With each lender she got declined and figured how to get around that and then went to the next lender and when declined, she figured how to plug that next hole. I was number 4. No matter how she begged I would not go against guidelines and FIX the situation. She was so borderline and high ratios I couldn’t put a single mom into this situation. She was buying a home she couldnt afford. Somehow she got into this home, I found out they “changed her income” to make it work. She was counting on her BF moving in to help with the payments but she discovered he was married and was not going to move in like promised. I listen to the unsaid when talking with clients. A lot of time you learn more by sitting quietly. I guess I ask that same question on every loan, would I give this loan to my kids.

I have talked many people out of home loans when they start talking about budget cuts and “eating less meat” (true story) I do budget letters with people and remind them of hidden things like diapers and latte’s or how many cokes do you drink a day. Pretty soon people realize they can’t afford that home and either buy less or they usually will come back later. IF they do go somewhere else, get the loan and get hurt, they ALWAYS come back to me for help or to review that budget letter. I keep track of people even when I say no, I keep talking to them until the time is right and we can do a great fit loan for them. I really care about my clients.

So in short, I look for redflags such as many lenders on credit reports. I listen for things like “when my BF moves in I can afford it”…. or things like “well what if I get a raise”. Usually people want to tell you they lied if you listen. As a professional, they assume you know how to get around the guidelines and will do the loan to get a paycheck. I want repeat biz, not just one paycheck.

Clients moved in from another state. All belongings were in transit and to be delivered by a specific date. The clients urgently needed to find a home and secure financing.

Client, who was self employed, was asked to provide income documentation. Rules require me to order secondary documents which allow me to verify the validity of the documents the client provides. In this specific transaction, the documents did not match. An explanation was requested of the clients. Though the explanation was creative many doubts remained, the clients could not produce a valid explanation or fulfil the request for supporting documentation.

I was faced with many decisions: Do I assist in creating an acceptable story. Do I turn a blind eye and allow the loan to progress knowing there were falsified documents even though the credit history and assets were strong and satisfactory. What harm would it cause when the action of the approval did not put the clients, community or others into an adverse situation simply because the client chose to report lower than actual earnings for tax benefit.

This specific transaction has me identifying with all several moral aspects… character: could I participate when I believed fraud was present. Duty: Social observation of facts, the loan made sense, however it was my duty to my employer and others to follow the rules.

Once there is a mandatory code of ethics for all LOs ( no matter where they work) like doctors, lawyers, etc., you could turn to your code of ethics and be ethically justified by saying to these folks, “I am unable to help you secure a loan that will put you in a worse off position.” You wouldn’t be able to ethically justify it and neither would your competitor.

We don’t have such a code at this time. Someday we will.

Regarding religion, once a person is in the role of the professional, you would turn to your profession’s code of ethics. That becomes your profession’s “bible” so to say. And that code of ethics would help the members of your profession make ethical decisions.

Professionals can’t use one’s own religion to solve moral dilemmas in their role as a professional because there are literally thousands of different religions. Whose religion would we use? A person’s own religion is a nice place to start but once LOs transition into becoming professionals we wouldn’t stop there, instead we’d keep moving beyond religion to find a solution grounded in ethical theory that supports the goals of the professional group. This is what doctors, lawyers, engineers, CPAs, paralegals, nurses, and so forth, do. Someday LOs will be able to do this, too.

Q: How did you solve it?
I took a tremendous amount of time with each customer who’d inquired into these types of loans and when discussing other options, typically the customer would chose a product that provided better security.

Q: Do you identify more with Aristotle’s ideas, Kant’s duty-based ethics, or J.S. Mill’s Utilitarianism? Or maybe your ethical style is a combination of each.
I think my ethics would most closely resemble Kant’s duty-based approach, because I believe that as a service provider in our community it’s our duty to provide a service that is benefial to the clients, their families, the community as well as the longevity of my employer.

“What is the right choice for you? Is it also the right choice for your client?”

Balancing duty to self and duty to client is important for an LO and part of the failure in the predatory lending days.

However, now that LOs are fiduiaries in WA State, an LO’s client’s needs outweigh his/her own needs. That doesn’t mean LOs work for free. Instead it means LOs are duty-bound to make sure their clients understand how the LO is paid and how much the LO is paid for the work performed.

Who decide on the SISA, NINA? These loans in there mere essence presented a ethical delimena that the entire idustry is still falling from.

There was numerous times when faced with ethical issues I have just said, no I will not be involved in that deal. Only to be confronted later that someone else had done the deal.

With any time in a business and any modest amount of success most people will be faced with a ethical dilemna.

I refuse to be the most popular based on how I malipulated a deal. I work daily to be the best based on my knowledge of my trade and the effort I put forth. An attempt to be the best professional I can be.

This is a tough time for many of use it the business. More people don’t qualify because of unemployment income and the basic downturn in the economy. There is no putting a circle in a square any longer.

Thank HUD!!

Once an industry group becomes professionals, they join together to write such a book. Except it’s called a Code of Ethics and that’s the “book” their members turn to when faced with ethical dilemmas.

We can’t use religion as a basis of solving professional ethical dilemmas because there are literally thousands of different religions out there so whose religion would we use? Religion is a nice place to start but once we become professionals we wouldn’t stop there; we would keep going and write our own Code based on values that we all agree are desired across the industry (which just happen to also cross all religions).

This is one of the reasons why Aristotle’s Virtue/Values approach works so well in a professional setting.

I think NAMB needs to put together a designation much like the Realtor and start martketing it as NAR does. The new designation would be a higher level of ethical compliance and might require the lender to take an Oath on the holy book of their choie and be sworn in much like a physican’s oath to do no harm.

Regarding the idea that “a person either has it or they don’t” consider a little tiny baby. When a baby is born, does the baby automatically know how to be moral and ethical?

No. Humans learn and grow morally all throughout life. Even into adulthood we continue to grow morally. The philosopher Kohlberg taught us this.

http://en.wikipedia.org/wiki/Kohlberg’s_stages_of_moral_development

However, there are a few exceptions. That would be your average, garden variety socipath. This is why we have DFI: to regulate the people who will always choose to break the rules. But there never will be enough money to regulate every single transaction and every single LO in every single office in every single city. Our regulators are there to find and get rid of the sociopaths in our industry. For the rest of us, we can help each other grow ethically, which is what other professional industry groups do for each other.