Loan officers usually specialize in commercial, consumer, or mortgage loans. Commercial or business loans help companies pay for new equipment or expand operations; consumer loans include home equity, automobile, and personal loans; mortgage loans are made to purchase real estate or to refinance an existing mortgage. As banks and other financial institutions begin to offer new types of loans and a growing variety of financial services, loan officers will have to keep abreast of these new product lines so that they can meet their customers’ needs.
In many instances, loan officers act as salespeople. Commercial loan officers, for example, contact firms to determine their needs for loans. If a firm is seeking new funds, the loan officer will try to persuade the company to obtain the loan from his or her institution. Similarly, mortgage loan officers develop relationships with commercial and residential real estate agencies so that, when an individual or firm buys a property, the real estate agent might recommend contacting a specific loan officer for financing.
Once the initial contact has been made, loan officers guide clients through the process of applying for a loan. The process begins with a formal meeting or telephone call with a prospective client, during which the loan officer obtains basic information about the purpose of the loan and explains the different types of loans and credit terms that are available to the applicant. Loan officers answer questions about the process and sometimes assist clients in filling out the application.
After a client completes the application, the loan officer begins the process of analyzing and verifying the information on the application to determine the client’s creditworthiness. Often, loan officers can quickly access the client’s credit history by computer and obtain a credit “score,” representing a software program’s assessment of the client’s creditworthiness. In cases a credit history is not available or in which unusual financial circumstances are present, the loan officer may request additional financial information from the client or, in the case of commercial loans, copies of the company’s financial statements. With this information, loan officers who specialize in evaluating a client’s creditworthiness—often called loan underwriters—may conduct a financial analysis or other risk assessment. Loan officers include such information and their written comments in a loan file, which is used to analyze whether the prospective loan meets the lending institution’s requirements. Loan officers then decide, in consultation with their managers, whether to grant the loan. If the loan is approved, a repayment schedule is arranged with the client.
A loan may be approved that would otherwise be denied if the customer can provide the lender with appropriate collateral—property pledged as security for the repayment of the loan. For example, when lending money for a college education, a bank may insist that borrowers offer their home as collateral. If the borrowers should ever default on the loan, the home would be seized under court order and sold to raise the necessary money.
Some loan officers, referred to as loan collection officers,
contact borrowers with delinquent loan accounts to help them find a method
of repayment in order to avoid their defaulting on the loan. If a repayment
plan cannot be developed, the loan collection officer initiates collateral
liquidation, in which the lender seizes the collateral used to secure the
loan—a home or car, for example—and sells it to repay the loan.
Source: Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook