Choosing the Right Mortgage Company for Loan Officers

Written ByGustan Cho, NMLS 873293 Published On
Choosing The Right Mortgage Company

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Choosing the Right Mortgage Company: A Loan Officer Career Guide

This guide covers choosing the right mortgage company for loan officers. Choosing the right mortgage company for loan officers is one of the most important decisions a mortgage loan originator needs to make. John Strange, a senior loan officer at Gustan Cho Associates, explains choosing the right mortgage company for loan officers to start their careers.

Loan officers can choose to work at banks, credit unions, mortgage brokers, correspondent lenders, or mortgage bankers. Compensation plans differ from lender to lender.

Besides the compensation plan, the mortgage loan officer should take other important factors into consideration when choosing the right mortgage company. Types of mortgage loan options the employer (the lender) offers, and if the lender does not offer a loan product, can the lender develop a broker or correspondent lending partnership, the lender overlays, the number of licensed states they are approved to originate in, the support and operations team, and the rates.

How the Mortgage Industry Works

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Experienced mortgage loan officers with their book of business are highly sought after by lenders. Mortgage companies’ rates differ from lender to lender. There are thousands of mortgage companies in the United States. Often times, mortgage loan originators often get recruited with large compensation and benefit agreements from aggressive head-hunters and recruiters.

The compensation and benefit employment agreements is so generous that even the most experienced mortgage loan originator often overlook the fact that there is no such thing as “GENEROUS or FREE” in the mortgage industry.

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NMLS Licensing Exemptions By FDIC Banks versus Mortgage Companies

Others who cannot get an NMLS state license due to being unable to pass a federal and state criminal background check or credit check due to bad credit can seek employment at an FDIC chartered bank. Every bank has its 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 but may be lenient and not as strict as getting licensed with the individual states.

For example, suppose a mortgage loan originator candidate had a non-fraud-related felony within the past seven years. In that case, it will be 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 an FDIC Bank if the bank is willing to hire them: Another example is bad and 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 loan originator candidate has a judgment or charge-off.

Choosing a Small Mortgage Broker Shop 

Mortgage brokers do not fund the loans they originate and are middlemen between the borrowers and the actual mortgage lenders. Mortgage brokers need to have relationships with actual mortgage lenders. 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 a 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% and 2.75% of 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.

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Choosing the Right Mortgage Company: Loan Officers and Lender Options

Choosing the right mortgage company can shape your income, reputation, production, and the entire direction of your career as a loan officer. A generous commission split does not always mean you have found the best place to work.
Look deeper: compare mortgage rates, loan programs, overlays, underwriting, technology, marketing, lead flow, licensing, management, compliance, and company culture.
A great compensation plan means little if the company cannot reliably close the loans you bring in.
Seasoned loan officers should weigh the whole business platform before making a move. New MLOs should seek out strong support and mentorship to help close those crucial first loans. Choosing a mortgage company is about much more than just basis-point spreads or exclusivity deals.

Consider:

  • How do the company’s mortgage rates compare with competitors?
  • What loan programs does the company offer, and do they meet your borrowers’ needs?
  • How efficient are the company’s processing and underwriting?
  • What lender overlays does the company have?
  • Are you allowed to originate business in the states your referral partners are sending business to?
  • Are you supplied with leads, and how are they distributed?
  • What resources are included with the company’s technology and marketing?
  • Who has ownership of your database and leads?
  • Are there fees for technology, processing, and other services on a monthly or per-file basis?
  • Is management accessible for assistance in structuring a complex loan?
  • How does the company’s loan closing time compare with competitors?
  • How does the company’s compensation structure compare with competitors, and is it documented?
  • The best mortgage company is not always the one with the biggest payout, but the one with the strongest platform to serve borrowers and close loans smoothly.

Why Taking the Time to Select the Right Mortgage Company is Important

Even top sales professionals can struggle if they join the wrong company. Good leads won’t help if rates are not competitive. On the other hand, good rates and programs for self-employed borrowers are not enough if other parts are weak. Choosing the right employer is very important for a loan officer’s success. The mortgage company you work for affects every part of your business, including pricing, loan programs, underwriting, rules, technology, marketing, and how borrowers experience the process.
Treat your search for a mortgage company like you would a search for a business partner: with careful scrutiny and high standards.
Before you even look at compensation, make sure you truly understand the kind of company you are considering.

