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? If so how?
For example from the Mortgage Broker’s Code, the phrase “Mortgage brokers shall conduct their business in a manner reflecting honesty.” This could mean brokers simply have to look like they’re being honest. I would re-word this to say something like, “brokers shall be honest when conducting the business of mortgage lending.”
It seems to me that they all sound the same. I wonder if they all just copied and pasted from the Mortgage Banker’s Code. Now let’s take a look at some of the newer trade associations.
Upfront Mortgage Brokers Association
National Association of Responsible Loan Officers
Certified Mortgage Planners
National Association of Mortgage Fiduciaries (link coming soon)
Can you see how the industry is beginning to transform?
Do you have a code of ethics at your company? If so, please provide the link in the comment box. If not, ask your manager why and tell us what he or she says.
as far as I know we dont have a formal code of ethics at this moment, but it is an unwritten rule that we will conduct business in an upfront and honest manner
We don’t have a written code of ethics but it is clearly understood that we will not charge unreasonble fees and those fees are explained to our clients upfront.
Canon #4 of the National Association of Mortgage Brokers Code of Ethics states: Fiduciary Responsibilities – Members maintain and use money or property held on behalf of others in a prudent, identifiable manner and for the purposes such were received.
I feel that this is a very loosely written and abiguous Canon. They don’t even mention the fiduciary of always looking out for and protecting clients best interest.
As far as I know our company does not have a formal written code of ethics, but I think all good ideas have a starting point. I am going to suggest we have one, and post it openly. It instills morality in our loan officers and confidence in our customers.
I think we all should have a code of ethics to live by exspecialy in the business world. as I read through the canon, I notice the word “act” in canon 2 & 7 I do not like that word, it implies fake, not authintic, to me. I would much rather have it read like this.” (2) Members should conduct themselves in a manner that reconnize that integrity and confidentiality are essential in the real estate finance industry. (7) Members shold conduct themselves with applicable laws and regulations and cooperate in every appropriate way with govermental bodies.
Our company has a very strict set of “Personal Conduct” rules that are linked to the companies “Core Values”. As part of the initial interview process for employment everyone has to read and agree that this is something they will follow or the process goes no further.
I own my own company and I am very strict with how my employees should conduct themselves with regards to the business. I also believe that the same integrity should be applied personally as being a sales person you are constantly confronted with opportunities to help people based on the knowledge of the business.
I take fiduciary duty very seriously. I take continuing education and research very seriously and require that employees continue to learn as much as possible about everything going on in the industry regardless of their position. I have a zero tolerance for fraud or misleading statements.
The number one goal of the company is to help the client and meet their needs.
Our company has many Values and Personal Conduct rules we use. We have a handbook of different approaches we use as a company to keep personal and group ethics in place. I believe many of the Code of Ethics I read are very similar and have a lot of repeated, unecessary material. People know the difference between right and wrong, it’s those who choose to do wrong that disregard any Code put in place.
I think these codes of ethics are for the most part correct and say what should be practiced by everyone. My main question is: Do all of us really have the background and undrestanding of finance to sell these sofisticated financial instruments? Even if a person has the intention to help his or her client, one must have the technical proficiency to do so.
Our company doesn’t have a written code of ethics, We have been educated on what is right and wrong. We strongly encourage all parties involved in the loan process to do what is morely right for the consumer.
I thought that after reading the 12 canons that they all seemed very resonable and easy to follow although some of the wording could be changed. I would have no problem taking additional course or study requirements such as SMBA. Perhaps with more study requirements the ethical issues might decline.
I have read the SMBA Cannons the CMPS Code Etc. and combined with all other codes, standards and guidelines in existance makes you wonder what went so wrong, I have to conclude that human nature threw rhe Codes and Ethics out the window and greed and selfserving opportunism toke over and brougt us to this crazy point in the Mortgage /Real Estate world. Honesty and Diligence along with being sensitive to the fears that many home seekers have about obtaining a mortgage loan, earning their trust and confidence as a responsible advisor sounds simple but is absolutly necessary in the loan Industry
Hi richard,
Actually, there was no one at these organizations making sure that their members complied with the association’s code of ethics.
