Loan Officers and Counselors

• Nature of the Work

  Banks and other financial institutions need up-to-date information on companies and individuals applying for loans and credit. Customers and clients provide this information to the financial institution's loan officers and counselors, generally the first employees to be seen by them. Loan officers prepare, analyze, and verify loan applications, make decisions regarding the extension of credit, and help borrowers fill out loan applications. Loan counselors help consumers with low income or a poor credit history qualify for credit, usually a home mortgage.

  Loan officers usually specialize in commercial, consumer, or mortgage loans. Commercial or business loans help companies pay for new equipment or to expand operations. Consumer loans include home equity, automobile, and personal loans. Mortgage loans are made to purchase real estate or to refinance an existing mortgage.

  Loan officers represent lending institutions that provide funds for a variety of purposes. Personal loans can be made to consolidate bills, purchase expensive items such as an automobile or furniture, or finance a college education. Loan officers attempt to lower their firm's risk by receiving collateral-security pledged for the payment of a loan. For example, when lending money for a college education, the bank may insist that the borrower offer his or her home as collateral. If the borrower were ever unable to repay the loan, the borrower would have to sell the home to raise the necessary money. Loans backed by collateral also are beneficial to the customer because they generally carry a lower interest rate.

  Loan officers and counselors must keep abreast of new financial products and services so they can meet their customers' needs; for example, banks and other lenders now offer a variety of mortgage products, including reverse equity mortgages, shared equity mortgages, and adjustable rate mortgages.

  Loan officers meet with customers and gather basic information about the loan request. Often customers will not fully understand the information requested, and will call the loan officer for assistance. Once the customer completes the financial forms, the loan officer begins to process them. The loan officer reviews the completed financial forms for accuracy and thoroughness, and requests additional information if necessary. For example, the loan officer verifies that the customer has correctly identified the type and purpose of the loan. The loan officer then requests a credit report from one or more of the major credit reporting agencies. This information, along with comments from the loan officer, is included in a loan file, and is compared to the lending institution's requirements. Banks and other lenders have established requirements for the maximum percentage of income that can safely go to repay loans. At this point, the loan officer, in consultation with his or her manager, decides whether or not to grant the loan. A loan that would otherwise be denied may be approved if the customer can provide the lender appropriate collateral. Whether or not the loan request is approved, the loan officer informs the borrower of the decision.

  Loan counselors meet with consumers who are attempting to purchase a home or refinance debt, but who do not qualify for loans with banks. Often clients rely on income from self-employment or government assistance to prove that they can repay the loan. Counselors also help to psychologically prepare consumers to be homeowners and to pay their debts. Counselors frequently work with clients who have little or no experience with financial matters.

  Loan counselors provide positive reinforcement along with the financial tools needed to qualify for a loan-this assistance may take several forms. Occasionally, counselors simply need to explain what information loan officers need to complete a loan transaction. Most of the time loan counselors help clients qualify for a bank-financed mortgage loan. The loan counselor helps the client complete an application, and researches Federal, State, and local government programs that could provide the money needed for the client to purchase the home. Often several government programs are combined to provide the necessary money.

• Working Conditions

  Loan officers and counselors usually work in offices, but mortgage loan officers frequently move from office to office and often visit homes of clients while completing a loan request. Commercial loan officers employed by large firms may travel frequently to prepare complex loan agreements.

  Most loan officers and counselors work a standard 40-hour week, but may work longer, particularly mortgage loan officers who are free to take on as many customers as they choose. Loan officers and counselors usually carry a heavy caseload and sometimes cannot accept new clients until they complete current cases. They are especially busy when interest rates are low, resulting in a surge in loan applications.

• Employment

  Loan officers and counselors held about 214,000 jobs in 1994. About 6 out of 10 are employed by commercial banks, savings institutions, and credit unions. Others are employed by nonbank financial institutions, such as mortgage brokerage firms and personal credit firms. Most loan counselors work for State and local governments, or for nonprofit organizations. Loan officers and counselors generally work in urban areas where large banks are concentrated.

• Training, Other Qualifications, and Advancement

  Most loan officer positions require a bachelor's degree in finance, economics, or a related field. Most employers also prefer applicants who are familiar with computers and their applications in banking. A mortgage loan officer is the exception, with training or experience in sales more crucial to potential employers. Some loan officers advance through the ranks in an organization, acquiring several years of work experience in various other occupations, such as teller or customer service representative.

  Persons planning a career as a loan officer or counselor should be skilled in mathematics and in oral and written communication. Developing effective working relationships with different people-managers, clients, and the public-is essential to success as a loan officer or counselor. Loan officers must enjoy public contact and be willing to attend community events as a representative of their employer.