Working as a Loan Officer at a Bank/Credit Union

Loan Officers at some federally regulated depository institutions generally work as registered mortgage loan originators rather than as licensed state MLOs. This does not mean they are outside of the NMLS. Financial institutions are required to ensure that the relevant mortgage loan originators are registered with the Nationwide Mortgage Licensing System and Registry, have a unique identifier, and maintain up-to-date registration.
Banks and credit unions bring a built-in customer base, a strong reputation, smooth processes, and their own products. The downside? Loan officers usually can only offer the programs and pricing those institutions provide.
This can offer a Loan Officer a diverse range of pricing, underwriting, non-QM and government loans, Investor products, jumbo loans, and specialized mortgage programs. If a borrower doesn’t fit one lender’s rules, having access to many lenders can be very helpful. But not all broker platforms are the same. Some have advanced technology, good training, and strong lending support, while others do not. Don’t assume a broker always means better prices or support—look closely at what each platform really offers.

Working for a Retail or Direct Mortgage Lender

Loans may be offered on the company’s own platform for many retail or direct mortgage lenders. Depending on the company, loan officers may have access to in-house operations, underwriting, marketing, trained leads, a branch, a banner, and/or a brand.
The main drawback? If the lender does not broker loans beyond its own offerings, you might face limited product or pricing choices.

Working for a Correspondent Lending Platform

Correspondent lenders may provide an option. Depending on the company’s setup and the corresponding lender’s investors, loans may be funded through a warehouse line and sold to investors. Many of these platforms may also have brokerage agreements with lenders for loans outside of their correspondent channels. For loan officers working with a diverse borrower population, the ability to access multiple lending channels may be a necessity.
What a company can actually deliver matters far more than what it claims in its business model.

Compare the Mortgage Company’s Rates and Pricing

Compensation plans can look good, but a flashy pay plan means little if you lose loans because competitors offer better prices.

Look at Common Scenarios Like:

  • FHA and VA Mortgage Pricing
  • Government loans comprise a large portion of many mortgage loan officers’ business.
  • When looking at typical FHA and VA loan borrowers, consider rates, borrower loan credit, discount points, and underwriting.
  • Conventional Mortgage Pricing
  • Let’s examine conventional pricing at various Credit Scores and loan-to-value ratios.
  • Consider how your company stacks up in purchase deals, as both agents and borrowers will compare you to other lenders.

Advantages  of Small Mom & Pop Mortgage Broker Shop

When choosing the right mortgage company for loan officers, a mortgage broker shop may be the right fit for a brand new mortgage loan originator: Most mortgage broker shops are small.

New loan officers can get one-on-one training and see how the mortgage business works. Mortgage brokers need to be licensed like any other mortgage banker.

All mortgage loan originators who work under the mortgage broker must have their NMLS licenses in the states where they intend to originate loans. For the mortgage loan officer to get an out-of-state license, the mortgage broker shop must also be licensed. When they refer a mortgage borrower to a particular lender, the lender will pay the mortgage broker a commission.

Disadvantages of Working for Mortgage Brokers

Choosing The Right Mortgage Company

The disadvantage of working for a mortgage broker is that you do not have control because the company does not underwrite the loans you originate.  Most mortgage broker shops are only licensed in one of only a few states.

Many states who have never cracked down on bad credit for loan origination NMLS licenses are now putting the breaks on them. f they do not have entered into a payment plan.

They cannot seek employment at any mortgage company if they need to originate loans in those states. However, they can seek employment at an FDIC chartered bank. So if you want to get licensed in multiple states, you may be limited to getting licensed in other states.

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 to working for a mortgage broker versus working for a national mortgage lender.

Commissions, or the yield spread premium the mortgage broker makes, must be disclosed if you work for a mortgage broker. Mortgage bankers do not have to disclose the comp the mortgage banker or loan officer makes on the file. Since mortgage brokers are limited on commissions from wholesale lenders, you may be limited on a small commission plan versus working as a mortgage banker.

