Want to make a career in the lending industry but don’t know the difference between a loan officer vs. a loan processor? Read this article to find out
If you want to become part of the mortgage industry in the United States, you must have knowledge of the various professions within it. For instance, there are differences between mortgage loan processors vs. loan officers. Both are important roles since each of them is needed in the varying stages of a mortgage deal—from the loan introduction to the preparation for underwriting.
Would you like to know more about what loan officers are and how they help clients achieve their property ownership goals? What about loan processors?
In this article, Mortgage Professional America will shed light on the differences between loan officers vs. loan processors and how both professions help borrowers secure a mortgage. We will also highlight other relevant information such as their educational and professional requirements as well as how both professions interact with clients. Read on if you’re new in the mortgage industry and want to choose between being a loan officer or loan processor.
What is a loan officer?
A loan officer introduces the mortgage products and services offered by the mortgage provider (such as commercial banks) that they work with. They are also in charge of authorizing and evaluating loans for both corporate and individual functions.
Loan officers aid potential home buyers in choosing the best mortgage based on their financial capacity and objectives.
Other mortgage providers that employ loan officers
Aside from commercial banks, loan officers can also be employed by these lending institutions:
- Government-Sponsored Enterprises (GSEs)
- mortgage insurance companies
- independent brokerage firms
- credit unions
- online lending platforms
- real estate firms
- other related organizations
If you are interested in exploring this career option, watch this video about the five-step process on how to get a loan officer job in the US:
Becoming a loan officer opens up many opportunities for your financial and professional growth. It can also give a great boost to your work portfolio. If you want to make a living out of this profession, read our guide on how to become a loan officer.
What is a loan processor?
After a loan officer introduces their prospect to a mortgage product, the loan processor will be in charge of the administrative tasks involving the client’s profile.
A loan processor proceeds with these tasks once the client applies for a home loan with the mortgage lender that the loan processor works with. They receive all the details submitted by the client for their mortgage application. They will also organize the information in the client's file so the underwriter can find what they need easily.
In essence, loan processors are responsible for collecting all the essential documentation needed as well as reviewing them before they go to the underwriter.
A loan processor will also compile details about the applicant’s primary and secondary sources of income. This thorough documentation process is critical since there are conditions that must be met before the applicant’s profile and documents are submitted to the underwriter.
Curious to know the difference between a loan processor vs. underwriter? Read this article to find out.
Essential skills to become a successful loan processor
If you wish to be successful in this career, you must be highly organized. You should also have basic data entry skills on top of being time conscious. While the process of applying for a mortgage cannot be rushed, it must not be delayed as well.
There are other essential skills that are great to have and develop if you wish to succeed in a loan processor job. Here are four of them:
- effective communication
- excellent eye for detail
- proficiency in financial analysis
- knowledge of mortgage products and regulations
To learn more about mortgage processing and what a loan processor does, watch this clip:
We also have a guide that features what a mortgage loan processor is and how they keep everything organized for underwriting. Feel free to check it out.
Loan officer vs. loan processor: key responsibilities
As for key responsibilities, we have listed some of the main tasks that loan officers do as well as loan processors.
For loan officers:
- assessing the applicant's financial situation
- providing loan product recommendations
- communicating with clients throughout the process
- ensuring compliance with lending regulations
- coordinating the loan closing process
For loan processors:
- reviewing documents for loan applications
- gathering information on applicant’s credit history
- verifying the applicant's employment status
- obtaining bank statements made by the applicant
- working with loan underwriters
Still, both professions are required to be licensed and maintain compliance with state and federal regulations that govern the mortgage industry. In line with this, we will cover the requirements needed by aspiring loan officers and loan processors.
Loan officer vs loan processor: educational and professional requirements
For new mortgage professionals who either want to work as a loan officer or loan processor, you must obtain the necessary qualifications and apply for licensure. Let us first discuss the steps that you need to take as an aspiring loan officer.