A code without enforcement is like having no code.
I wish we had a code of conduct. It seems that everyone likes to talk about ethics and honorable codes of conduct, but what happens after the client leaves and no one is looking? My opinion is that with today’s relaxed moralities, to many of our cohorts this all sounds wonderful because this kind of talk makes us feel good. But to actually do what we’re talking about requires understanding — and much of our profession are missing this key ingredient.
It all goes well beyond testing. Perhaps if we each signed an oath of conduct and every brokerage insisted on a written standard? It all eventually reduces itself to the quality of people that are hired. I believe that customers subconsciously know the difference.
A good company, with good people, providing a good service, will attract good customers . . . and the rest will eventually change or fade away.
Primerica has a code, though I am sure like all agencies not all believe or follow the code. Like Robert said above A good company, with good people, providing a good service will attract good customers…
THE CODE OF ETHICS! How do you enforce the code? Either your individual make up is designed to uphold the quality or it’s not. It’s your established values and principles which help maintain these ideas of conduct. We can write them, rewrite them, teach them and enforce them. But we cannot create the true desire to abide in them. Only the individual can make that decision.
There is a striking difference between the sites. The SMBA Cannons of ethics are contained in one page, while the the code of ethics from CMPS covers four pages. The SMBA Cannons are not crisp and do not get to the point rather they say things like “conduct business in a professional manner” Very broad interpretation here. Where as the CMPs Ethics code spells out specifically how clients are to be treated, much more detailed. ” not deliberitly mislead, avoid exageration, misrepresentation, concealment of facts. In general the more updated wording spells out throughout the code of ethics more detail as to what it means to be profeessional, or have inegrity. One other example is competition. Members “support healthy competition” vs “shall not knowingly or recklessly make false or misleading statements about competition, their business, or their business practices” Again the newer language more clearly defines what is required of the code of ethics. So theere is a transformation going on to more clearly define what are code means as we practice it. I was unable to find ethics in our home page and will bring that up. in meetings we do discuss ethics and whatconduct is expected.
My company does not have a formal code of ethics but we had to go through a orientation class with my office. Upon signing a contract with them, we were educated in the moral of this industry.
If you have integrity-the Codes of Ethics should not be a problem. Very simple really…
I like a Code of Ethics for Mortgage loan officers and brokers. To me it goes almost unsaid. But a lot of people don’t think that way. It is very similar to having a Fidicuary relationship. If a person looks out for the best interst of a customer, he/she will be acting in an ethical, professioan manner. It is similar to Marketing 101. You have to meet the needs of a client, not just “sell” something.
I have been a branch manager for several companies through out the years nad have always consudted myself with the utmost ingetrity. With that said, I have always had return business and a ton of referrals just because of my conduct.
If you are a professional sales person, you will get repeat business and referrals by using ethics. You can’t survive this business anymore by not wanting referrals and repeat business. You can’t!
My company has a strict code of ethics expected to be followed by all employees. Personal codes are also expected by the general population as a whole.
As a mortgage professional in the business I guess i would expect the same with other companies and individuals.
You just can’t conduct any type of business without certain guidelines in place.
To be sucessfull and provide good service that will ensure a strong referral business you must be ethical. You must work for an eithical company that is without reproach. I work for a company that has a very strict disclosure policy. If your client is in escrow and doesn’t understand what he/she is signing, you the LO are required to go and explain it. (if this does happen at all it only happens once) I understand the reason for the Ethical Codes, Bill of Rights, not compensating third party’s for referrals, negotiating price with apprasiers…. if you work hard at compling a team of professionals that are in the business to stay, these principals are understood.