Choosing a Small Correspondent Lender to Work for as a Loan Officer

After the implementation of QM, Quality Mortgage, many small mortgage broker shops turned into mini-correspondent mortgage lenders: They are somewhere between a mortgage broker and full eagle mortgage banker. A mini correspondent lender is a mortgage broker that is not a full eagle lender.

Looking forward to our conference call together. After our meeting, I will brief Elbert and others and discuss the next step for our restructuring.

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 them to the wholesale mortgage lender once the loan funds. Mini correspondent lenders can also broker out loans to wholesale lenders.

Non-QM and Other Specialty Mortgage Pricing

If you work with self-employed borrowers, investors, borrowers with recent credit issues, or those who can’t prove regular income, having good Non-QM loan options will be very important for your business.
It is better to have a handful of loan programs you can actually close than a long list of options you cannot use.

Mortgage Loan Programs Can Be More Important than Compensation

What if your new company gave you a 25-basis-point boost per closed loan, but you lost multiple loans each month because it lacked the necessary programs? You could actually make less money, even with a higher commission rate.
A robust mortgage platform can provide you access to conventional, FHA, VA, USDA, jumbo, bank statement, DSCR, asset depletion, 1099s, investment property, construction, down payment assistance, and multiple other Non-QM or Specialty mortgage products.
Not every company needs to offer every single loan program. The key question is whether they meet your borrowers’ needs.

Mortgage Companies with Lender Overlays

Loan officers who work with borrowers who are harder to qualify should pay close attention to lender overlays. Two mortgage lenders might both say they offer FHA loans. But borrowers should not assume they will be treated the same way with FHA loans, because one company might be stricter about credit or risk. It is important for borrowers with lower credit scores, higher debt-to-income ratios, those who need manual underwriting, or those who have faced bankruptcies, foreclosures, or have unstable income. This includes borrowers with unstable or variable income.
Before you send any business their way, ask potential employers how they handle tough or unusual loan scenarios.
So, finding creative solutions depends on how strong their processing and underwriting are and how talented you are; a disorganized operations team will drag down your results.
Ask how the company handles the movement of files from application to closed loan.

Who Processes Mortgage Loans

  • Are company loan processors assigned to the files?
  • Do they process centrally, contract out processing, or does the loan officer have discretion to select their processor?
  • Ask how many files the average loan processor handles.

Inquire About Underwriting Time

  • Purchase transactions have timelines.
  • A low interest rate is not helpful if underwriting leads to unnecessary delays in closing.

How Do They Handle Difficult Situations

  • Difficult loans may require a second review.
  • You should know who you will be dealing with in a situation where there is a legitimate difference of opinion on a guideline, income calculation, condition, or structuring of the loan.
  • A strong, experienced leadership team can be worth much more than a small increase in commission.
  • Never pick a mortgage company based on commission alone.

MLO Compensation

Federal Regulation Z introduces restrictions regarding the compensation of loan originators. It defines the terms of mortgage transactions and loans, and outlines the types of compensation that may be offered, including salary, compensation per loan, and compensation as a percentage of the loan, among others.
When entering into an employment or contracting agreement, examine the details of your compensation. Look at your total pay, not just the main number.
Hidden fees can reduce what you actually take home. If the company provides solid paid support, a lower commission could be more valuable than a higher one that leaves you footing the bill for everything else.
Obtain a copy of the compensation in full.

Are Leads Offered?

This is a big factor when choosing a mortgage company, especially if you are new. But “leads offered” can mean many things. Some companies give leads that expire quickly, while others expect loan officers to find their own leads.
What are the lead sources? Are they unique to the company? What is the sharing process? Are there production thresholds? What does it cost the loan officer? Once leads enter the system, who owns them? The best leads come from people who truly want to buy—not just names added to hit a quota.
Every seasoned loan officer knows how crucial this is. You might have records for past clients, referral partners, Realtors, builders, attorneys, accountants, and more.
Check all of this before you join a new company. Review your contract for details on customer data, CRM records, company versus self-generated leads, marketing lists, and what happens to your contacts if you leave. You will not be able to take every contact with you when you leave a company. You should find the answer to this question before you actually make the move to the new company.

