Category: Ethics
Mortgage Folks: Stop Blaming Fannie, Freddie and the CRA for the Meltdown
Hi Everyone, When the topic of blame comes up, lots of us in the mortgage lending industry always seem to want to point towards someone else instead of taking a look at our own role as loan originators, processors, underwriters, and so forth. One thing I constantly hear is how it was the fault of [...]
View PostAre the Cash Call radio ads advertising a “no fee” loan deceptive?
I listen to 97.3FM and am a longtime listener of Dave, Luke, Dori (accidentally listening since 1995), Ron, Don, John, @thenewschick and @joshkerns38. I am so sick and tired of hearing the Cash Call radio ads that everytime one of the ads run, I feel the need to switch the dial over to satellite radio and I’ve been meaning [...]
View PostNewest Scam: Assignment of Mortgage Payment System
I have received several emails from confused loan originators and Realtors wondering if this “Assignment of Mortgage Payment” system is real or just another scam. There will always be a get-rich-quick scheme and people willing to take your money to sell you a system. The people who are really making the money are the ones [...]
View PostLOs Who Attack Realtor Commissions Might Want to Look Inward
I was just asked to proof a very agressive manifesto penned by a mortgage broker who was attacking the, in his words, “outrageous” commissions Realtors make when helping people buy and sell a home. It made me wonder why the LO was so angry with Realtors in general. Any Realtor who reads the article in its [...]
View PostHow to Think About Ethics
What do you remember from your last Ethics class? When I ask this question, the room falls silent. Then maybe a lone person might shout, “honesty.” Someone else might say “The Golden Rule.” It’s easier to talk about ethics in smaller groups rather than one large group so when the classroom is divided up into [...]
View PostCase Study: NAACP v. Novastar
Novastar and its mortgage broker Bell South Mortgage (Bell) conspired to maintain a policy of denying all loans secured by row houses in Baltimore and discouraged the referral of such business. Over a period of time, HUD sent shoppers to Bell/Novastar who were repeatedly treated differently based on protected characteristics of race, color, racial composition, [...]
View PostCase Study: Carnell v. KMC
Carnell, a self-employed 64 year old single man with no dependents, applied to KMC Mortgage Co. (KMC) to refinance a first and second mortgage and get cash to buy tools for his small business. Besides what he earned as a general handyman, he received Supplemental Security Income (SSI) for a disability. At application he talked [...]
View PostAre Loan Originators Professionals?
When I ask the question “Are loan originators professionals?” to a group of loan originator students in ethics classes, almost everyone says “yes.” Anyone can do their job in a professional manner (adjective,) but not everyone is a Professional (noun.) Is your barista at Starbucks or the person who bags your groceries a professional? If [...]
View PostMortgage Industry Codes of Ethics
Read the Code of Ethics from these three trade organizations. Don’t worry; it will be a very fast read. National Association of Mortgage Brokers National Association of Mortgage Women For the Mortgage Banker’s Code, follow this link and click on “cannons” from the menu on the left. What’s missing? Could some of these phrases be re-worded? [...]
View PostFee Splitting
I recently wrote about a common question I often receive in which an unlicensed LO asks a licensed LO to act as the originator on a transaction, and pass part of the origination fee back to the unlicensed LO. Read the story here. What are the possible consequences for the licensed LO, the unlicensed LO, the [...]
View PostSolutions to the Mortgage Lending Crisis
The mortgage industry crisis is a gift. Mortgage lending can emerge from this mess and transform itself. I have been co-writing about predatory lending and the ambiguous professional status of retail mortgage salespeople for over 7 years. The industry has traded consumer respect for massive profits. It does not matter where you work: banker, broker, credit union, consumer [...]
View PostWhat the Space Shuttle Challenger Disaster Can Teach Us About the Current Mortgage Lending Crisis
In this mortgage ethics article about allegiance to rule-following, I will compare the mortgage industry crisis with a classic business ethics case study. The space shuttle Challenger accident has frequently been used as a case study in the study of engineering safety, the ethics of whistleblowing, communications, and group decision-making. With Challenger, an O-ring eroded on earlier shuttle [...]
View PostThe Giant Pool of Money, by TAL and Chicago Public Radio
This NPR radio episode runs just under 54 minutes. Click on the “download” button; it will take several minutes to download. While you’re waiting, browse through some of our other articles on Ethics in Mortgage Lending! In order to better understand why we are currently facing massive mortgage loan defaults of epic proportions, this radio program [...]
View PostAre Mortgage Loan Originators Professionals?
When I ask the question “Are loan originators professionals?” to a group of loan originator students in ethics classes, almost everyone says “yes.” Anyone can do their job in a professional manner (adjective,) but not everyone is a Professional (noun.) Is your barista at Starbucks or the person who bags your groceries a professional? If [...]
View PostThe Subprime Meltdown
When I entered the mortgage industry in 1985, Conventional loans were only for those who could put down 10%. Most folks opted for an FHA or VA loan. There was no risk-based pricing. Everyone received the same interest rate on their mortgage loan whether they had great credit or a few late payments. Homeowners with [...]
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