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Loan Officers - What They Do

How to Advance (Advancement)
Capable loan officers may advance to larger branches of their firms or to managerial positions. Some loan officers advance to supervise other loan officers and clerical staff.

Various banking associations and private schools offer courses and programs for students interested in lending and for experienced loan officers who want to keep their skills current. For example, the Bank Administration Institute, an affiliate of the American Banker's Association, offers the Loan Review Certificate Program for people who review and approve loans.

The Mortgage Bankers Association offers the Certified Mortgage Banker (CMB) designation to loan officers in real estate finance. The association offers three CMB designations: residential, commerce, and master to candidates who have 3 years of experience, earn educational credits, and pass an exam. Completion of these courses and programs generally enhances employment and advancement opportunities.

Loan officers held about 327,800 jobs in 2008. Nearly 9 out of 10 loan officers were employed by commercial banks, savings institutions, credit unions, and related financial institutions. Loan officers are employed throughout the Nation, but most work in urban and suburban areas. At some banks, particularly in rural areas, the branch or assistant manager often handles the loan application process.

Job Outlook
Loan officers can expect average employment growth. Good job opportunities should exist for loan officers.

Job Growth
Employment of loan officers is projected to grow 10 percent between 2008 and 2018, which is about as fast as the average for all occupations. Employment growth will be driven by economic expansion and population increases—factors that generate demand for loans. Growth will be partially offset by increased automation that speeds the lending process and by the growing use of the Internet to apply for and obtain loans. However, these changes have also reduced the cost and complexity associated with refinancing loans, which could increase the number of loans originated.

The use of automated underwriting software has made the loan evaluation process much simpler than in the past. Underwriting software allows loan officers—particularly loan underwriters—to evaluate many more loans in less time. In addition, the mortgage application process has become highly automated and standardized, a simplification that has enabled mortgage loan vendors to offer their services over the Internet. Online vendors accept loan applications from customers over the Internet and determine which lenders have the best interest rates for particular loans. With this knowledge, customers can go directly to the lending institution, thereby bypassing mortgage loan brokers. Shopping for loans on the Internet is expected to become more common in the future and to slow job growth for loan officers.

Most job openings will result from the need to replace workers who retire or otherwise leave the occupation permanently. Good job opportunities should exist for mortgage and consumer loan officers. College graduates and those with banking, lending, or sales experience should have the best job prospects. Excellent opportunities should exist for commercial loan officers as banks report having a hard time finding qualified candidates.

Job opportunities for loan officers are influenced by the volume of applications, which is determined largely by interest rates and by the overall level of economic activity. Although loans remain a major source of revenue for banks, demand for new loans fluctuates and affects the income and employment opportunities of loan officers. An upswing in the economy or a decline in interest rates often results in a surge in real estate buying and mortgage refinancing, requiring loan officers to work long hours processing applications and inducing lenders to hire additional loan officers. Loan officers often are paid by commission on the value of the loans they place, and when the real estate market slows they often suffer a decline in earnings and may even be subject to layoffs. The same applies to commercial loan officers, whose workloads increase during good economic times as companies seek to invest more in their businesses. In difficult economic conditions, an increase in the number of delinquent loans results in more demand for loan collection officers.

Median annual wages of wage and salary loan officers were $54,700 in May 2008. The middle 50 percent earned between $39,710 and $76,860. The lowest 10 percent earned less than $30,850, while the top 10 percent earned more than $106,360.

The form of compensation for loan officers varies. Most are paid a commission based on the number of loans they originate. Some institutions pay only salaries, while others pay their loan officers a salary plus a commission or bonus based on the number of loans or the performance of the loans that they originated. Loan officers who are paid on commission usually earn more than those who earn only a salary, and those who work for smaller banks generally earn less than those employed by larger institutions.

Earnings often fluctuate with the number of loans generated, rising substantially when the economy is strong and interest rates are low.

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