Should loan originators take a second job while rates are elevated?
I recently had a conversation with a loan originator who was considering taking a second job “until rates come back down.”
First, check your state mortgage lending laws and rules to see if there are prohibitions against having a second job. Some states will allow it, some states will not.
Next, you’ll need to make sure that having dual employment is allowed by your current and any future employer.
Important: You’ll need to update your employment information within the NMLS with your second job.
Let’s take a look at this from the position of your existing company managers.
Your employer is responsible for your conduct and your manager may not want to keep you on their team because it is difficult to stay completely up-to-date with all compliance and company policies and procedures if you are only originating part time. How are you going to keep up to date if you’re unable to attend routine company meetings? Who is going to take the calls from your customers when you are not available? Why should the company even pay you a full time LO’s commission, if manager and others have to cover for you?
Pretending that you’ll only do residential loans during a certain time period is not believable to your second employer.
If you’re not available to answer questions from your mortgage company, your clients, or Realtors at any time, then Realtors and consumers may not want to work with you. This means you absolutely will be answering those phone calls and emails at any time of the day or night. And a second employer will figure this out really fast.
You could stay with your current employer, getting a part time side-hustle that’s not in the mortgage industry to pay the bills, where you could completely control when and how long you work, and then walk away from at any time. I am currently hearing about real estate agents driving for Uber or delivering food.
I do not recommend getting your real estate license because this can be an expensive commitment in both time and money. It is very rare for any mortgage company to want to hire you because you are not 100% focused on originating loans and that means you’re a risk. Almost all hybrid real estate agent/LOs incentivize the home buyer to use them for both. Since an LO cannot reduce their compensation, the hybrid real estate agent/LO will say that he/she will reduce their real estate commission. This may or may not be in the best interest of the consumer. And buyer-side real estate commissions are currently being tested in court cases all of the United States. Let’s wait and see what happens with those cases.
I DO know a very small number of hybrid real estate agent/LOs who CAN do a good job on both sides, but it is rare, and they have decades of experience doing this. The SAFE Mortgage Licensing Act of 2008 requires loan originators to look after the best interest of their customers and not themselves, to the greatest extent possible. How does the hybrid real estate agent/LO balance the duty of care to their customer and their agency law duties? That would be a great question to ask a mortgage company’s attorney.
I recommend considering part time or full-time employment opportunities at your existing mortgage company such as an LO assistant, compliance, loan servicing, file audits, secondary marketing processing and so forth. What you will learn from stepping into any of these roles will absolutely help you become a better loan originator in the future.
I recommend considering a full-time job at a company that is tied to the mortgage lending industry such as title insurance, escrow, credit reporting agencies and appraisal management firms, and mortgage insurance. You will become a better loan originator in the future from the knowledge you gain from learning this side of the mortgage machine. Or you might discover you like this side of the industry even better than originating loans!
Whatever you decide to do, DO NOT let your loan originator license lapse. If you don’t take the LO CE classes each year and renew your license, it will lapse and if you ever want to become a license loan originator again, re-activating your license could become expensive and time consuming. Depending on how long you’ve been out of the industry, you may have to retake some pre-licensing education and you might have to re-take the licensing exam.
In closing, if you just entered the industry during a recent refi boom and have cultivated no real estate agent or client relationships, just want to sit at a desk, make phone calls, and this was just a “sales job” to you, then exit the industry and find any other sales job. If you enjoy selling, then you can sell anything.
Keep thinking about it and talking about it with your managers and family and you’ll make the right decision.