Choosing the Right Mortgage Company: A National 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 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 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 officer becomes a top producer. It is up to the mortgage broker and the loan officer to agree on a comp plan.

Mortgage Technology vs Loan Officer Workflow

Technology should help you close more loans and work more efficiently—not bog you down with extra admin headaches.
  • What is the quality of the company’s loan origination system, the Point of Sale (POS), their CRM, the pricing engine, document collection, e-sign, and the rest of the workflow tools?
  • What is the user experience of the borrower on the company’s website?
  • What technology will you be using during an actual transaction?
  • If the company’s loan origination system does not play nicely with other tools and forces you to re-enter data, all the fancy tech demos in the world will not help.

Importance of Training for New and Experienced Loan Officers

Passing an NMLS exam does not prepare new loan officers to analyze complex tax returns, variable income, and automated underwriting; structure loan underwrites; review credit history; or communicate with an underwriter.
New loan officers thrive with real mentorship. New loan officers should make sure they get hands-on guidance for closing their first few loans.s.A great mentor explains the why behind decisions, not just the how-to steps.

Experienced Loan Officers Demand Different Training

Experienced loan officers require a different level of training. They might require specialists knowledgeable about non-QM, government manual underwriting, complex self-employed income scenarios, investment property financing, condo guidelines, and tricky credit.
The top mortgage companies offer ongoing training for experienced loan officers instead of assuming they already know it all.

Review the Company’s Licensing and Geographic Scope

A mortgage company can’t help you in a market where you or the company is not licensed to originate loans.
Because of the SAFE Act, loan originators usually fall into two categories: federally registered or state-licensed, depending on their employer. State-licensed MLOs must obtain licensure, while employees of covered depository institutions must complete federal registration.

Consider the Following:

  • In which states is the company licensed?
  • In which states will the company allow you to be licensed?
  • Who covers the costs of licensing and license renewal?
  • Is there a minimum production level you must meet to maintain the additional licenses?
  • Can you originate from your current location?
  • Remote work depends on both your location and company policy.
  • Just because you have an MLO license does not mean you can work from anywhere.

Under the Mortgage Company’s Compliance Culture

Compliance should be viewed as complementary to production. Think of compliance as a partner to production, not a roadblock. borrowers, loan officers, and the mortgage company when it is expertly managed. Request a detailed explanation of how the company reviews advertising, social media, websites, co-marketing, referral relationships, branch activity, licensing, disclosures, and other regulated activities.
Be cautious if a recruiter claims other companies are too strict or says their company has found ways around rules that others follow. Be wary if a recruiter says other companies are too strict or boasts about finding ways around rules others follow.d

Loan Officers Now Compete for Both Traditional Referrals and Online Business

Loan officers today compete for both classic referrals and digital business.RMs and tools for email marketing and social media. Also, check if it provides training, co-branded marketing collateral, videos, and tools for database marketing and advertising.
Find out how much freedom you have to build your personal brand within the company’s rules. The best setup lets the company’s brand build borrower trust while you grow your own professional identity.
Your mortgage company should help—not get in the way of—building relationships with real estate agents and referral partners. This means fast pre-approvals, on-time closings, quick communication, good products, strong underwriting, and tools to support your partners.

Recruiting Red Flags

Recruiting presentations naturally highlight the best parts of a company. Recruiting pitches always highlight a company’s best features, like steady income, guaranteed closings, guaranteed promotions, very high pay with no upfront costs, or suspiciously good mortgage programs.
Be extra cautious if a recruiter will not put big promises in writing. Things like pay, leads, expenses, database ownership, branch costs, licensing help, and more affect your decision. Ask for these in company documents or written agreements.

The Right Company May Depend on Your Experience Level

The best company for a new MLO is often different from the best fit for a high-volume producer. New loan officers should focus on training, mentorship, and learning support, along with access to managers who can help with compliance and real loan processing. A new mortgage loan originator won’t benefit from higher pay if they don’t have the skills to close loans.

