The Guide to Becoming a Mortgage Loan Officer

How to Become a Mortgage Loan Officer (MLO) in 2023

Loan officers are the critical human connection between a lender and a borrower. Mortgage loan officers (MLOs) do more than just collect documents and fill out forms. They enable homebuyers to finance the homes that will house their families and serve as a stable investment for years to come.

This article covers:

  • How to get started as a loan officer
  • Factors to consider when becoming a loan officer
  • Laws that you need to know
  • Tools lenders can use to recruit quality loan officer talent

What do loan officers do?

According to the United States Bureau of Labor Statics, “loan officers evaluate, authorize, or recommend approval of loan applications for people and businesses.”

In the mortgage industry, it is best to think of loan officers as gatekeepers who evaluate the borrowers’ eligibility to proceed through the loan underwriting process.

Loan Officer

Loan officers complete this process by meeting and engaging with their loan applicants to procure the information needed to determine credit worthiness before guiding them through the many steps of loan approval.

A large portion of a mortgage loan officer’s job is customer service and sales related. Most of these mortgage originators must find their own clients to generate new business for the bank or financial institution that they work for. Working as a loan officer (also known as a Mortgage Loan Officer or MLO) means working for a mortgage broker, a professional licensed to act as an intermediary between lenders and borrowers. Learn how to become a mortgage broker here!

MLOs are often responsible for marketing their own business even when their license is with a corporate lending institution. Learn more about mortgage marketing in Black Knight’s Mortgage Marketing University.

What kind of training does a mortgage loan officer need?

While some community colleges offer certificate programs for mortgage loan originators, there are no four-year degree programs currently offered for loan origination.

Most loan officers with a bachelor’s degree studied accounting, finance or business administration.

Organizations like the American Bankers Association’s American Institute of Banking offer certification programs through approved training providers. In these programs, prospective loan officers learn about real estate, ethics and loan structuring.

The only required training for becoming a loan officer is 20 hours of approved pre-licensure courses followed by passing the NMLS Mortgage License Examination.

The bulk of training that loan officers receive will come post-licensure in the form of on-the-job training from the bank, mortgage company or credit union that they work with. This training varies from company to company, and often focuses on the different types of software used to manage prospective home buyers, organize client information and documents, underwrite loans and ensure compliance with federal and state lender regulations.

What will my first year be like as a loan officer?

After completing the process of acquiring your state licensure and finding a job, there is a high probability that you will be assigned to work with a more seasoned loan officer for your first year.

During this time, 50 percent of your day will be spent growing your sales pipeline and the other 50 percent will be devoted to learning regulations and guidelines so that you know how to quickly and effectively guide your borrowers through the loan approval process.

What are the key requirements to becoming a loan officer?

As previously mentioned, you are required to pass the National NMLS Mortgage License Exam. But there are a few other federal and state requirements that will vary depending on where you work.

First and foremost, you must be at least 18 years old to register with the Nationwide Mortgage Licensing System and Registry (NMLS), which requires a background check. You’ll be able to take the exam once you’ve provided proof of your 20 hours of education. Upon passing the exam you’ll have the necessary qualifications to become a loan officer.

But it doesn’t stop there. The SAFE Act mandates that state-licensed mortgage loan originators complete eight hours of continuing education annually which must include: three hours of federal law and regulations and two hours of ethics, including instruction on fraud, consumer protection and fair lending.

Can mortgage loan officers make a lot of money?

The answer is yes, you can make a lot of money as a loan officer. But, like all career paths, you have to put your nose to the grindstone.

Loan officers are paid either “on the front” and/or “on the back.”

If a loan officer makes money on the front, it means they get paid for fees associated with processing a mortgage, often categorized as settlement costs or processing fees.

Getting paid “on the back” means that the bank filing for the loan gives money to the originator as commission.

You may notice that regardless of how you are paid as a loan officer, both require that you are closing loans correctly and efficiently.

If you can balance a growing network of partners while properly vetting and educating your customers, a career as a loan officer can be quite lucrative. So how much money does a loan officer make? The answer, more so than in many other jobs, is that your income is up to you!

Get to know our top-producing lenders from their start in the industry through their rise to the top.

What are the main associations for Mortgage Brokers and Loan Officers?

How long does it take to become a Loan Officer?

States have varying requirements, and your personal schedule has an impact on how quickly you can complete all the training and licensing. Of course, you must have a strong understanding of mortgage regulations and pass the tests on the first try, a feat that not every applicant accomplishes. Expect the process to take approximately 30-60 days depending on location and your own efforts.

What is the S.A.F.E. Act?

A result of the 2008 financial crisis, the S.A.F.E Mortgage Licensing Act is a federal law that governs the requirements for issuing a license to any individual who, for compensation or gain, takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan application.

The law also establishes standards for loan officers to maintain their license with stipulations that dictate circumstances for which the licensure may be revoked.

Lenders' Corner

When the new generation of loan officers hits the job market, lenders hoping to attract the most driven and talented prospects will need to differentiate themselves from competitors. Giving loan officers access to a robust mortgage marketing and customer relationship management (CRM) tool is an effective way for lenders to show prospects how their future employer’s marketing program will help them generate more leads, collaborate with partners and maintain a healthy pipeline.

To show loan officer recruits that you want them to get the greatest possible benefit from your technology stack, it is also important that the systems in your tech stack can seamlessly transfer loan details, consumer data and lead contact information. That way, the mortgage marketing tool will automatically trigger appropriate actions based on the type of information it receives.

The best mortgage marketing tools will also integrate with a mortgage point-of-sale (POS), loan origination system (LOS), product pricing engine (PPE) and other common lending software so that loan officers don’t have to waste time system-hopping or manually transferring data.

How does Surefire by Black Knight help lenders recruit new loan officers?

The Surefire CRM and Mortgage Marketing Engine from Black Knight is a mortgage lender’s secret weapon in the recruiting process. Surefire CRM offers built-in features that help lenders showcase their investment in marketing automation, build powerful loan origination teams, strengthen partnerships and cultivate clients for life.

The Surefire Lookbook is a simple way for lenders to give potential LO recruits a comprehensive look at a wide array of award-winning mortgage marketing content in the Surefire Creative library. However, instead of only showing generic examples of marketing collateral, each Lookbook is dynamically customized with the lender’s unique branding and the prospective LO’s headshot, contact information and location.

In a minute or less, prospective recruits can see themselves featured in their future employer’s marketing emails, open-house flyers, direct-mail postcards, interactive multimedia and more — including co-branded marketing campaigns that can also spotlight a real estate agent or other partner.

By providing a custom overview of all the eye-catching forms of marketing collateral that Surefire CRM provides, the Surefire Lookbook helps lenders exhibit their value as an employer to the type of loan officers they want to invest in most — ones committed to building lasting consumer and partner relationships with timely, relevant and personalized mortgage marketing content.

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