One of the tensions in our industry is when a client shops around with different loan officers and does not disclose how much work their current loan officer has put into their loan. What’s missing for loan officer to loan officer ethics is for us to ask clients that are “shopping” around if they are pleased with their current loan officer and if they are just looking for the best price. I have made it a practice to ask clients if they are working with another loan officer, and if so, that they should stick with the loan officer if they have already invested substantial time with them and have provided honest, prompt service, to honor that loan officer.
I think banks should shorten the length of their code of ethics and focus on perhaps 5-7 points and make them concise. The industry is being transformed for the better, but until their is self-regulation, increased licensing and education, it won’t be meaningful. Our company does have a code of ethics in the employee manual.
We voluntarity subscibe to the National Association of Responsible Loan Officers. We have our own 8 item code of ethics. To see this code go to NARLO. http://www.narlo.com
We do have a code of ethics, and it is strictly enforced. I think as long as aents, brokers,companies, ect., think about what is best for the client and not with their wallets a code of ethics would’t even be needed. Unfortunatley that’s not how it is and I believe that is one of the biggest reasons we have a mortgage crisis at hand.
Ethical behavior, personal or professional, is invariably linked to an individual’s learned values. In our society, these values are typically learned in the formative years at home and built upon at church, school and other social activities…including scouting, sports, school and extracurricular activities.
In all commission based earning activities (sales, loan origination, etc.) there are opportunities for the individual to enhance their earnings by engaging in unethical practices…either at the expense of the client or fellow workers. The problem is further exacerbated by employer’s expectations of performance levels by LOs, brokers and salespeople.
The use of Codes of Ethical conduct by offices and associations is valuable in that it provides the uninitiated with a guide to what is acceptable ethical conduct. Without enforcement, the assoications’ codes themselves are no guarantee of ethical behavior. It is only through the individual’s commitment to personal integrity and honor that etihical behavior is achieved.
The company that I work for does have a code of ethics and corporate compliance officers. Non compliant loan officers are subject to termination. This document is posted on our employee website however you would need to have a pass code to enter the site. I agree with Johns posting above that it is only through the individual’s commitment to personal integrity and honor that ethical behavior is achieved.
Yes, we do have a code of ethics, it contains 39 items and is posted on our employee website, but can be faxed or emailed to you.
Non compliance with the code makes a LO subject to termination. Wouldn’t it be great to see all brokers & mortgage banks address this upfront and make it a condition of employment. It eliminates the question of what is acceptable and defines the rules before the game is played.
Our company has a code of ethics, but i think it goes without saying the LO needs to be honest, upfront, and with highest level of integrety. I think it is very important for consumers to know that every LO is ethical and will have their best instrest at heart. Even if the company LO works for does not have code of ethics, the point should be made clear, that step 1 of originating a loan starts with ethics.
I am fortunate to be working for a Company that has a code of ethics in place. Failure to abide is grounds for termination. It would definately be a benefit to our industry as a whole for all LO’S to be bound by a similar if not same code. This can only benefit the consumers as well as the profession itself.
I have a strict code of ethics. Regardless of the lack of a code of etics in this industry I seriously doubt that would have saved us from the current status we have aquired. I have worked in arenas where there are strict codes of ethics to be a member of this or that so you can print it on your biz card but the truth is: ethics are the responsibility of the individual and can’t be prescribed or forced upon someone. Just my opinion. Until we have a governing body simialar to the legal profession, ethics will always be left to the individual to adhere to or not. This has been my obsevation, don’t mean to be pessimistic but written ethics with out some type of teeth in them are just writing on paper.
I find that comment from Vladislav Baydovskiy on February 2nd very funny considering he is now sitting in jail for mortgage fraud, loan fraud, wire fraud, bank fraud, and a host of other charges. You should really take that comment down, or post it in a seperate section labeled “most ironic comment of the decade”
Hi Michael,
You bring up a very valid point. Just because a person works for a company with a code of ethics does not mean that the code is enforced.
After Sarbanes Oxley passed, many companies were required to have a code of ethics and mandated that every employee sign something that said they had read it and will abide by it.
A code of ethics without enforcement is meaningless.
Many people say that they believe in ethics, but it is a person’s actions and not their words that matter.
