What is an MLO?

Ameritrain 19 Feb , 2024 Ameritrain

Before we clarify what a Mortgage Loan Originator (MLO) is, let’s begin by clarifying what an MLO is not.

For starters, an MLO is not the same as a real estate agent. A real estate agent assists individuals in the process of buying or selling a house. In short, they show residential properties, help execute sales contracts between parties, and assist with property inspections. Real estate agents do not provide financing for mortgage loans. Real estate agents help people find a home to purchase or sell a home they have. They do not play any role in securing financing to buy a home. 

Unlike a real estate agent, a residential mortgage loan originator is a financial professional who helps individuals secure mortgage loans. Their sole responsibility is to assist borrowers in obtaining loans to purchase real estate or, if they are already homeowners, to refinance their existing mortgages. MLOs cannot work in the mortgage industry for non-banking entities, like lenders or brokers, without first passing a national exam and meeting state-specific requirements to get their license. Similar to MLOs, real estate agents must also have a state license, but as previously discussed, a real estate license only enables agents to assist individuals with the sale or purchase of residential real estate.   

Now that we have covered the differences between real estate agents and mortgage loan originators, let’s explore some of their key responsibilities. 

The MLO's principal role is to assist individuals seeking mortgage financing with the application process. This will involve collecting and reviewing the financial information of borrowers, such as income, credit history, and debt obligations. Based on this information, they determine a borrower's eligibility for a mortgage. 

To determine a borrower’s eligibility, it is necessary for the MLO to thoroughly understand the various types of mortgage products, interest rates, and loan terms available in the market. Just like people come in all shapes and sizes, so do loan products. Partnering with a knowledgeable MLO ensures clients receive the best loan options to meet their needs. 

A critical part of an MLO’s role is negotiating loan terms and conditions with lenders on behalf of borrowers to secure the most favorable terms. Think of an MLO as a prospective borrower’s representative who presents an argument to the underwriter, who determines loan approval, similar to an attorney presenting a case in a court of law.   

Building and maintaining relationships with real estate agents, financial institutions, and other professionals in the industry is another relevant part of the MLO’s job. These connections can help MLOs access an even broader network and provide better services to their clients. 

As mentioned, MLOs working for non-banking entities must hold a state license to meet regulatory compliance requirements. MLOs must ensure the loan origination process complies with all relevant state and federal regulations. This involves staying informed about changes in mortgage laws and regulations. 

It is important for Mortgage Loan Originators to be licensed, as regulations vary by jurisdiction. Licensing typically involves completing pre-licensing education, passing a licensing exam, and fulfilling ongoing continuing education requirements. These requirements aim to ensure that MLOs are knowledgeable, ethical, and capable of assisting borrowers in navigating the complex process of obtaining a mortgage loan. 

For more information about becoming an MLO, visit www.ameritrain.com