include:
- Fees (depending on the state)
- Typical costs range from $400 for a mortgage broker or lender with a $300 renewal fee. Originators pay a $100+ fee.
- Submission of a personal history
- Review of career experience
- Submission of a credit report
- Disclosure of ownership in any financial institution
- Ability to demonstrate financial responsibility and character
- Ability that show that person will act fairly and honestly
- Any required licensing education (could be 20 hours or more including ethics training). Must also demonstrate some knowledge of financial regulations.
- A passing grade on a written exam. Tests have national and state components. Tests have multiple sections that can be taken at separate times. States regulate the period that tests must be completed. For example, in one state a person can take the test up to three consecutive times after waiting at least thirty days between tests. If you fail three consecutive tests the person must wait at least six months before taking the test again (check your local regulations).
- Placing of a surety bond (might be covered by employer.) The bond is redeemed as a financial penalty if the person being bonded fails to adhere to banking rules and regulations. The size of the bond is frequently based on the loan volume processed.
All licenses need to be renewed. Renewals are based on the payment of fees and if the person met all educational requirements. Administrative hearings are available for anyone that is denied. If denied for cause there is usually a waiting period before you can apply again. In the state of Louisiana the period of five years.
Individuals need to be aware of any criminal penalties associated with the loan process. Penalties are inflicted when an individual knowingly collects excessive deposits or fees, or if they provide false information. It goes without saying that it is criminal to offer mortgages without an active license.
Reasons for denial include:
- Failure to maintain accurate records
- Conviction for a felony
- Violation of any regulatory provision
- Misrepresentation on an application
- Knowingly engage in fraud
- Fraud related to funds applied to a mortgage
- Fraud in the application process
Processes and Procedures
There are cactivities in the mortgage process that are instituted by the individuals mentioned above:
Residential Mortgage Loan: A residential mortgage is typically written for a family or personal home. The house, apartment or condominium is secured by a security interest, deed or mortgage. It is typically an immovable property, mobile home loan, motorized home, vacant land or boat.
Residential Mortgage Lending Activity: This refers to the processes that occur when someone is paid to sell or facilitate a mortgage loan. This includes origination, funding, placement, and negotiation.
Reverse Mortgage: A reverse mortgage (FHA version is program reverse mortgage) is a loan that is secured by a property. These types of loans provide the borrower with a cash advance based on the value of their home. Mortgages have no prepayment penalties. Loans are payable when the home is sold or if the title is transferred. Because of the complexity of reverse mortgages, individuals must be counseled before agreeing to the loan.
Being a Successful Loan Officer
Being a successful loan officer requires an aptitude for numbers as well as people skills. Every borrower is different. Loan officers need to be one part analyst and one part business person. Individuals need to be willing to operate through industry peaks and valleys. Those that do can find it to be very financially rewarding.
Success Can Be Illusive
Since many borrowers shop for a mortgage at several companies, rejection is par for the course. Loan officers have to have the patience to answer an endless series of questions from borrowers that do not understand how a loan works. It is possible to have a month with 1 or 2 successful loans only to be followed by an outstanding month where you close ten loans.
Being a mortgage loan officer is not a 9 to 5 job. Clients like to meet at all hours. Education requirements that are part of the licensing process take even more time.
Steps to Becoming a Mortgage Loan Officer
- Get a bachelor’s degree, ideally in a related field such as finance, business or accounting
- Apply for a job in a company that originates loans such as a bank or broker such as Freedom Mortgage
- Learn on the job as quickly as you can by learning how to work with customers
- Become familiar with State and Federal rules and regulations
- Learn how to use all of the paperwork and technology that is used to administer a mortgage
- Fulfill all licensing requirements including any required courses and exams
- Apply for certification by the Mortgage Bankers Association and the American Bankers Association
- Take courses on how to be a good sales person. At the end of the day, you are paid by how many mortgages you close.