What are the steps on how to become a loan officer in the US?
To become a loan officer, you need to get a license, pass the exam, and complete all requirements imposed by the state where you want to build your career. Here are the steps on how to become a loan officer:
- request an NMLS account
- finish NMLS-approved pre-licensure education
- pass Secure and Fair Enforcement Act (SAFE) loan officer test
- have the state and FBI run criminal background checks
- finish NMLS application
Let us take a closer look at each step:
1. Request an NMLS account
You need to request an account with the Nationwide Multistate Licensing System or NMLS. This system is used across the country to register and track loan officers.
After making the request, you need to take the loan officer exam. This is administered by NMLS as well. The exam will be about the mortgage industry and will focus on these topics:
- ethics
- federal law
- general electives
- state-specific defined electives
- non-traditional mortgage lending
After that, you need to submit a license application through the NMLS Consumer Access portal. Be sure to provide the details below:
- personal information
- employment history
- background check
2. Finish NMLS-approved pre-licensure education
For the second step, you will need to complete a pre-licensure education program approved by the NMLS. This training program is designed to help you develop the skills and knowledge needed to thrive as a loan officer.
3. Pass Secure and Fair Enforcement Act (SAFE) loan officer test
Once you have completed the NMLS pre-licensure education program, you need to take and pass the SAFE Loan officer Test. This exam will evaluate all that you have learned from the NMLS program and assess your knowledge of the mortgage industry.
Aside from that, the SAFE test will determine your readiness to work. It will let you know if you need to study further or if you can proceed to the next step.
4. Have the state and FBI run criminal background checks
After the SAFE loan officer test, you need to let the FBI and the state where you want to work do criminal background checks on you. This is necessary for them to analyze your profile as an individual and see if you have or are involved in any criminal activity.
You might encounter some challenges if the state authorities and the FBI find anything that they deem to be suspicious. Any criminal activity found in the analysis might even lead to the rejection of your license application. To avoid problems in your application to become a loan officer, make sure that you have a clear record.
5. Finish NMLS application
The fifth step is finishing your NMLS application. With its completion, all necessary information about you (such as your qualifications) will be consolidated in one place. This will enable you to work legally as a loan officer.
Watch this video about the honest experience of a loan officer during his first two years in the profession:
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What are the steps on how to become a loan processor in the US?
Similar to becoming a loan officer, aspiring loan processors must also get a license before they can work in their respective states as loan processors. Here are the three steps on how to become one:
- finish high school
- go to training sessions
- get a license
Let's check each step below:
1. Finish high school
You need to at least have a high school diploma or general education diploma if you want to work as a loan processor in the US. However, some banks and mortgage lenders require that you have a college degree.
2. Go to training sessions
Training sessions, while not required, are important for new loan processors. Be sure to hone your skills not just through these programs but also while working on the job itself. You can also earn certifications to increase your credibility.
3. Get a license
Most states require that you get a license first before working as a loan processor. You must also earn a license with the National Association of Mortgage Processors (NAMP).
Once these three steps are satisfied, you can now start your journey as a loan processor in the US.
Loan officer vs. loan processor: client interaction
A loan officer’s role involves client interaction most of the time. They must maintain a good relationship with their clients not only to boost their career but also for possible referrals. Loan officers will also introduce the loan products and services offered by their employer-lender so their communication skills must be top-notch.
The function of loan processors is more on the administrative side. They work on documentation and tracking the client’s profile through the submitted information. Loan processors do this instead of directly communicating with the client.
Loan officer vs. loan processor: Which career should you go for?
The answer depends on many factors. Your personality and career goals will determine whether you should work as a loan officer or a loan processor. If you are into client-facing jobs, choose to become a loan officer. If not, try working as a loan processor.
Either way, both professions can provide career growth and stability.
Did this guide help you understand the differences between loan officer vs. loan processor? Share what you think in the comments section below
