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 smaller working groups and I charge students to come up with a list of 10 things they learned, or to come up with a list of 10 character traits they admire in people (like honesty, courage, etc.) the task is easier because we have each other to talk with.

The SAFE Act now requires licensed LOs to take an ethics class every single year.  Along with that, course providers like NAMF have to insert additional topic categories inside our ethics class: Consumer protection, fraud, and fair housing.  So you’ll be taking an ethics class….every….single…year.  It might seem irritating that the government is mandating this every year but if you think about it, ethical dilemmas change from year to year and course providers are charged with making sure our courses are current each year.

But the mortgage lending industry doesn’t have a required, mandatory code of ethics which all members must subscribe to.  The codes that do exist are pretty lame and are only voluntary.

So we should ask the NMLS, if we are suppose to think about ethics, whose ethics are we suppose to be learning?  Without direction from NMLS, it would be pretty presumptive to assume that we’re suppose to teach/learn the NAMB, NAMPW, NAMF, MBAA codes of ethics. 

So where does an industry begin to learn how to use ethics to solve their professional ethical dilemmas? For example, if we were to sit down and write a brand new code of ethics for the industry (don’t worry, there’s not enough time to do that for the purpose of this article) we would have to start somewhere and here’s where it is: We’d look to normative moral theory.  (Read a very brief paragraph on descriptive, normative, and analytical ethics here.)  Normative moral theory can be applied to any profession such as law, medicine, and even the emerging profession of mortgage loan origination. If we were to sit down and write a code, we would create that code from elements of Aristotle’s virtue ethics, Kant’s duty-based ethics, and J.S.Mill’s Utilitarianism and apply these theories to ethical dilemmas faced by loan originators.

Someday the industry will be ready for mandatory, prescriptive code. If you’d like to take a look at an industry that’s created a prescriptive code, we can look at the Realtor Code of Ethics.  Make all the Realtor jokes you want to; their code has been around for over 100 years.  To me, this means the Realtor association is 100 years ahead of mortgage lending in terms of promoting the moral development of their profession. 

Ethical subjectivism is one of the many reasons that lead to the subprime meltdown. The industry is still in need of an objective, prescriptive code.  An argument against that position is that as long as we follow state and federal law, we don’t really need anything else to guide us.  That may be true, but then that person is arguing to keep himself/herself about as morally developed as a teenager. 

Assignment:
Consider an ethical dilemma you’ve faced during your time originating loans. If you are a new or newer LO, think about an ethical dilemma you’ve faced in another job position.

Q: What was the dilemma?
Q: How did you solve it?
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.

Remember, it’s okay to use intuition, emotion, and religion to start your thinking process but we can’t stop there. For example, our intuitions might be wrong. Emotions (example of fear-based thinking “if I can’t sleep at night I know it’s unethical) are a pretty self-serving way of solving problems, and there are literally thousands of different religions in the world so although it’s fine to reach back and think about the ideals you learn from your religion, once you become a professional, your code of ethics becomes your bible.  Since our industry doesn’t have that mandatory code of ethics just yet, we definitely CAN use normative moral theory to get us started.