Training A New Mortgage Loan Officer Explained

This Article On Training A New Mortgage Loan Officer Was Written By Gustan Cho

To become a mortgage loan originator requires commitment, time, and patience. You cannot become an expert mortgage loan originator overnight. Training A New Mortgage Loan Officer takes patience and time. To become a mortgage loan originator, you first need to take a 20 hour pre-licensing NMLS approved mortgage course. The pre-licensing course can be taken at a live classroom or it can also be completed online. There are many types of 20 hour NMLS approved pre-licensing courses available. Some are a straight 3 consecutive day course while others are evenings only for those who work full time. Yet, there are other courses that are scheduled on weekends and stretched out over a few weekends. There are many mortgage loan originator training schools and you can search the internet for the best school that suits your schedule and for pricing. Tuition for the 20 hour NMLS pre-licensing course varies. Some schools are under $200 while other schools can surpass the $400 price tag. The 20 hour pre-licensing course is pretty intense and a lot of materials are covered as well as practice tests. Once the student completes the 20 hour pre-licensing course, the school will mandate that the student pass an exam, which all students will pass because most schools will allow the graduate to take the test multiple times and other schools will allow an open book test. Taking and passing the 20 hour pre-licensing NMLS approved course by no means prepares training a new mortgage loan officer.  There is much more to it.

What Is Next After Completing The 20 Hour NMLS Approved Pre-Licensing Class

Most students who passed the 20 hour NMLS pre-licensing class think that they are now ready to take the national NMLS exam. This is not true. The short quizzes that is part of the 20 hour NMLS pre-licensing exam does not even come close to preparing for the national NMLS test. The national NMLS exam is a 3 hour test that consists of 125 questions. The first time pass rate is just under 70% for first time test takers. My recommendation is to read the text book once and go over as many practice multiple choice questions as possible. I have loan officers who studied for weeks and fail the national test because they did not study the right way. Those who failed the national NMLS exam multiple times are those who concentrated on the text material portion of the study guide and not the practice test questions. If you go over 2,000 plus practice test questions over and over again, you should be prepared to pass your federal NMLS exam.

After Passing The National NMLS Test

Training A New Mortgage Loan Officer: After you have passed the National NMLS exam, the next step is to get licensed in the states you want to originate loans in. Some states will let you get licensed without getting sponsored by a mortgage company while other states require you that you get sponsored and hired by a mortgage company first. Once you have passed your NMLS Test you should start looking for a mortgage company to work for . There are hundreds of mortgage companies to choose from. Unfortunately, most mortgage companies will not hire a brand new loan officer. Most mortgage companies want a loan officer to have at least two or more years experience originating loans and many mortgage companies will require a minimum monthly production for the past 12 months. Some mortgage companies will take on a brand newly licensed mortgage loan originator but will only take them on as a Loan Officer Assistant (LOA) where they will get paid a nominal salary and/or minimum wage and a small amount of commission per file. The reason most mortgage companies will not hire brand new loan officers is because training a new loan officer takes time. New loan officers cannot be trained overnight. Training a new loan officer is like training a new trial attorney.

How Do You Train A New Mortgage Loan Officer?

Training A New Mortgage Loan Officer: Passing The NMLS Exam is an extremely challenging task and no matter how smart you are, how great of a test taker you are, or how many advanced degrees you have, there is no way you will be able to pass the national NMLS exam without spending countless hours of studying for it. I have hired new loan officer recruits who were attorneys, pharmacists, and doctors who failed the NMLS examination because they did not devote the time and commitment to studying the NMLS Test. However, once you have passed the NMLS Test, the journey to becoming a loan officer has just begun. The new loan officer needs to not just learn the mortgage lending guidelines for FHA, VA, USDA, and Fannie Mae/Freddie Mac, but the loan officer also needs to go over case scenarios. Not every loan application is the same. There are hundreds if not thousands of different types of case scenarios a loan officer will run into throughout their careers. There is no short cut in training a new loan officer. You can memorize all of the mortgage guidelines inside and out and that will not prepare you in being an experienced loan officer. You need to go over dozens if not hundreds of loan case scenarios and actually take a mortgage application from qualifying the borrower, preparing the mortgage documents, submit it to processing, clearing the conditions after the mortgage underwriter issues a conditional loan approval , to getting a clear to close, to closing the loan.

Mortgage Guidelines Versus Company Lender Overlays

Training A New Mortgage Loan Officer: New loan officers need to not just know the minimum lending guidelines by FHA, VA, USDA, Fannie/Freddie but they also need to familiarize themselves with their employer’s lending overlay requirements. Lender overlays are the individual mortgage company’s lending requirements that are in addition to the minimum federal lending guidelines. For example, under HUD 4000.1 FHA Handbook the minimum credit scores required for a 3.5% down payment home purchase FHA Loan is 580 FICO credit scores. However, most mortgage company will not accept any FHA borrowers who do not have at least a 620 or 640 FICO credit score. This higher requirements on credit scores to qualify for a FHA Loan is called a lender overlay on credit scores. Just because a borrower meets the minimum FHA, VA, USDA, or Conventional Loan Lending Guidelines does not mean that your mortgage lender can approve and fund the mortgage borrower. Always check your company’s lender overlays.

New Loan Officer Opportunities

The Gustan Cho Team at The Money Store will accept individuals who are eager and willing to train as a loan officer. New loan officer recruits need to be full time because training to be a new loan officer cannot be done part time. New loan officer recruits will be assigned to an Area Sales Manager and Area Operations Manager and work closely one on one. The first dozen mortgage loan files will be worked together with a senior loan officer from the pre-approval stage to closing. If you are a career minded, goal oriented, hard working motivated individual who would like to start a new career as a loan officer, contact Gustan Cho at or call 800-900-8569.

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.

Comments are closed.