Choosing The Right Mortgage Company For Loan Officers

This Article On Choosing The Right Mortgage Company For Loan Officers Was Written By Gustan Cho of Gustan Cho Associates

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 but 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, which we will explain later on this article. Just mortgage companies are much more stricter on compliance issues than others.

Choosing A FDIC Bank Versus A Mortgage Company

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. You do not have to take and pass the NMLS exam to become a mortgage loan originator at a FDIC chartered bank.  Mortgage 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. 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 and 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. 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 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 A Small Mortgage Broker Shop To Work For

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 and when they refer a mortgage borrower to a particular lender, the mortgage lender will pay the mortgage broker a commission which is called a yield spread premium .  The maximum commission a mortgage broker is allowed to get by law is no greater than 3% commission but most mortgage brokers will agree to a 2.5% to 2.75% commission plan with the wholesale mortgage 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 of the 2.5% or 2.75% commission the mortgage broker shop has made from the transaction. Most mortgage brokers will have a split of 50/50 from the commission that the mortgage broker gets from the wholesale mortgage lender but it is up to the mortgage broker and the loan officer to agree on a comp plan. 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 because most mortgage broker shops are small and you 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 and 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.

Disadvantages of working for a mortgage broker is that you do not have control because your 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 mortgage lenders, you may be limited on a small commission plan versus working for a mortgage banker. Growth and advancement opportunities working under a mortgage broker may be limited and 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. Your 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 where 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 and 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 mortgage 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 which 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 an assistant sales manager, sales manager, branch manager, or area manager 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.

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 me at 262-716-8151 or email me at gcho@gustancho.com. All of my loan officers do not have to worry about cold calling. We have more mortgage loan applicants than we do borrowers and you 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.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

1 Comment

  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.