Career Paths
Posted: Wed May 03, 2023 8:00 am
I wrote this with the intent to help someone with zero experience in the mortgage industry have a framework for exploring the different career paths.
Mortgage loan officers (a.k.a mortgage loan originators, MLO's, and LO's) assist borrowers in obtaining mortgage loans for purchasing or refinancing property. We are responsible for guiding clients through the complex mortgage loan process, from budgeting to application, through underwriting, and finally to closing. There are various types of companies that a mortgage loan officer can work for, each with its own set of pro's and con's. In this article I will give a high level overview of different types of business structures that a loan officer can work in, and what I have learned over my 13 years in the industry.
Depository vs Non-Depository
Banks and Credit Unions are depository institutions and governed under a different set of laws than non-depository lenders. If you are a MLO employed by and depository institution, you will not typically need to pass your state licensing exam to obtain an NMLS number. You will take a relatively simple test simple compared to the state exam. Working for a non-depository lender will require you to pass the NMLS/SAFE exam, which has a prerequisite of 20 hours of formal training. Some states have additional training requirements and tests on top of this federal requirement.
When I left my credit union job to go to a retail lending shop, I used OnCourse Learning to meet my formal training requirement. I also learned a TON from Artricia Woods with Affinity Real Estate and Mortgage Training Services, you can find her free training on YouTube here.
Brick and Mortar vs Call Center
One perspective to view the career options of an MLO is to classify business models into two catagories: Brick and Mortar, and Call Center. This is an oversimplification, as there is a lot of nuance, but this is helpful in understanding your options as a new mortgage loan officer.
Generally, career LO's who start generating their own business through referrals will find themselves working for a brick and mortar company. B&M includes banks (Chase, Wells), credit unions (lots of local CU's, Navy Federal), brokerages (NEXA), retail lenders (Fairway, CrossCountry), correspondent lenders (MY FAVORITE BUSINESS MODEL) and direct lenders.
B&M isn't necessarily all self sourced though, banks and credit unions often provide leads for their LO's through the bank's other business and branch network. A trade off to a bank/cu is that the commission paid on loans is often SIGNIFICANTLY less than a non-depository lender.
For example, a local credit union I know pays their mortgage lenders something like the following:
Base Salary - $55,000
Commission Structure -
Close fewer then 6 loans per month - $0
Close 6-10 loans per month - $200 per loan
Close 10-16 loans per month - $350 per loan
Close 16+ loans per month - $500 per loan
When you dig into that model, it's actually pretty terrible if you're originating those loans yourself.
You can close 20 loans per month and with an average loan size of $250,000, you'd make $175,000, while at a broker you'd make over $600,000 AFTER paying your team!
Call centers are typically either small to medium brokerages or direct lenders, such as Rocket, PennyMac, and Cardinal. The comp structure is usually 'worse' than a brick and mortar, and the work life balance is... wait what is balance? There isn't any balance, at least if you want to make money. A big benefit to these companies is they can be a great place to learn the ropes, many times they'll pay for your training, licensing and the knowledge you'll get due to being so busy will accelerate your career progression dramatically.
Brokerage, Independent Broker, Correspondent, Retail
If you dream of a freedom filled day, great money and as much work life balance as you can desire, you're going to end up working in one of these business models. At the end of the day, generating loans through referrals is the key to success in the mortgage lending industry. Below I'll breakdown my perspective on each of these models.
Brokerage - The support and training you will receive can range from nothing to literally everything. Leads may be provided, or you may have to self source. The barrier to entry is low because it's 100% commission (typically), but you get what you pay for. Pricing/rates is typically competitive.
Independent Broker - 100% independent, you can chose which lenders you want to send loans to. No support, but you can always use a third party for processing if you'd like to avoid hiring someone. Pricing/rates is typically competitive.
Correspondent - Similar to a broker but with a higher barrier to entry (from a business owners perspective) because correspondent lenders need their own warehouse line of credit to fund their own loans; they still have the ability to sell the loan to whomever they want after closing. Pricing tends to be much better than retail, banks and credit unions, and similar to brokers. Correspondent lenders are always lender payed compensation and do not disclose the amount on the LE like a broker does.
Retail - Terrible pricing, but training and support can be great. Branch managers, regional managers and sales managers are all taking a cut of your production to pay their salaries. I started at a retail lender and managed to close $6,000,000 my first year in the business, and quickly realized that I could have doubled my income if I wasn't losing so many loans to competitors due to rate and cost.
To sum it up..
The mortgage industry has so many possible ways to get started, you need to figure out what works for your location, lifestyle and current expenses. If you live at home with your parents, jumping right into 100% commission would be my choice. If you have a family, taking a salary role or a call center job to get started might make more sense until you build up some referral relationships.
