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Nature of the Work
Loan officer positions generally require a bachelor's degree in finance, economics, or a related field; for commercial or mortgage loan officers, training or experience in sales is advantageous.
Faster than average employment growth will stem from increases in the number and complexity of loans and in the importance of loan officers to the success of banks and other lending institutions.
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, 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, also called loan collection officers, contact borrowers who have delinquent accounts and help them find a method of repayment to avoid a default on the loan.
Loan officers usually specialize in commercial, consumer, or mortgage loans. Commercial or business loans help companies pay for new equipment or 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.
Consumer loan officers attempt to lower their firm's risk by receiving collateralproperty pledged as security 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.
Commercial and mortgage loan officers behave as sales people who actively seek out potential customers. Commercial loan officers contact firms that may or may not have accounts with their bank. They find out if their potential client is planning any projects for which they may need a loan; if so, loan officers try to establish a relationship with the firm so that the firm will contact them when the loan is needed. Similarly, mortgage loan officers try to develop relationships with commercial or residential real estate agencies; when an individual or firm buys a property, the real estate agent might recommend contacting that loan officer for financing.
Banks and other lenders are offering a growing variety of loans. Loan officers must keep abreast of new types of loans and other financial products and services so they can meet their customers' needs.
Loan officers meet with customers to gather basic information about the loan request, and explain the different types of loans that are available to the applicant. Often customers will not fully understand the information requested, and will call the loan officer for clarification. Once the customer completes the financial forms, the loan officer begins to process them. 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. The loan officer also informs the borrower if the loan is approved or denied.
Loan counselors contact holders of delinquent accounts in an effort to develop a repayment plan. If a repayment plan cannot be developed, the loan counselor initiates collateral liquidation, in which case the collateral used to secure the loana home or car, for exampleis seized by the lender and sold to repay the loan.
Commercial and mortgage loan officers frequently work away from their offices, relying on laptop computers, cellular phones, and pagers to keep in contact with their offices and clients. Mortgage loan officers frequently work out of their home or car, often visiting offices or homes of clients while completing the loan application. Commercial loan officers may travel to other cities to prepare complex loan agreements. Consumer loan officers and loan counselors are likely to spend most of their time in an office.
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 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, triggering a surge in loan applications.
Loan officers and counselors held about 209,000 jobs in 1996. About 3 out of 5 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. Loan officers are concentrated in urban and suburban areas. In rural areas, the loan application process is often handled by the branch or assistant manager.
Loan officer positions generally 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. For commercial or mortgage loan officer jobs, training or experience in sales is highly valued by potential employers. A small number of 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 capable of developing effective working relationships with others, confident in their abilities, and highly motivated. Loan officers must be willing to attend community events as a representative of their employer.
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. Completion of these courses and programs enhances one's employment and advancement opportunities.
Capable loan officers and counselors may advance to larger branches of the firm or to a managerial position, while less capable workers 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.
While employment in bankswhere most loan officers and counselors are foundis projected to decline, employment of loan officers and counselors is expected to grow faster than the average for all occupations through the year 2006. 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 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, lending, or sales experience should have the best job prospects.
Loan officers and counselors are less likely to lose their jobs than other workers in banks and other lending institutions during economic downturns. 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 are likely to see an increase in the number of delinquent loans during difficult economic times.
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 $30,600 and $45,000 in 1997; commercial real estate mortgage loan officers, between $45,100 and $73,000; consumer loan officers, between $28,900 and $48,000; and commercial lenders, between $37,400 and $85,000. 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.
Banks and other lenders sometimes offer their loan officers free checking privileges and somewhat lower interest rates on personal loans.
Loan officers 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.
Information about a career as a loan officer or counselor 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.).
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