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Loan officers evaluate, authorize, or recommend approval of loan applications for people and businesses.
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, the loan officer evaluates the information they obtain to determine the applicant's need for a loan and ability to pay back the loan. Most firms use underwriting software, which produces a recommendation for the loan based on the applicant's financial status. After the underwriting software produces a recommendation, loan officers review the output of the software and consider any additional information to make a final decision.
The work of loan officers has sizable customer-service and sales components. Loan officers often answer questions and guide customers through the application process. In addition, many loan officers must 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 upgrade or expand operations. Commercial loans frequently are larger and more complicated than other types of loans. Because companies have such complex financial situations and statements, commercial loans usually require human judgment in addition to the analysis by underwriting software. Furthermore, some commercial loans are so large 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. Consumers take out loans for many reasons, such as buying a car or paying college tuition. For some simple consumer loans, the underwriting process is fully automated. However, the loan officer is still needed to guide applicants through the process and to handle cases with unusual circumstances. Some institutions—usually small banks and credit unions—do not use underwriting software and instead rely on loan officers to complete the underwriting process manually.
Mortgage loan officers specialize in loans used to buy real estate (property and buildings), which are called mortgage loans. Mortgage loan officers work on loans for both residential and commercial properties. Often, mortgage loan officers must seek out clients, which requires developing relationships with real estate companies and other sources that can refer prospective applicants.
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 their loan payments on time. They work with borrowers to help them find a way to keep paying off the loan. If the borrower continues to miss payments, loan officers start the process of taking away what the borrower used to secure the loan (called "collateral")—often a home or car—and selling it to repay the loan.
Loan underwriters specialize in evaluating whether a client is creditworthy. They collect, verify, and evaluate the client's financial information provided on their loan applications and then use loan underwriting software to produce recommendations.
Loan officers hold about 318,600 jobs. The largest employers of loan officers are as follows:
|Depository credit intermediation||42%|
|Nondepository credit intermediation||28|
|Activities related to credit intermediation||9|
|Management of companies and enterprises||6|
The depository credit intermediation industry includes commercial banks and savings institutions, and nondepository credit intermediation includes mortgage companies.
Loan officers who specialize in consumer loans usually work in offices. Mortgage and commercial loan officers often work outside the office and meet with clients at their homes or businesses.
Most loan officers work full time, and many work extensive hours.
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Most loan officers need a bachelor's degree and receive on-the-job training. Mortgage loan officers must be licensed.
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 experience in sales, customer service, or banking.
Once hired, loan officers usually receive some on-the-job training. This may be a combination of formal, company-sponsored training and informal training during the first few months on the job.
Mortgage loan officers must have a Mortgage Loan Originator (MLO) license. To become licensed, they must complete at least 20 hours of coursework, pass an exam, and submit to background and credit checks. Licenses must be renewed annually, and individual states may have additional requirements.
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.
Decisionmaking skills. Loan officers must assess an applicant's financial information and decide whether to award the applicant a loan.
Detail oriented. Each piece of information on an application can have a major effect on the profitability of a loan, so loan officers must pay attention to detail.
Initiative. Loan officers need to seek out new clients. They often act as salespeople, promoting their lending institution and contacting people and firms to determine their need for a loan.
Interpersonal skills. Because loan officers work with people, they must be able to guide customers through the application process and answer their questions.
The median annual wage for loan officers is $63,650. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $32,820, and the highest 10 percent earned more than $132,290.
The median annual wages for loan officers in the top industries in which they work are as follows:
|Management of companies and enterprises||68,340|
|Depository credit intermediation||62,890|
|Activities related to credit intermediation||61,540|
|Nondepository credit intermediation||61,300|
The form of compensation varies widely by employer. Some loan officers are paid a flat salary; others are paid on commission. Those on commission usually are paid a base salary plus a commission for the loans they originate. Loan officers also may receive extra commission or bonuses based on the number of loans they originate or how well the loans perform.
Most loan officers work full time, and many work extensive hours.
Employment of loan officers is projected to grow 11 percent over the next ten years, faster than the average for all occupations. Although the demand for loan officers will increase as the overall economy grows, the decline of bank branches may moderate employment growth.
Economic growth will lead to more demand for loan officers, as both businesses and individuals seek credit to finance commercial investment and personal expenditure. Loan officers will be needed to evaluate the creditworthiness of applicants, and determine the likelihood that loans will be paid back in full and on time.
Employment of loan officers in commercial banks and savings institutions is projected to grow 3 percent over the next ten years. As bank customers increasingly use mobile and online banking services, the need for bank branches will decline. Banks have decreased the number of branches in operation in recent years, and this trend is expected to continue. Because the banking industry is the leading employer of loan officers, this trend will depress employment growth for these workers.
Job opportunities should be good for people with lending, banking, or sales experience. In addition, some firms require loan officers to find their own clients, so candidates with established contacts and a referral network should have the best job opportunities.
|Occupational Title||Employment, 2016||Projected Employment, 2026||Change, 2016-26|