At the end of the day, continuing to get the BEST training and having a rock solid process is the key to make sure you're KEEPING your referral partners, and earning referrals from your past clients.
Mortgage loan officers (a.k.a mortgage loan originators, MLO's, and LO's) assist borrowers in obtaining mortgage loans for purchasing or refinancing property. We are responsible for guiding clients through the complex mortgage loan process, from budgeting to application, through underwriting, and finally to closing. There are various types of companies that a mortgage loan officer can work for, each with its own set of pro's and con's. In this article I will give a high level overview of different types of business structures that a loan officer can work in, and what I have learned over my 13 years in the industry.
Depository vs Non-Depository
Banks and Credit Unions are depository institutions and governed under a different set of laws than non-depository lenders. If you are a MLO employed by and depository institution, you will not typically need to pass your state licensing exam to obtain an NMLS number. You will take a relatively simple test simple compared to the state exam. Working for a non-depository lender will require you to pass the NMLS/SAFE exam, which has a prerequisite of 20 hours of formal training. Some states have additional training requirements and tests on top of this federal requirement.
When I left my credit union job to go to a retail lending shop, I used OnCourse Learning to meet my formal training requirement. I also learned a TON from Artricia Woods with Affinity Real Estate and Mortgage Training Services, you can find her free training on YouTube here.
Brick and Mortar vs Call Center
One perspective to view the career options of an MLO is to classify business models into two catagories: Brick and Mortar, and Call Center. This is an oversimplification, as there is a lot of nuance, but this is helpful in understanding your options as a new mortgage loan officer.
Generally, career LO's who start generating their own business through referrals will find themselves working for a brick and mortar company. B&M includes banks (Chase, Wells), credit unions (lots of local CU's, Navy Federal), brokerages (NEXA), retail lenders (Fairway, CrossCountry), correspondent lenders (MY FAVORITE BUSINESS MODEL) and direct lenders.
B&M isn't necessarily all self sourced though, banks and credit unions often provide leads for their LO's through the bank's other business and branch network. A trade off to a bank/cu is that the commission paid on loans is often SIGNIFICANTLY less than a non-depository lender.
For example, a local credit union I know pays their mortgage lenders something like the following:
Base Salary - $55,000
Commission Structure -
Close fewer then 6 loans per month - $0
Close 6-10 loans per month - $200 per loan
Close 10-16 loans per month - $350 per loan
Close 16+ loans per month - $500 per loan
When you dig into that model, it's actually pretty terrible if you're originating those loans yourself.
You can close 20 loans per month and with an average loan size of $250,000, you'd make $175,000, while at a broker you'd make over $600,000 AFTER paying your team!
Call centers are typically either small to medium brokerages or direct lenders, such as Rocket, PennyMac, and Cardinal. The comp structure is usually 'worse' than a brick and mortar, and the work life balance is... wait what is balance? There isn't any balance, at least if you want to make money. A big benefit to these companies is they can be a great place to learn the ropes, many times they'll pay for your training, licensing and the knowledge you'll get due to being so busy will accelerate your career progression dramatically.
Brokerage, Independent Broker, Correspondent, Retail
If you dream of a freedom filled day, great money and as much work life balance as you can desire, you're going to end up working in one of these business models. At the end of the day, generating loans through referrals is the key to success in the mortgage lending industry. Below I'll breakdown my perspective on each of these models.
Brokerage - The support and training you will receive can range from nothing to literally everything. Leads may be provided, or you may have to self source. The barrier to entry is low because it's 100% commission (typically), but you get what you pay for. Pricing/rates is typically competitive.
Independent Broker - 100% independent, you can chose which lenders you want to send loans to. No support, but you can always use a third party for processing if you'd like to avoid hiring someone. Pricing/rates is typically competitive.
Correspondent - Similar to a broker but with a higher barrier to entry (from a business owners perspective) because correspondent lenders need their own warehouse line of credit to fund their own loans; they still have the ability to sell the loan to whomever they want after closing. Pricing tends to be much better than retail, banks and credit unions, and similar to brokers. Correspondent lenders are always lender payed compensation and do not disclose the amount on the LE like a broker does.
Retail - Terrible pricing, but training and support can be great. Branch managers, regional managers and sales managers are all taking a cut of your production to pay their salaries. I started at a retail lender and managed to close $6,000,000 my first year in the business, and quickly realized that I could have doubled my income if I wasn't losing so many loans to competitors due to rate and cost.
To sum it up..
The mortgage industry has so many possible ways to get started, you need to figure out what works for your location, lifestyle and current expenses. If you live at home with your parents, jumping right into 100% commission would be my choice. If you have a family, taking a salary role or a call center job to get started might make more sense until you build up some referral relationships.
At the end of the day, continuing to get the BEST training and having a rock solid process is the key to make sure you're KEEPING your referral partners, and earning referrals from your past clients.