Your Questions About Mortgage Loan Officer

Ken asks…

What’s the difference between a mortgage broker, and loan officer?


John answers:

A loan officer is a person who works for a bank or lending institution. He is the one who does the work on the loan, gathers the information, and interfaces with the person who wants to borrow the money.

A mortgage broker is not a person but a company (though it might be just one person). The company works with lending institutions and sets up loans between them and customers. If you go to a mortage broker he knows what kind of loan you need and what lending institution is likely to give you a good deal. He might give you several options.

Mary asks…

What is the difference between a Loan Officer and a Mortgage Consultant?

I’m studying finance and accounting and wondering which one will make more money, and the differences between the jobs… thanks :)

John answers:

The short answer is that “Loan Officer” and “Mortgage Consultant” are almost certainly synonyms. Just to be safe, I’ll define what a “Loan Officer” is here. A Loan Officer makes connections with his prospects and customers to get them a loan (a mortgage loan or other sort of loan). The Loan Officer does not make the lending decision (an Underwriter who has no relationship with the customer does that). The Loan Officer is basically a salesperson who gets a cut of the loan when the loan is closed and funded.

Strictly speaking, the word “consultant” means anyone who has some sort of knowledge or expertise that they share with another party to help them make a decision. In this way, a Loan Officer who makes mortgage loans is a “consultant” in that he or she helps his or her customers decide which mortgage product is best for them. So it’s fair to call a “Loan Officer” a “Mortgage Consultant.” I think that some mortgage companies and banks prefer “Mortgage Consultant” because it sounds more thoughtful. (It’s just the same as some companies calling their employees “associates” and other companies calling their employees “team members” and still other companies calling their employees “employees.”)

There is a lot of confusion about what a “consultant” is and does due to the fluidity of this term. I am a professional consultant (a “management consultant”). This is what I have been doing for many years. But when I introduce myself as a “consultant,” I usually have to explain that I’m not in between jobs (since unemployed people often call themselves “consultants” while they’re searching for another job).

Further, my consulting practice is focused on the Mortgage Banking Industry. So it would be fair to call me a “Mortgage Consultant.” I do projects for mortgage companies and mortgage-related companies. But of course, people come to me all the time asking me about the best rates for a loan right now (assuming that I’m really some sort of Loan Officer or Mortgage Broker).

Sorry about the long explanation but the short answer is that these are two different terms for the same job. There is almost certainly no difference at all in what they do or how much commission they make. (NOTE: Some mortgage “loan officers” work in a phone bank – usually referred to as “Consumer Direct” or something like that – and take incoming requests from people they don’t know from either the phone or Internet; these folks usually work on salary, not 100% commission like most Loan Officers.)

I can’t speak to whether or not you’ll enjoy being a loan officer but being a Management Consultant is (in my opinion) a great job and a lot of fun.

Good luck!

Joseph asks…

I want to know how to become residential mortgage loan officer?

I am 23 years old and about to be a college grad in August, in probably the worst job market in our history. I really want to start a career instead of taking another pointless job that is not going to fulfill my career needs. I know someone in my family is a Loan Officer and she did not even attend college. I am wondering how someone gets into this type of field. What type of licensing is required and how do I overcome the lack of experience?

Also I have read answers to this type of question about going on job boards and such, I have been for 6 months now and I can’t even land an interview. I am also wondering if there is someone who would be able to mentor me and it could be as simple as just e-mailing back and forth. Thanks.

John answers:

Most states require that you obtain a real estate sales license to become a mortgage loan officer. After obtaining your real estate sales license yo would be required to work under a person that has a real estate broker’s license.

Then there are some states that simply require that you are employed by a broker. These states have other requirements, the broker does not have to have a real estate broker’s license.

Either way the most important thing in working basically for yourself is a marketing plan. This is something that you must work very very hard at. You will not be an overnight success, but you must build a client base and other professionals that will assist you in becoming successful.

There are several marketing techniques that are in use today.

#1 You can purchase leads from a lead provider normal cost is approximately $25.00-$35.00 per lead and there is a minimum purchase amount like about 100 per purchase. Some of these are retreads, so you are really guessing which are real or is this someone that just like talking on the phone.

There are cheaper ones but they have been around the block a few times. So you are really guessing on these leads.

#2 There is telemarketing, but then there is the “Do not call list” So you have to be careful there and not make a mistake or you and your company could be sued. The penalty for being successfully sued it approximately $11,000 each for you and your company.

#3 Advertise in the local newspaper that you are now in the business of doing loans

#4 You can direct mail to individuals that you are in the business of doing loans.

I suggest you secure your own leads by leaving the office and spending time in a area that you want to work and get to know the people that could be your future clients.

