What You Need To Know Before Becoming a Loan Officer
Are you considering a career as a loan originator or loan officer?
Professional originators play a key part in the process of helping buyers find homes that are right for them — typically, they are the primary contact person when a borrower completes a mortgage transaction.
A loan originator typically works for a bank, credit union, or other financial institution, and is responsible for assessing a borrower’s eligibility for a loan and then providing them with the necessary documentation. In some cases, loan officers also work with private lenders.
Becoming a loan originator requires completing a certain amount of education and training, as well as passing a state-specific exam. Some states also require loan officers to complete continuing education on an ongoing basis.
If you’re considering a career as a loan officer and want mortgage training, here’s what you need to know.
What does a loan officer do?
A loan officer’s primary responsibility is to assess a borrower’s eligibility for a loan and then provide them with the necessary documentation. In order to do this, loan officers must have a thorough understanding of the different types of loans available and the underwriting criteria used to approve or deny a loan application.
Loan officers typically work with borrowers throughout the entire loan process, from the initial application all the way through to loan closing. They may also be responsible for providing borrowers with guidance on choosing the right type of loan, negotiating terms with lenders, and helping to resolve any issues that arise during the loan process.
If all of this sounds appealing to you and you’re ready to start a career as a loan officer, the next step is to get the education and training you need! The Capstone Institute of Atlanta has provided aspiring loan officers with top-rated loan officer training, loan processor training, and underwriting training courses for over three decades.
What is a loan processor? What does a loan processor do?
A loan processor is a professional who works with loan officers and underwriters to obtain the necessary documentation for loan approval. A loan processor’s primary responsibility is to collect and organize all of the required documentation, including tax returns, pay stubs, bank statements, and more.
Loan processors must have a thorough understanding of the different types of loan programs available and the underwriting guidelines used to approve or deny a loan application. They may also be responsible for providing borrowers with guidance on choosing the right type of loan, negotiating terms with lenders, and helping to resolve any issues that arise during the loan process.
Loan processor training is essential for anyone who wants to start a career in this field. The Capstone Institute offers both online and in-person loan processor classes, as well as a comprehensive loan processor exam prep course to help you prepare for your state licensing exam.
Our loan processor classes are designed to give you the skills and knowledge you need to succeed in this exciting and growing industry. Contact us today to learn more about our loan processor training program!
What is underwriting? What does an underwriter do?
Underwriting is the process of assessing a loan application to determine whether or not the borrower meets the lending criteria. Underwriters review all of the required documentation, including tax returns, pay stubs, bank statements, and more. They then use this information to make a decision on whether or not to approve the loan.
Underwriters must have a thorough understanding of the different types of loan programs available and the underwriting guidelines used to approve or deny a loan application. They may also be responsible for providing borrowers with guidance on choosing the right type of loan, negotiating terms with lenders, and helping to resolve any issues that arise during the loan process.
What are the formal education requirements for becoming a loan officer?
There are no specific degrees required to become a loan originator. Many candidates later choose to pursue advanced training covering government FHA and VA loans. Gaining expertise in these types of loans will assist them later if they decide to become branch managers or even open their own mortgage brokerage. Many successful originators have opened their own mortgage companies after only 2 to 3 years of experience.
Before you can become licensed as a loan originator working for a mortgage broker or mortgage lender; candidates must complete an NMLS-approved 20-hour pre-licensing course. Some states have additional state-specific courses. These additional courses if required (2 to 4 hours) must be completed prior to submitting your application for the license.
Loan Originators must also pass the SAFE Mortgage Loan Originator Test, which is administered by the Nationwide Mortgage Licensing System (NMLS). The test covers topics such as federal banking regulations, mortgage operations, fraud, and ethics. Once you pass the test, you will then forward your training and testing results to your Department of Banking
which supervises mortgage brokers and lenders.
After reviewing the originator’s application, and if approved, they will issue the originator a license to work under their sponsoring company. The term sponsoring company means the company that is hiring them and who is supervising them while under their employment.
