Loan officers and counselors work with individuals to help them finance autos, homes and education. They help businesses to obtain startup funds. Loan officers collect customer’s basic information, such as employment, salary and current debts. They request his or her credit report from one of three credit bureaus and analyze the information. They assess the client’s ability to repay the loan based on this information. In some circumstances the loan officer may request additional financial information. Loan counselors help clients with bad credit to improve their their credit situation to obtain a loan in the future. Loan officers and counselors explain the loan options and process and help customers to pick the right products. In many financial institutions loan officers also serve as loan counselors.
Loan Officer Job Responsibilities
A loan officer’s job is to determine if the customer is creditworthy. In order to do this, he or she looks at the credit report and financial statements, tax statements or paycheck stubs. The collected information is then sent to an underwriter who can determine whether the loan can be approved according to the financial institution’s lending guidelines. If a requested loan can not be approved, another loan type may be available. Sometimes, a loan may be approved if the client has collateral to secure it. Collateral can be any asset, such as a car or a house. In case the client defaults on the loan, the bank can sell the asset to pay off the debt.
Usually loan officers specialize in one type of loan, such as consumer loans, commercial loans or mortgages. Consumer loans include home equity, auto, motorcycle, boat, RV and trailer loans. Educations loans, credit cards and unsecured lines of credit also falls under this category. Businesses use commercial loans to purchase equipment and supplies. Mortgage loans include first mortgages and refinancing.
The goal for a loan officer is to sell loan products to clients. This may involve assessing the customer’s situation to determine his or her needs before offering the products. Loan products include not only credit, but also extended warranties and protection plans. Mortgage loan officers often rely on referrals from existing customers or real estate agents.
Collection loan officers work with customers who have defaulted on their loan and have difficulties repaying it. They try to work out a payment plan to avoid further collection steps. They may refinance the loan to extend the term and to offer lower payments.
Loan Officer Training and Education Requirements
Generally, financial institutions require at least a high school diploma but prefer a Bachelor’s degree in business or related field for the loan officer position. Some may accept extended working experience in the industry field in lieu of a college diploma. Sales experience is important, especially for commercial and mortgage loan officer positions.
No specific loan officer training is required and courses are offered as continuing education for professionals. These courses will let the loan officers to be more competitive and to land positions in larger financial institutions and to advance to a supervisor or a manager positions.
Candidates must be highly motivated, pleasant in working with others, have excellent communication skills and striving to succeed in this job. Prior banking experience is always a plus.
No licensing is required to be a commercial or consumer loan officer. However, some financial institutions require a license to sell insurance products, such as payment and asset protection programs and warranty products. The recent federal regulations require all mortgage loan officers to be licensed. They must complete 20 hours of coursework, pass a test and a background check. To maintain their license, mortgage loan officers also need to take continuing education classes.
Loan Officer Salary and Wages
According to the US Department of Labor, the average salary for loan officers in 2002 was $54,700. The lowest was $30,850 and the highest was $106,360.*
*According to the BLS, http://www.bls.gov/oco/
Salaries will be different for consumer, commercial and mortgage loan officers. If wages are commission-based, mortgage and commercial loan officers may have higher salaries than consumer loan officers. Some financial institution pay only salaries and some offer a base salary plus the commission on the loans.*
*According to the BLS, http://www.bls.gov/oco/
Loan Officer Certifications
Consumer and commercial loan officers are not required to be certified. Bank Administration Institute, the affiliate of the American Bankers Association, offers a Loan Review Certificate Program for loan officers. It is an excellent option for those who want to learn the process, hone their skills and advance in their career.
Mortgage Bankers Association offers a Certified Mortgage Banker Program (CMB) for real estate loan officers. The CMB is available for candidate who have three years of experience, earn educational credits and pass an exam.
Loan Officer Professional Associations
Professional organizations include the American Bankers Association, the National Association of Ethical Loan Officers, the National Association of Loan Officers, the National Association of Responsible Loan Officers. Mortgage loan officers can become members of the Mortgage Bankers Association, the Christian Real Estate Network or the Association of Mortgage Professionals which holds offices in every state.