What Experienced Loan Officers Look for in the Right Company

Experienced producers look at pricing, product range, management, support, marketing, pay, and advanced underwriting when evaluating a mortgage company. Top producers also check if the company can handle their loan volume and special needs without lowering service quality. Before you sign anything, make sure your interests are protected just as much as the company’s.
Ask about company and per-file expenses, pricing, lender credits, mortgage products, access to wholesale lenders and overlays, processing, underwriting, closing and licensing timelines, remote work rules, leads, CRM ownership, marketing tech, compliance, management access, training, branch options, and what happens to your pipeline if you leave. Then, talk to several loan officers who already work at the company. Recruiters will tell you what the platform is supposed to do.platform is.
Active loan officers can tell you what it is really like when you have multiple purchase files all needing to close at once.

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FAQs: Choosing The Right Mortgage Company For Loan Officers

Why is Choosing the Right Mortgage Company Important for Loan Officers?

Choosing the right mortgage company is crucial because it can significantly impact a loan officer’s career development, compensation, work environment, and ability to offer diverse loan products to clients.

What Types of Employers Can Mortgage Loan Officers Work For?

Mortgage loan officers can work for banks, credit unions, mortgage brokers, correspondent lenders, or mortgage bankers. Each type of employer offers different benefits and compensation structures.

What Factors Should Loan Officers Consider When Choosing a Mortgage Company?

When choosing a mortgage company, loan officers should consider compensation plans, available mortgage loan options, the lender’s ability to develop lending partnerships, lender overlays, licensed origination states, the support team, the operations team, and interest rates.

How Does Working for an FDIC Bank Differ from a Mortgage Company?

Employment at an FDIC bank comes with certain benefits, including not needing NMLS licensing and being able to initiate loans in every state. However, banks may be stricter on compliance issues and may perform background and credit checks.

Can a Loan Officer Who Fails the NMLS Exam Work at an FDIC Bank?

Yes, loan officers who cannot pass the NMLS exam or fail federal and state background checks can seek employment at an FDIC-chartered bank, which may have more lenient hiring requirements.

What Are the Pros and Cons of Working for a Mortgage Broker?

Working for a mortgage broker has benefits, such as one-on-one training for new loan officers and the ability to refer borrowers to different lenders. However, drawbacks include limited control over the underwriting process and potential limitations on growth and advancement opportunities.

How Do Mini-Correspondent Lenders Differ from Mortgage Brokers?

Mini-correspondent lenders are mortgage brokers with a line of credit that funds loans, which are then sold to wholesale lenders. Compared to traditional brokers, mini-correspondent lenders have more control over the funding process but are not full eagle lenders.

What Advantages Do National Mortgage Lenders Offer?

National mortgage lenders offer several advantages, including the opportunity to be licensed in multiple states, the benefit of brand recognition, which can help build consumer trust, the potential for career advancement and management positions, and more extensive support structures for marketing, leads, and training.

What Should Loan Officers Look for in Compensation Plans?

Loan officers should look for competitive commission structures, a clear understanding of yield spread premiums, transparent compensation agreements, and opportunities for bonuses or additional financial incentives.

Why Might a Loan Officer Choose a Small Mortgage Broker Shop?

A small mortgage broker shop can provide personalized training, a closer look at the mortgage business operations, and potentially more flexible working conditions. This setting can be ideal for new loan officers looking to gain experience.

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Gustan Cho NMLS 873293 is the National Managing Director of Coast 2 Coast Mortgage Lending, LLC dba as Gustan Cho Associates NMLS 1657322. Gustan Cho and his team of loan officers are licensed in multiple states. Over 75% of the borrowers of Gustan Cho Associates (Gustan Cho Associates) are folks who could not qualify at other lenders due their lender overlays on government and conventional loans. Many mortgage borrowers and real estate professionals do not realize a mortgage company like Gustan Cho Associates exists. We have a national reputation of being a one-stop mortgage company due to not just being a mortgage company with no lender overlays but also offering dozens of non-QM and alternative financing loan programs. Any non-QM mortgage loan program available in the market will be offered by the team at Gustan Cho Associates. Our team of support and licensed personnel is available 7 days a week, evenings, weekends, and holidays.

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