Syllabus for the NMLS 20 Hour pre-licensing course
Three hours of Federal law and regulations
Three hours of ethics that shall include instruction on fraud, consumer protection, and fair lending issues
Two hours of training related to lending standards for the nontraditional mortgage product market
Twelve hours of undefined instruction on mortgage origination
In addition to this, each state has specific requirements for education, typically on state-specific topics. This can range from education on alternative lending products like reverse mortgages, to how to spot red flags on a mortgage application.
Applicants should refer to their respective states’ guidelines on how to become a licensed loan officer.
The SAFE Act
One thing to remember is that each state has specific guidelines that apply to MLO licensure, and state agencies are the ones to actually issue those licenses
But there are a number of requirements listed in federal legislation that are applicable across the board. It is worthwhile to become familiar with the federal Secure and Fair Enforcement Act for Mortgage Licensing of 2008 (i.e. SAFE Act), a major bill passed by Congress in the wake of the mortgage lending crisis.
Per the SAFE ACT and the NMLS, MLOs are required to:
Register with the NMLS
Obtain licensing from their respective states
Provide authorization to obtain a credit report
Provide a variety of identifying information
Provide a financial services employment history for the past 10 years
Disclose any financial regulatory body charges against them
Attest to the completeness and accuracy of the information provided
Nationwide Mortgage Licensing System Requirements for MLOs
Must have an employment offer from a licensing Broker or Lender
Be at least 18 years old
Have a valid Social Security number
Complete 20 hours of pre-licensing education
Submit to a credit report and background check
Pass the SAFE Mortgage Loan Originator Test
Meet any additional requirements that may be specific to your state
Some other NMLS requirements include:
Sponsorship: An individual’s MLO activities must be sponsored and supervised by their employer. State regulators must approve sponsorships.
NMLS Unique Identifier: An NMLS Unique Identifier is a number permanently assigned to each company, branch, and individual with an NMLS account. This system was designed for the purpose of better tracking each company and licensee and is required to appear in all advertisements for mortgage origination services.
Payment of fees: Applicants are required to pay fees in order to obtain licensure. The amount of these fees vary by state.
What are the continuing education requirements for loan officers?
Once you’re licensed, you will be required to complete continuing education (CE) on an ongoing basis. CE requirements vary by state, but most states only require loan officers to complete 8 hours of CE per year.
Some states have additional CE requirements for loan officers who wish to maintain their MLO license. For example, the state of California requires loan officers to complete 24 hours of CE every two years.
The CE requirements for loan officers are designed to ensure that loan officers stay up to date on the latest changes in the mortgage industry and remain knowledgeable about the different types of loans available.
What are the certification requirements for becoming a loan officer?
While certification is not required to become a loan officer, some candidates choose to pursue professional certification through recognized organizations such as Capstone Institute of Mortgage Finance the Mortgage Bankers and Brokers Association. These certifications can demonstrate a commitment to professional development and show employers that you have the skills and knowledge necessary to excel in your role.
What are the job outlook and salary expectations for a loan officer?
The job outlook for loan officers is expected to grow 7% from 2019 to 2029, according to the U.S. Bureau of Labor Statistics (BLS). This growth is largely due to the increasing demand for loans in the wake of the housing market crisis.
The median annual salary for loan officers was $63,670 in 2019, according to the BLS. The highest-paid 10% of loan officers earned more than $130,880, while the lowest-paid 10% earned less than $31,740.
Get Your Loan Officer Training at Capstone Institute of Atlanta
Here at Capstone Institute of Atlanta, we offer comprehensive mortgage training courses, Loan Originator Pre-Licensing training, and mortgage education courses that will help you prepare for the SAFE Mortgage Loan Originator Test and fulfill your pre-licensing education requirements. Our course is taught by experienced instructors who have years of experience in the mortgage industry. Capstone Institute of Atlanta also provides resources and flexible courses for loan processor training and underwriting loans.
To learn more about our mortgage training and education courses, contact us today!