Find an area in your city that you want to work approximately 5,000-10,000 houses. Make you enough fliers to cover your area. If you have children this will be a good weekend activity for them as well as yourself. While walking the area passing out your fliers, if you see someone out doing the lawn or just out introduce yourself, give them one of your cards. See if they are willing to give you their name and email address so you can email them, on a monthly basis, things about the mortgage industry as well as your monthly newsletter. Place any information you collect in a data base that you should start.

Your flyer should tell them a little about you a few of the loan programs that you will be offering and introducing. This is an introductory flier that you can make on your computer. You can get them ran off at Staples or Office Depot.

You should pass these type fliers out at least 3 months in a row. This will let them know that you are sincere and look as if you will be there for them.

You should also visit the local commercial places in the same area. Find out if they will allow you to place a flyer holder in their business, give them one of your business cards, find out their
name, write it down you never want to forget it because they will become one of your partners. Buy something even if you are gonna give it away and don’t need it. Do this to as many commercial businesses in the area as will allow you to place a flyer holder in their place of business. You will find the flier holders at Staples or Office Depot..

Call the post office and inquire about their bulk mailing stamp. Get one and learn the system of bulk mailing.

Also call your title company and get them to provide you with the names of the people in your area that you have been passing out your flyer.

Remember your data base you were starting and now should have over a thousand names that you alone should have been able to get if you have been walking the area.

Once you have passed out the fliers for at least 3-4 months start you a newsletter covering topics on the mortgage business. Get articles from your local newspaper as well as off the internet. Just remember to give credit to the author of the article. You might have a doctor, lawyer or some other professional to help you on your articles. Charge them for the articles, about 50% of the cost of the newsletter.

Now remember the businesses that you had your flyers in and you now know their names because you have been there to change your flyers about 2 times per month. Place your news letter in these businesses also.

The best thing about these businesses is now you want to see if they will advertise in your business newsletter being sent to the local area in which their business is located. You should be able to charge them about $45.00 to $50.00 per business size card advertisement. Try and get them to place a coupon in the flyer offering some type of discount if the customer bring the coupon in to their store.

Now you will need a professional team to assist you in your business. You will need an attorney, a notary, a title rep, an insurance agent that sell homeowners insurance poli

Sandy asks…

Mortgage loan officer?

What are the requirements to become a mortgage loan officer or processor?

John answers:

It depends on where you live. In many states the requirement to becoming a loan officer is just signing up with a broker, who is supposed to educate and guide you (not always they really do). Some states, such as Maryland, (and there is a trend towards it, but a slow one) require licensing, which means a course (40 hours in Maryland), a test usually, and various fees and registration with the governing authority. While it might mean that in license states knowledge by loan officers is higher, the differences between loan officers are large enough that it doesn’t really matter.

Here is a source for requirements for becoming a processor:

By the way, most are leaving the business now, due to the credit crunch and much lower volume. Therefore, it is a good time to start and be positioned to when it goes up again (and it is going up in refinancing activity).

Carol asks…

loan officers?

I am interested in becoming a loan officer but I dont know where to begin. What is the best way to get started? Should I take go to one of those schools that will help me to get my liscensing?
I heard you do not need a degree so what is my other option?

John answers:

Loan officer positions generally require a bachelor?s degree in finance, economics, or a related field. Banking, lending, or sales experience is highly valued by employers. Most employers also prefer applicants who are familiar with computers and their applications in banking. Loan officers without college degrees usually advance to their positions from other jobs in an organization after acquiring several years of work experience in various other occupations, such as teller or customer service representative. Personal qualities such as sales ability, good interpersonal and communication skills, and a strong desire to succeed also are important qualities for loan officers.

There are currently no specific licensing requirements for loan officers working in banks or credit unions. Training and licensing requirements for loan officers who work in mortgage banks or brokerages vary by State.

Various banking-related associations and private schools offer courses and programs for students interested in lending, as well as for experienced loan officers who want to keep their skills current. For example, the Bank Administration Institute, an affiliate of the American Banker?s Association, offers the Loan Review Certificate Program for persons who review and approve loans. This program enhances the quality of reviews and improves the early detection of deteriorating loans, thereby contributing to the safety and soundness of the loan portfolio. The Certified Mortgage Banker (CMB) designation demonstrates the holder?s superior knowledge, understanding, and competency in real estate finance. The Mortgage Bankers Association offers three CMB designations: residential, commerce, and master?s. To obtain the CMB, the candidate must have 3 years of experience, earn educational credits, and pass an exam. Completion of these courses and programs generally enhances one?s employment and advancement opportunities.

Persons planning a career as a loan officer should be capable of developing effective working relationships with others, confident in their abilities, and highly motivated. For public relations purposes, loan officers must be willing to attend community events as representatives of their employer.

Capable loan officers may advance to larger branches of the firm or to managerial positions, while less capable workers—and those having weak academic preparation—could be assigned to smaller branches and might find promotion difficult without obtaining training to upgrade their skills. Advancement beyond a loan officer position usually includes supervising other loan officers and clerical staff.

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