Loan Officers bid on chunks of the loan pool. They then are issued the currency and are able to distribute it to people that they see fit to be issued a loan. They cannot change the interest rate. Instead, they compete on their ability to help the issuer turn the loaned funds into cash producing capital.
Loan officers make their money off of the prefs paid from the accounts they give loans to. As the loan is paid back the number of prefs owned will be netted between the amount of the loans and the amount paid back. The loan officer may decide to forgive the loan to convert it to an investment. This forgiveness should not be taxed as it will encourage creating value with borrowed capital.