Choosing The Right Mortgage Company For Loan Officers


Choosing The Right Mortgage Company For Loan Officers

This Article On Choosing The Right Mortgage Company For Loan Officers Was UPDATED On October 15th, 2018

Choosing the right mortgage company for loan officers is one of the most important decisions a mortgage loan originator needs to make.

  • There are thousands of mortgage companies in the United States and many times, mortgage loan originators get recruited or get offers by many mortgage recruiters
  • Or representatives of a mortgage company several times during the course of every year
  • Experienced mortgage loan officers with their own book of business are highly sought after by lenders
  • Loan officers can choose to work at banks, credit unions, mortgage brokers, and mortgage bankers
  • Compensation plans differ from lender to lender
  • The most important factor a mortgage loan officer should consider is the mortgage loan programs and the lender overlays that the lender have to offer besides just the compensation plans
  • Mortgage companies mortgage interest rates differ from lender to lender
  • We will explain later on this article
  • Just mortgage companies are much more stricter on compliance issues than others

Choosing The Right Mortgage Company As An FDIC Bank

Choosing The Right Mortgage Company is very important. There are pros and cons of working at a FDIC chartered bank versus a mortgage company.

  • Mortgage loan originators at banks do not have to get licensed and are exempt from NMLS licensing requirements
  • Loan officers do not have to take and pass the NMLS exam to become a mortgage loan originator at a FDIC chartered bank
  • Loan officers who work at FDIC chartered bank can originate mortgage loans in all 50 states without being licensed
  • Many loan officers who cannot pass the federal NMLS exam often seek employment at banks

NMLS Licensing Exemptions By FDIC Banks Versus Mortgage Companies

Others who cannot get a NMLS state license due to not being able to pass a federal and state criminal background check or credit check due to bad credit can seek employment at a FDIC chartered bank.

  • Every bank has their own employment requirements for its mortgage loan originator’s position
  • Banks often do a background check on every loan officer candidate
  • They will often do a credit check as well but may be lenient and not as strict as getting licensed with the individual states
  • For example, if a mortgage loan originator candidate had a non-fraud related felony within the past 7 years, it will be next to impossible for them to get their NMLS license from any state
  • So they would not be able to seek employment at any mortgage company

Choosing The Right Mortgage Company And Getting Hired

However, they can seek employment as a mortgage loan originator at a FDIC Bank if the bank is willing to hire them:

  • Another example is with bad and/or derogatory credit
  • Certain states have higher credit requirements for loan officers than others
  • The states of Texas and Wisconsin will not issue a Mortgage Loan Originator’s license if a mortgage loan originator candidate has a judgment and/or charge off
  • This holds true if they do not have entered into a payment plan
  • So if they need to originate loans in those states, they would not be able to seek employment at any mortgage company
  • However, they can seek employment at a FDIC chartered bank

Choosing The Right Mortgage Company As A Small Mortgage Broker Shop

Mortgage brokers are do not fund the loans they originate and are middle men between the borrowers and the actual mortgage lenders.

  • Mortgage brokers need to have relationships with actual mortgage lenders
  • When they refer a mortgage borrower to a particular lender, the lender will pay the mortgage broker a commission
  • The commission paid to mortgage brokers is called a yield spread premium
  • The maximum commission a mortgage broker is allowed to get by law is no greater than 3% commission
  • Most mortgage brokers will agree to a 2.5% to 2.75% commission plan with the wholesale lender so they do not go over the 3% maximum threshold
  • The mortgage broker then needs to pay the mortgage loan originator who originated the mortgage loan under the mortgage broker a percentage
  • The percentage is between 2.5% or 2.75% brokers make from transactions
  • Most mortgage brokers will have a split of 50/50 from the commission that the mortgage broker gets from the wholesale mortgage lender
  • It is up to the mortgage broker and the loan officer to agree on a comp plan

Advantages Of Small Mom & Pop Mortgage Broker Shop

When deciding on choosing the right mortgage company for loan officers, a mortgage broker shop may be the right fit for a brand new mortgage loan originator:

  • This is because most mortgage broker shops are small
  • New loan officers can get individual one on one training and see how the mortgage business works

Mortgage brokers needs to be licensed just like any other mortgage bankers:

  • All mortgage loan originators who work under the mortgage broker need to have their NMLS licenses on states where they intend to originate loans
  • In order for the mortgage loan officer to get a out of state license, the mortgage broker shop also needs to be licensed

Disadvantage Of Working For Mortgage Brokers

Disadvantages of working for a mortgage broker is that you do not have control:

  • This is because company does not underwrite the loans that you originate
  • Most mortgage broker shops are only licensed in one of only a few states
  • So if you want to get licensed in multiple states, you may be limited on getting licensed in other states
  • Since mortgage brokers are limited on the commissions they can make from wholesale lenders, you may be limited on a small commission plan versus working as mortgage bankers

Limited Growth And Advancement Opportunities In Working At Mortgage Broker Shops

Growth and advancement opportunities working under a mortgage broker may be limited:

  • Just being a loan officer may be your only position working for a mortgage broker
  • Support such as marketing support, leads, and training may be limited working for a mortgage broker versus working for a national mortgage lender
  • Commissions, or the yield spread premium that the mortgage broker makes, needs to be disclosed if you work for a mortgage broker
  • Whereas mortgage bankers do not have to disclose the comp the mortgage banker and/or loan officer makes on the file

Choosing A Small Correspondent Mortgage Lender To Work For

After the implementation of QM, Quality Mortgage , many small mortgage broker shops turned into mini-correspondent mortgage lenders:

  • They are somewhere in between a mortgage broker and full eagle mortgage banker
  • A mini correspondent lender is a mortgage broker that is not a full eagle lender
  • But has developed a line of warehouse line of credit with wholesale mortgage lenders
  • They use that line of credit to fund loans and resell it to the wholesale mortgage lender once the loan funds
  • Mini correspondent lenders can also be able to broker out loans to wholesale lenders

Choosing A National Mortgage Lender

Choosing a national full eagle mortgage lender offers many opportunities for loan officers who need to be licensed in multiple states and need name recognition.

  • Consumers are very leery these days when choosing financial services companies from the internet
  • Smaller broker shops with a no name brand tend to be scrutinized by consumers who are internet shoppers for home loans
  • Many small mom and pop mortgage broker shops have the broker’s names such as names like Jimmy Smith Mortgages or Mike Jones Financial
  • Nothing is wrong with it but you may encounter leery borrowers
  • Choosing a national mortgage lender also provides room for advancement for the loan officer if the loan officer becomes a top producer
  • For example, with loan officers under my umbrella, I give every mortgage loan officer an opportunity to become the following:
    • assistant sales manager
    • sales manager
    • branch manager
    • area manager
    • regional manager
    • This holds true as long as they are willing and able to proceed and have proven themselves
  • Every loan officer under my watch has an opportunity to start their own net branch office and have a team of loan officers under their wing

Career Opportunities At Gustan Cho Associates At Loan Cabin Inc.

If you are a new loan officer or experience loan officer that is interested in finding a home where you can grow and advance with your career, contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at All of my loan officers do not have to worry about cold calling. We have more mortgage loan applicants than we do borrowers. Never have to worry about not closing a loan in any given month. All of my loan officers are given the opportunity to become sales managers and will be given the opportunity to open up their own net branch and I will provide the initial financial and emotional support in growing your business.

  1. Shad Morris says

    Thank you for all this great information about choosing a loan officer! One thing that really stood out to me is that you say to look for someone that is highly experienced, and has their own book of business, Since we were looking into getting a mortgage, it would be nice to have them at our backs.

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