Loan officers, also known as mortgage loan originators or MLOs, are individuals employed by banks or financial institutions to help recommend the right loans to potential homebuyers.
Loan officers are monitored by the Nationwide Mortgage Licensing System or NMLS, through which they obtain a license. This license is required both nationally and at the state level for loan officers to originate loans.
Originating mortgage loans is not an easy job. According to Mortgage Educators and Compliance, the life of a mortgage broker or loan officer takes deadline management, marketing activity, communication skills and a strong desire to succeed. There are also a number of government regulations, rules and laws to learn and abide by to obtain and maintain an MLO license.How Are Loan Officers Compensated?
Loan officer commission structure varies widely. MLOs who work in call centers might receive a flat salary, but most are paid on commission. Commissions are calculated according to the basis points of the loan: Each basis point is 1/100th of 1 percent, so 25 basis points, or BPS, equals 1/4 of 1 percent. For example, the commission of 25 BPS on a $100,000 mortgage would be $250.
According to a survey conducted by Inside Mortgage Finance, just under half (47%) of retail residential MLOs receive commissions that are between 75 and 150 basis points per loan.
“Go where you can get the very best training and support at the beginning of your career — don’t worry about the BPS you get per loan in the beginning,” advises Joe Parsons, a mortgage originator in the San Francisco Bay Area, via a response on Quora.com. “Once you have learned the ropes and have begun to build a reputation, and a book of business, you’ll be in a far better position to look for the best commission schedule.”
Most loan officers close anywhere from 18 to 25 loans in a year, with some doing as many as 35 to 40. U.S. News ranks loan officers as #15 in its list of Best Business Jobs, with a median salary of $63,040.How Can Loan Officers Use Tools like ScoreMaster to Close More Loans?
Because most mortgage loan professionals work on commission, they might spend hours with prospective borrowers on loan scenarios. They also help borrowers improve credit scores, pull necessary documentation, assist in the completion of applications, order title reports, verify assets and undertake other activities.
Loan officers usually do not get paid if a prospective borrower decides not to buy or refinance, the application is denied, or the prospect changes lenders. Working for free is a big part of this business.
To help allay a borrower’s fears of taking on the huge burden of a mortgage, loan officers can use a credit modeling tool like ScoreMaster to provide scenarios showing what the prospective borrower’s total debt — and monthly payments — will look like. ScoreMaster can help the loan officer appear not as a commission-seeking salesperson but as a trusted personal finance advisor.