  Persons interested in counseling should have a strong interest in helping others and the ability to inspire trust, respect, and confidence. Because loan counselors frequently explain the complicated world of banking to clients who have never been exposed to it, patience and an understanding of mortgage banking is necessary to be an effective loan counselor. Loan counselors should be sensitive to their clients' needs and must consider the importance and pride their clients attach to home ownership. Counselors should be able to work independently or as part of a team.

  The American Institute of Banking, which is affiliated with the American Bankers Association, offers courses through correspondence and in some colleges and universities for students and others interested in lending, as well as for experienced loan officers. The certification program for lenders leads to the title, "Certified Lender in Business Banking." Completion of these courses and programs enhances one's employment and advancement opportunities.

  Capable loan officers may advance to larger branches of the firm or to a managerial position, while less capable loan officers and those having inadequate academic preparation may be assigned to smaller branches and find promotion difficult. Advancement from a loan officer position usually includes becoming a supervisor over other loan officers and clerical staff.

  Most loan counselors receive substantial on-the-job training, gaining a thorough understanding of the requirements and procedures for approval of loans. Some acquire this knowledge through work experience in a related field. In addition, accounting skills can be very helpful. Educational requirements vary-some counselors are high school graduates while others have a college degree in economics, finance, or a related field.

  Like other workers, outstanding loan counselors can advance to supervisory positions. However, promotion potential is limited, and many loan counselors leave for better paying positions elsewhere.

• Job Outlook

  Employment of loan officers and counselors is expected to faster than the average for all occupations through the year 2005. As the population and economy grow, applications for commercial, consumer, and mortgage loans will increase, spurring demand for loan officers and counselors. Growth in the variety and complexity of loans, and the importance of loan officers to the success of banks and other lending institutions, also should assure rapid employment growth. Although increased demand will generate many new jobs, most openings will result from the need to replace workers who leave the occupation or retire. College graduates and those with banking or lending experience should have the best job prospects.

  Loan officers are less likely to lose their jobs than other workers in banks and other lending institutions during difficult economic times. Because loans are the major source of income for banks, loan officers are fundamental to the success of their organizations. Also, many loan officers are compensated in part on a commission basis. Loan counselors typically have so many clients that a reduction in their numbers would lead to a decline in the services provided to the community. However, job security is influenced by the spending patterns of local governments. Budget reductions could result in less hiring or even layoffs of loan counselors.

• Earnings

  The form of compensation for loan officers varies, depending on the lending institution. Some banks offer salary plus commission as an incentive to increase the number of loans processed, while others pay only salaries.

  According to a salary survey conducted by Robert Half International, a staffing services firm specializing in accounting and finance, residential real estate mortgage loan officers earned between $28,500 and $44,000 in 1995; commercial real estate mortgage loan officers earned between $43,300 and $70,500; consumer loan officers, between $27,200 and $45,700; and commercial lenders, between $36,100 and $82,500. Smaller banks generally paid 15 percent less than larger banks. Loan officers who are paid on a commission basis generally earn more than those on salary only.

  The earnings for loan counselors varies widely, with local government employees in large cities earning the highest salaries.

  Banks and other lenders sometimes offer their loan officers free checking privileges and somewhat lower interest rates on personal loans. Loan counselors sometimes get awards for their service to the community.

• Related Occupations

  Loan officers and counselors help the public manage financial assets and secure loans. Occupations that involve similar functions include securities and financial services sales representatives, financial aid officers, real estate agents and brokers, and insurance agents and brokers.

• Sources of Additional Information

  Information about a career as a loan officer may be obtained from:
  American Bankers Association, 1120 Connecticut Ave. NW., Washington, DC 20036.

  State bankers' associations can furnish specific information about job opportunities in their State. Or, contact individual banks to inquire about job openings, and for more details about the activities, responsibilities, and preferred qualifications of their loan officers. For the names and addresses of banks and savings and related institutions, as well as the names of their principal officers, consult one of the following directories.
  The American Financial Directory (Norcross, Ga., McFadden Business Publications).

  Polk's World Bank Directory (Nashville, R.L. Polk & Co.).

  Rand McNally Bankers Directory (Chicago, Rand McNally & Co.).

  The U.S. Savings and Loan Directory (Chicago, Rand McNally & Co.).

  Rand McNally Credit Union Directory (Chicago, Rand McNally & Co.).

  Your local State employment service office or municipal government also may have information on job opportunities, particularly for loan counselors.

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