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General Financial Lending Industry Overview
 
 

General Financial Lending Industry Overview

We will provide a general sense of the lending and finance industry inclusive of average loan officer-processor salary ranges, forecast for job opportunities and growth treks within the field, and examples of specific loan officer-processor positions, for instance, commercial versus consumer loan officers.



Loan Officer: Career Environment

When exploring the financial lending field as a place to begin your new career, some of the basic facts you may want to consider include:

· Loan officers are classified as being part of the overall banking industry.

· The majority of these (9 out of 10) were employed by commercial banks, savings institutions, credit unions, and associative financial institutions.

· There is likely to be competition for available loan officer jobs.

· Experience may trump formal education as far as marketability goes for loan officer candidates.

· Loan officers' earnings tend to fluctuate based upon the number of loans they have generated, a figure which may show substantial increases when the economy is good and interest rates are low yet significant decreases when the reverse economic trends are true (economy is bad and interest rates are high).

Not meant to be a deterrent but rather as a means of painting a realistic portrait of the lending industry, the job of loan officer can apparently be fraught with a great many challenges (economic conditions, internal competition, client development and retention, and others).

Yet, that is why those who possess such traits as perseverance, good money management, proactive yet also effective under reactionary situations, understanding of people's needs and behaviors where money is concerned, tend to do very well within the profession.

Not only do such candidates understand and, to some degree, accept the volatility of the marketplace, they also understand how to make the best of either end of the spectrum, for instance with interest rates either low or high, and not to let the external factors hamper their abilities to generate loans.
Loan Officer: Positions

Fortunately, within the banking and financial world, on account of the great diversity of employment opportunities, all who wish to become loan officers need not compete for the same types of positions.

Hence, candidates may take time to review the range of positions that exist within the lending arena and from there determine the specific traits they need to acquire in order to realize their goal.

The four major types of loan officer positions involve:

· Loan officers versus brokers.

· Working in a full service bank versus in a designated lending agency.

· Generalist versus specialist.

· Salary plus commission versus straight commission.

While we may have all heard the term broker being used and, perhaps may have thought it was interchangeable with loan officer, the truth is that a broker is more or less a mediator where they help the lender find a suitable loan given the qualifications of the client.

As such, brokers do not develop the close relationships with the client for this is the lender's duty to gather credit information, determine the client's needs, and then reach out to a broker or other source for specific loan amounts.

With respect to the working environment in which a loan officer works, they may elect to become associated with a bank versus a specified lending agency, for instance, a mortgage brokerage or perhaps, become affiliated with a credit agency. There their duties would entail more reviews of credit histories than actual origination and processing of loans.
Loan Officer: Generalist versus Specialist


Some loan officers are able to work with clients to obtain all forms of financial assistance from auto loans, emergency personal loans, and/or mortgages. However, other lenders have elected to specifically focus on the issuance of particular loan types, for example, school loans or perhaps a specific industry or sector of an industry, like small business expansion.

While the generalist loan officer may be afforded greater diversity and the specialist more focused, the success of each is wholly dependent upon one's ability to cultivate a following for their services as a whole.
For generalists, their mainstay is based on being able to convey knowledge on a good number of different lending products. So in some respects, specialists may have it easier as they can pour all of their energy into that one particular area.
For instance, should one specialize in small business loans, they may do well by utilizing their time attending industry specific events, small business seminars, and networking sessions, and becoming educated on trends or developments occurring within the small business arena.

Yet, specialists are then relegated to generating the bulk of their business from one particular niche market. Should anything cause a downturn within that particular industry, for instance, stagnancy of small businesses, then their business will be profoundly affected. In contrast, in instances of industry downturn, generalists will likely fare better for they can shift their attention to areas in which there is motion.

Loan Officer: Payment Structures

How do you prefer to earn your money? Do you like the idea of unlimited earning potential or are you more secure knowing what your biweekly take home pay will be?

In the case of loan officers, although some tend to be paid on a flat salary, the majority tend to be paid on commission. The third payment option is that of receiving a flat salary buffered by commission bonuses paid out based on performance. Banks also compensate loan officers in part by providing them with free or discounted banking services.

The form of compensation for loan officers varies. Most are paid a commission based on the number of loans they originate. Some institutions pay only salaries, while others pay their loan officers a salary plus a commission or bonus based on the number of loans originated. Loan officers who are paid on commission usually earn more than those who earn only a salary, and those who work for smaller banks generally earn less than those employed by larger institutions.

According to a salary survey conducted by Robert Half International, a staffing services firm specializing in accounting and finance, consumer loan officers, referred to as personal bankers, with 1 to 3 years of experience, earned between $30,750 and $36,250 in 2007, and commercial loan officers with 1 to 3 years of experience made between $45,750 and $70,250. Commercial loan officers with more than 3 years of experience made between $61,750 and $100,750, and consumer loan officers earned between $36,250 and $51,250.

In 2006, the median annual earnings of loan officers was estimated to be $51,760.

Note: Earnings of loan officers with graduate degrees or professional certifications are viewed to be higher.

Additional incentives offered to loan officers include enhanced or complementary checking privileges, as well as, lower interest rates on personal loans.
Loan Officer: Job Outlook for, and Transforming Role

In the coming years, loan officer candidates can expect average employment growth.

More specifically, the rate by which the employment of loan officers is projected to increase between the years of 2006 and 2016 is estimated to be at 11 percent (up to approximately 415,000 loan officers in the U.S. from the present 373,000) or on par with that of the average for all occupations through the year 2016.

Note: Job opportunities are forecasted as being the best for persons with a college education and related experience.

The positive projected growth can be attributed to poor economic conditions necessitating increased numbers of persons to seek assistance from outside funding sources; spending trepidation where persons are less likely to use their own money for secondary expenditures; and changes in the regulation of lending practices enabling loan officers to better service clients.

Conversely, as major shifts have occurred within the lending-credit industry, loan officers are also faced with a credit crisis situation where the creditworthiness of clients needs to be carefully evaluated to avoid a further hindering of the U.S. economy.

Fortunately for loan officers, the use of credit scoring has simplified the loan evaluation process to the point where, in select cases, it may even be unnecessary.

The integration of credit scoring to the application and credit review process has afforded loan officers, in addition to loan underwriters, the ability to complete greater numbers of applications then in the past.

On a separate front, rises in the use of automation, lending to shorter processing times, and increased online or Internet reliance, has eliminated the need for some loan officers as clients may fill out and submit applications on their own.

Yet, if loan officers choose to compete with online services, they can increase their volume simply by tapping into the steady stream of available clientele, benefiting from the automation and standardization that is an inherent part of the online loan application process, and servicing clients within an expanded work day timeframe.
Still, however, an area of lending that is in flux, especially where mortgages are concerned, with future growth anticipated online lending outlets are seen as vying for the business of physical loan officers.
 
 
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