It’s a loan officer’s job to decide which would-be borrowers are eligible to proceed to loan underwriting. The loans in question could be mortgages, small business loans or personal loans. Loan officers meet with applicants and are responsible for determining applicants’ creditworthiness. Want to learn more about what loan officers do? You’re in the right place.
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Loan Officer Basics
According to the U.S. Bureau of Labor Statics (BLS), “loan officers evaluate, authorize, or recommend approval of loan applications for people and businesses.” You may have heard that computer algorithms are increasingly taking on the task of mortgage underwriting. Many people who apply for, say, a home mortgage never meet with a loan officer. Instead, an algorithm will review their paperwork and approve or deny their loan application.
However, algorithms haven’t entirely replaced the loan officer. You’ll still find loan officers working in commercial banks and credit unions. Mortgage lenders still rely on loan officers to screen some applicants. In general, though, loan officers are the first layer of screening, before human or algorithmic underwriting takes place.
A recent ProPublica investigation found that some algorithms result in discrimination in the mortgage approval process. In other words, if you meet with a loan officer and an underwriter and have a chance to make your case to a human being, you’re one of the lucky ones.
The Job of a Loan Officer
For years, the job of a loan officer held a certain allure because it offered a stable, relatively high salary without the need of a professional degree. Mortgage loan officers must be licensed, but the job of a loan officer doesn’t require costly years in graduate school. The BLS estimates that the median pay for loan officers in 2015 was $63,430 per year.
But what about growth prospects for the field? The BLS gives loan officers a “job outlook” of 8%. That’s the percentage by which the field will grow between 2014 and 2024, according to BLS estimates. It’s about as fast as the average across all fields.
Thinking about becoming a loan officer? The job doesn’t require extensive training, but it may require visits to loan applicants, and it certainly involves plenty of paperwork.
Wondering what meeting with a loan officer will be like when you’re applying for a loan? You might not meet with a loan officer at all, but if you do, the meeting is your chance to prove your creditworthiness and explain any blips on your credit history such as a missed credit card payment. If the loan officer isn’t taking the time to answer your questions or seems to be putting on the hard sell, you can always look elsewhere for your loan.
These days, many loan decisions are a question of numbers. The success or failure of a loan application will come down to the applicant’s debt-to-income ratio, annual salary, credit score and total debt levels. Loan applicants tend to be a self-selected bunch, only applying if they know they have a good shot at success. Still, it’s the job of a loan officer to screen applicants and pass them on to the underwriting process – or not.
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