FHA Loans and Originators

• The FHA does not make loans; it insures loans. If a borrower defaults on an FHA loan, the government will pay back the money to the bank or mortgage company. Similarly, FHA loan originators do not work for the FHA. They work for mortgage companies and banks that make FHA loans. FHA loan originators must explain features of FHA loans to applicants, in addition to helping them apply for FHA-backed loans. FHA loan originators also work with their managers to decide whether the bank or mortgage company will approve them for the loan.
  
  

Split Compensation

• Different banks and mortgage companies pay their loan originators differently. Some earn a salary. Others earn a commission, while still others earn a salary and a commission. A loan originator's commission is often referred to as split compensation. Often loan officers split the profits of loans they originate with the company that employs them. To qualify for split compensation, however, you must be a licensed loan originator.
  
  

Education and Certification

• Although some banks and mortgage companies do not require loan originators to have a degree beyond high school, the federal government requires that all mortgage loan originators have a license. The Bureau of Labor Statistics notes that obtaining a loan originator's license requires coursework of 20 hours or more, an exam and a background check that shows you have no felonies. Loan officers must also go through continuing education. In addition, many companies have their own training and certification programs or require employees to obtain certification from an independent certifying body or school, like the Mortgage Bankers Association, which offers the Certified Mortgage Broker (CMB) program.
  
  

FHA Approval

• In the past, the FHA was responsible for approving loan originators who worked on FHA-backed loans. However, the FHA no longer assumes that responsibility. Instead, banks and mortgage companies that issue FHA-backed loans are solely responsible for ensuring that loan originators working on FHA loans follow FHA procedures. So, if you are working as a loan originator at a bank or mortgage company, your employer will determine if you need additional training before you can work on FHA-backed loans.