Loan officers typically do the following:
Loan officers use a process called underwriting to assess whether applicants qualify for loans. After collecting and verifying all the required financial documents, loan officers evaluate the information to determine an applicant’s need for a loan and ability to repay it. Most firms use underwriting software, which produces a loan recommendation based on the applicant’s financial status. Loan officers review the software output together with the evaluation of an applicant’s financial information to make a final decision.
The work of loan officers has customer-service and sales components. For example, loan officers often answer questions and guide customers through the application process. In addition, many loan officers market the products and services of their lending institution and actively solicit new business.
The following are common types of loan officers:
Commercial loan officers specialize in loans to businesses, which often use the loans to buy supplies and to upgrade or expand operations. Commercial loans frequently are larger and more complicated than other types of loans. Some commercial loans are so large and complex that no single bank will provide the entire amount requested. In such cases, loan officers may have to work with multiple banks to put together a package of loans.
Consumer loan officers specialize in loans to people for a variety of uses, such as buying a car or paying college tuition. For simple consumer loans, the underwriting process may be fully automated. However, the loan officer still guides applicants through the process. Some institutions—usually small banks and credit unions—rely on loan officers to complete the underwriting process instead of using underwriting software.
Mortgage loan officers specialize in loans that are used to buy real estate (property and buildings). Mortgage loan officers work on loans for both business and residential purchases. Often, these officers seek out clients, which requires them to develop relationships with real estate companies and other sources that can refer prospective borrowers.
Within these three fields, some loan officers specialize in a particular part of the loan process:
Loan collection officers contact borrowers who fail to make payments. They work with borrowers to help them find a way to keep paying off the loan. If the borrower continues to miss payments on secured loans—those involving collateral, such as a home or a car, that the borrower uses to secure the loan—these officers start the process of taking away the asset and selling it to repay the loan.
Loan underwriters specialize in evaluating whether a client is creditworthy. Underwriters collect, verify, and evaluate the financial information that clients provide on their loan applications and then use loan underwriting software to produce recommendations.
Loan officers typically need a bachelor’s degree, usually in a field such as business or finance. Because commercial loan officers analyze the finances of businesses applying for credit, they need to understand general business accounting, including how to read financial statements.
Some jobseekers may be able to enter the occupation without a bachelor’s degree if they have related work experience, such as in banking, customer service, or sales. Organizations that specialize in certain fields typically prefer to hire candidates who have some experience in those areas. For example, mortgage companies may prefer to hire candidates with residential mortgage or real estate experience.
Mortgage loan officers must have a Mortgage Loan Originator (MLO) license. To become licensed, they must complete prelicensing courses, pass a national exam, and submit to background and credit checks. Licenses must be renewed annually, and individual states may have additional requirements. Check your state licensing agency website for more information.
Several banking associations, including the American Bankers Association and the Mortgage Bankers Association, as well as a number of schools, offer courses, training programs, or certifications for loan officers. Although not required, certification shows dedication and expertise and thus may enhance a candidate’s employment opportunities.