A loan officer acts as the conduit between buyer and lender. Most states require the mortgage broker to be licensed. States regulate lending practice and licensing, but the rules vary. Most have a license for those who wish to be a “Broker Associate”, a “Brokerage Business”, and a “Direct Lender”.
Loan officers find, sell and counsel customers, and take applications. Loan officers employed by mortgage brokers may also be involved in loan processing. In the case of a one-person mortgage broker firm, that person is both the broker and the loan officer.
 While loan officers are employees, they act more like independent contractors. They are compensated largely, if not entirely, on a commission basis. The typical commission rate is 1/2 of 1% of the loan amount, and successful loan officers earn 6 figure incomes.
A mortgage broker is normally registered with the state, and personally liable (punishable by revocation or prison) for fraud for the life of a loan. A loan officer is typically not liable for their actions, and instead works under the umbrella license of their current institution. Typically, they have less experience in the field.
Both lenders and mortgage brokers post prices with loan officers to be offered to consumers. The loan officers usually have limited discretion to reduce the price if necessary to meet competition, and full discretion to raise the price if they can. The difference between the posted price and the price charged the consumer is called an “overage”, and it is usually shared with the loan officer.