With that said, with so many of the other vistors saying the same thing, how is a consumer to know who is ethical and who is not?
The Bar Association has a pretty good system for figuring this out for attorneys. The American Medical Association has a good system as well.
A system like this is lacking for loan originators.
This is one of the things our association is working on: Providing an ethical framework for its members and for consumers.
Thanks for stopping by NAMF.
This topic got me looking through my training maunal for the code of ethics of my Broker. It turned out to be one page referring me to the National Reverse Mortgage Lenders Association. So I downloaded and read their COE. It sounds nice but really doesn’t have any enforcement teeth of self reporting requirement. Further if the worst that can happen is being kicked out of the org compliance is very weak. I like Mr Platts comment about having his own COE until there is a governing body we are required to report our own complaints to.
yes there should be a code of ethics to go by just so people are doing the same and right things that they are suppose to be doing. otherwise i feel that things do get out of control.
Im sure our company does have a written code of ethics and it is also understood by all agents that we work with integrity and honesty and do the right thing for our clients 100% of the time.
Instead of being honest re-word it:
Be transparent as possible.
Disclose all relevant information upfront. Send all disclosures upfront and within a timely fashion.
Be professional and law-abiding
Loans are business transactions that depend on a lot of personal information. All parties should maintain a high-level of professionalism and abide by applicable federal and state laws.
Be the custodian of all personal information received by the client. You must have a safe, secure and compliant method for delivering documentation.
The code of ethics should be in the mission statement for each and every company.
With most of my experience having been employed by large banks I found their ethics code very broad and in most cases without management discipline and as Jillayne stated they all seem to use the basic verbiage needed to pass regulators but is executive management following their own written code? There seems to have been a financial game going on behind the real world that very few including regulators were not aware of or were a part of.
Good ethics need to start from the top and be required to be adhered to by their employees by example and education.
Our company has a set of Personal Conduct rules that are linked to the companies Core Values. As part of the initial interview process for employment, each person has to read and agree that this is something they will follow or the process goes no further.
Here are examples of things we have in place:
o Succeed with Integrity—Although we are committed to succeeding in the mortgage and insurance industry, we do so only within the bounds of ethics and with the highest professional ideals. We are committed to building a solid business foundation by being open and honest with our customers and our employees.
o Build Community—As part of the financial services business, ______ knows how important community is. We are committed to improving the community in which we work through service, sponsorship, and the personal citizenship of all our employees. Further, we feel that _________ itself is a community. We are committed to creating customers for life, no matter what it takes.
o Universal Respect—Whether a customer or an employee, _________ believes that everyone deserves respect. We are committed to making sure all of our customers receive the best service possible and our employees enjoy where they work.
o Care for Employees–_____________ is committed to creating an environment where all employees can feel professionally fulfilled; all employees demonstrate mutual respect, courtesy and concern for each other; and all employees are encouraged and permitted to afford time and attention to their families and other personal priorities.
It’s pretty much similar, only the words were used slight different.
I didn’t see any code in the company that my name listed; but I know honestly conduct the business is the principle.
I am an attorney in the financial services arena, and I have done work for a reputable credit repair company. My question is whether there exists some type of duty to refer low-scoring clients to properly registered and licensed credit repair companies? I guess the first question is whether there is a duty to refer someone who might benefit from legitimate credit correction and counseling. The second question is whether – if you do refer – is there a duty to ensure that the company is properly licensed and bonded (if required by your state)? Thanks for your input!
Hi Matt,
Duty: Do you mean legal duty or ethical duty?
The question you ask is a good one. A loan originator choosing to do research on the legitimacy and licensing/bonding of a credit repair company he/she is recommending to his/her clients would seem to be a very prudent choice.
Loan originators who owe fiduciary duties to their clients would have a high duty to disclose any conflicts of interest, including if, for example, a loan originator receives compensation of any kind from sending a client to a particular credit repair firm.
Not all loan originators owe fiduciary duties to their clients. It depends on state licensing laws.