Ethics in the mortgage lending business

However, there are ideas and suggestions that can be implemented immediately by both companies and the industry as a whole.

Doing It Right: The Growing Ethical Crisis in Mortgage Lending

Continuous Improvement CMPS members will regularly seek to improve their loan process and their co-worker relationships. CMPS members will respect the time of co-workers including assistants, processors and underwritersand minimize the amount of effort required of them by applying reasonable knowledge, skills and resourcefulness.

Be sure to include treatment of consumers, investors, employees and shareholders in addition to return-on-investment and profitability. Organizations often have established codes of ethics based on the industry or trade.

How often are staff members told to forward loans to the investor for funding, even when a problem such as fraud has been discovered? If a mortgage originator does not have professional status that results from national competency examinations and being held to a code of ethics with sanctions, then there is no good reason for a consumer to expect any kind of special duties above and beyond those prescribed by law.

We infer that anyone who is officially designated as a professional also has fiduciary duties toward his client. In some states, laws have been passed that designate a mortgage brokers and the loan originators licensed under the broker to owe fiduciary duties to their clients but this is not the case in all 50 states for all loan originators no matter where they work.

Some situations, though, are more subjective and require some thought about what rules guide acceptable behavior. The Moral Terrain of Mortgage Lending General ethics applies to everyone in all spheres of life; in contrast, professional ethics is usually memorialized by written code and is intended to apply only to those individuals who have been identified as professionals in their field.

Smaller institutions may have a more informal approach, but, any commitment by management must be clearly communicated to all employees.

Being designated as a professional carries correlative burdens and benefits. This is the very problem in this industry. Industry newsletters and magazines report on the impact on the victims of these crimes, while the list of convicted felons continues to grow.

For non-regulated entities, there is a general perception that the regulations intended to protect the consumer can be ignored. CMPS Institute determines who is certified and thus authorized to use the marks.

Our own mortgage industry in the USA is no exception to this problem. Despite the various companies with clearly articulated Codes of Conduct, it is not difficult to find those that do not follow their own standards.

CMPS members will conduct proper research on behalf of the client or put the client in contact with more suitable professionals if they are unable to help. Have you heard about the latest crime wave in America? Code of Conduct 1. While we do not intend to provide any definite answers to these sorts of conflicts that occur, we can offer some account of some of the moral considerations that go into thinking through these sorts of conflicts.

Companies Implement a company Code of Conduct: Each day you face many situations where you act with no thoughts about whether it is ethical or not.

You may not be able to put your finger on it, but, you can feel when the situation is just not right, and you may be facing a conflict of interest, an ethical dilemma, or the offer of an unacceptable gratuity.

Attacking this basic problem must also start at the top—the top of each company as well as the top leadership in the industry. Scotsman Publishing deplores fraud and similar unethical business practices. Consider the medical profession, whose primary ethical value is stated in the phrase: Systems should be sufficient to alert the [company] when a [company] employee serves [a customer or vendor of] the [company] for a fee, competes with the [company], receives loans from fiduciary clients, accepts gifts or bequests from fiduciary clients, receives goods and services from vendors, or executes personal securities transactions that are counter to the best interests of account beneficiaries.

However, while the detection and punishment of offenders will stop a fraction of the problem, they do not address the basic issue—the apparent deterioration of an ethical foundation in conducting business that is visible in many companies today.

ethics in mortgage lending

Are the programs and rates offered the best for this consumer, or is the loan program the result of the potential for increased income?Most sound business practices begin with an established commitment by management and a stated policy, and, the management of conflicts of interest, ethics, and prohibitions on activities like bribery or kickbacks is no different.

NRMLA Code of Ethics & Professional Responsibility. Ethics and Standards Complaint Procedures. business affiliation, contact information, and the scope of and limitations on the with or that are related to their reverse mortgage lending activities for such consumers.

This Code of Ethics applies to CMPS members actively involved in the practice of personal mortgage planning, in other areas of financial services, in industry, in related professions, in government, in education or in any other professional activity in which the marks are used in the performance of professional responsibilities.

Ethics in the Mortgage Lending Profession. Ethical and Legal Considerations Ethics in the mortgage industry may seem like a complex issue, but it really boils down to a few simple points: Many training and educational organizations offer business ethics.

A Code of Ethics for Lenders. Print Friendly Version. As part of its effort to fight predatory lending in Evansville, Ind., the Tri-State Best Practices Lending Committee drew up this code.

It calls for mortgage lenders to: Protect all they deal with against fraud, misrepresentation or unethical practices of any nature. Ethical Practices in Mortgage Lending.

Apply the concepts of business ethics to scenarios in the financial industry; Target Audience. Mortgage industry professionals. Speakers/Instructors. Gloria Fillmon is an independent business consultant and founder of GF Consulting.

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Ethics in the mortgage lending business
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