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Thursday, June 3, 2010

Ask the Loan Man: Ethics, not just a class.

I became a licensed real estate agent in 1990. In order to obtain my license, I needed to take several classes and one of them was an ethics class. In California, you need to have a real estate license to broker loans or broker real estate or manage real property. If you are a member of the national Association of Realtors, you have to adhere to a code of conduct and ethics in order to call yourself a Realtor.

If you were brought up right, you know the difference between right and wrong. Your parents taught you ethics from the day you were born. My own thoughts on the subject are that by the time you reach adolescence, your own personal ethics are pretty much a part of who you are and will shape the adult that you will become.

I was on a message board last week with several of my peers in the mortgage business and an interesting topic came up. A husband & wife lived in a home that was foreclosed upon and the loan had been in the husband’s name alone. The wife wanted to buy the home back from the bank and the loan officer turned to his peers for advice on how to do this loan. Many people came down on this guy and called him unethical. Of course, the story was not black and white. These people were scraping by and times were tough and they tried to modify their mortgage and they were taking advice from a loan modification company not to pay the mortgage and the house was foreclosed upon. They got bad advice and it cost them their home. Another loan officer told of a woman who came to him to get a loan to buy a home being sold in a short sale. The home was her boyfriend’s house and she had been living there for years. The loan officer said he would not help her and she went somewhere else and got the loan done. My friend lost a commission but he did not put his ethics or his license on the line.

I am reminded of a quote. “When your values are clear, making decisions become easier.” - Roy Disney

I shared this with my peers on the message board and a lot of people sympathized with this guy who just wanted to help a good person in a bad situation (and make a commission too!). I had to point out that most mortgage fraud is not some big banker working with a dirty appraiser to make millions of dollars in fraudulent loans; most mortgage fraud is a one time offender helping what they thought was a good person who simply did not fit in the box and most of the time they are caught because the loan goes bad. In both cases above, the only way to get these loans done is to lie about where these women lived for the last few years. Someone else on the message board said; Forget ethics for a minute and ask yourself if helping someone buy a house is worth risking your career, huge fines and jail time? Are you doing it for them or the commission?

Another quote. “If you always tell the truth, you never have to remember what you said.” – unknown.

Over the years I have had many clients try and do things the wrong way and I am happy to report that after counseling, many of them do decide to do things the right way and the ones that don’t are no longer clients. Ethics is not just a class but sometimes it doesn’t hurt to have little reminders along the way.

Please email or call me with any real estate and mortgage related questions. I am happy to answer you and it may become the topic of a future article.

Hans Bruhner, CMPS is a branch manager for First Priority Financial. Hans is licensed by the CA DRE # 01085398. If you have a question, please contact him at (707) 887-1275 or or stop by