Expert AnalysisLO TrendsMay/June 2024 Edition

Embracing And Empowering The Expanded Role Of The Loan Officer

Amidst the ongoing discourse in the mortgage lending industry, it’s crucial to underscore the loan officer’s pivotal role, which is poised to undergo significant changes. Interestingly, much of this anticipation is rooted in the role of organic evolution, driven by shifting regulations, technological advancements, and evolving consumer demands.

The 2010 Dodd-Frank Act set many changes in motion, with various new regulations calling upon lending institutions. Therefore, the loan officers should act in good faith in determining a consumer’s ability to repay a mortgage loan, conduct additional due diligence in unusual requests for mortgages such as property flips, provide homeownership counseling in some instances, and restrict loan originator compensation to prevent LOs from steering customers to more expensive loans to increase their income.

These requirements expect the loan officer to take on a more vital advisory role to protect the borrower from unanticipated financial consequences.

The growth in technology removes many manual processes from loan officers’ plates, ideally freeing up their time to engage in the kind of consultation needed to ensure the borrower is provided with the information and education they need to make the best decision for their situation.

And finally, the recent shift in how consumers approach buying a home also puts a loan officer in a different position in the chain of events. Rather than hiring a real estate agent first to learn about available properties, consumers start with online searches to assess what is available. The first professional they contact is often the loan officer to determine what they can afford before wasting time traipsing into dream homes beyond their means.

Lenders must acknowledge the shift from order taker to financial advisor in the loan officer’s role. This recognition should accompany a reassessment and enhancement of the hiring and training processes. Those who embrace this change will benefit from their loan officers’ expertise and foster a more productive work environment.

Hire for skills you cannot train.

We agree that specific skills are essential to a successful loan officer. How do we appropriately recruit for these skills, and more importantly, how do we support these efforts to ensure an atmosphere for success among our loan officers and companies?

It’s crucial to hire skills you cannot train. Doing so can establish a robust training program for those attributes you want to develop in your loan officer pool, ensuring a solid foundation of essential skills.

Lenders seeking long-term growth know that investing in their front-line loan officers is the best pathway to success.

Here are some fundamental qualities to look for in the hiring process, i.e., the skills you cannot train in character and work-relevant skills.


Character is a crucial aspect that cannot be trained but can be identified and nurtured in loan officers. Recognizing and hiring loan officers with character traits that align with your business objectives is critical in building a successful team.

For instance, the quality of servant leadership is tailor-made for lending institutions aspiring to more tremendous success.

A servant leader believes that the success of everyone in the transaction is vitally important, especially the borrower, including the real estate agent, the title and closing agent, and all of the many service providers involved in the transaction. Be a good listener, empathize with the borrower’s situation, share a sense of commitment to the customer with all the providers, and hold a broader appreciation for how helping people buy a home benefits the community long term.

Work ethic is another quality you cannot train, and it can be the most challenging attribute to identify in a candidate since people applying for jobs will always tell you how hard they work. In the case of a loan officer, work ethic cannot be tied to production alone but should be assessed in their dedication to the customer. This can be discerned by the candidate’s approach to working with a borrower to get them the best loan for their situation or by going above and beyond to help them find loan assistance programs to get them over the financial barriers to homeownership.

Emotional intelligence, teamwork, adaptability, and integrity are all necessary character attributes as loan officers become increasingly vital to borrowers at the front end of the transaction.

Sales acumen

An effective loan officer must have a specific set of skills native to this particular profession, and one of the most important is the ability to communicate effectively. This is fundamental in the LO’s work with the borrower, where education and the borrower’s grasp of the loan terms are critical in the decision-making process.

However, communication is also crucial in working with the real estate agent, title and escrow providers, and the many service providers the LO relies on for data in underwriting the loan.

Attention to detail, problem-solving proficiency, an aptitude for technology, and a commitment to staying informed of current trends are also must-haves for an LO.

Finally, personal confidence, the ability to network, drive, and resilience are vital to building a solid business book.

Empowering the loan officer

Even the most skilled loan officer cannot be effective if their work environment does not provide the necessary tools and resources to support their native abilities. Here are a few critical areas to consider.

Creating a culture of success

In the mortgage industry of the past, a culture of success was envisioned as little more than a hard-driving sales team married to the spreadsheet’s bottom line. The outcome of that kind of linear thinking killed off more than a few lending institutions in 2008.

For lending institutions seeking stability and long-term viability, a culture of success for their loan officers is not just a goal but a necessity. This culture should emphasize a conscious and consistent effort that aims not only for their success but also for their well-being and advancement, inspiring and motivating them to excel.

Culture is not just words on paper. A company’s culture has to be a well-thought-out strategy steeped in the company’s values, which plays out in many ways, including hiring managers who act in alignment with the culture, creating a working environment that instills allegiance to the values, and providing the compensation, benefits, and personal flexibility that nurture the individual.

Providing tools and resources

Some of the most fundamental resources you can provide your loan officers are ongoing education and a mentorship program. Great loan officers are committed to growth in their profession and helping them tap into resources to expand and perfect their lending knowledge is necessary for retention. In addition, creating an active and substantive mentoring program will not only help your LO improve over time. Still, it will also prove a pathway for retaining the best and the brightest as they seek opportunities to move up in the organization.

LOs good at consultation and sales are not necessarily gifted in marketing. Providing your LO with an experienced marketing team who can help them create and market their brand, identify opportunities to connect with potential homebuyers, build email and social media campaigns, and develop introductory and marketing materials provides a robust base from which they can expand their reach.

Another critical area is backing up your LOs with well-crafted educational materials. These materials can be developed across various communications channels, including hard copy flyers for in-person education, website portals with downloadable flyers on multiple topics for borrowers, and YouTube videos featuring your loan officers explaining different facets of the lending process.

Technology is king

Enough can’t be said about the importance of providing your LOs with robust technology to free up their time and allow them to become a consultative professional who will attract new clientele to your lending institution.

Some might say that the LO of the past was a number-crunching paper pusher. Still, over the past decade, the role has taken on additional responsibility more reminiscent of a financial advisor than an order taker.

To be proficient in the new gravitas of that role, the LO must have the technological tools to efficiently navigate the variables that make up the borrower’s profile and position the borrower in the most appropriate loan product. Anything that streamlines the many steps in the process will be a welcome boon to your staff.

The bigger picture

For great LOs who aspire to become more integral to the organization, moving from the one-off loan to taking a more profound interest in and role in the customer’s broader financial experience will go a long way toward ensuring they have customers for life.

To do that, the LO must have the tools, resources, and time to nurture a relationship with the customer both during the time the customer is working through the loan process and after that event to offer additional products and services, which may encourage a customer’s deeper, longer, and more active relationship with the lending institution.