The Inconvenience of Ethics

It’s not always easy to do the right thing and sometimes it’s downright inconvenient as well.  As a Loan Officer and someone who works in the financial service industry, it’s crucial to build rapport with customers and establish trust early on in my relationship with them.  Most transactions last between 30 to 45 days and the experience customers receive during that time has long-term implications.  Since my business is completely based on word of mouth I need a steady supply of referrals from happy customers to stay in business.  Unhappy customers don’t tend to refer their friends and family; however, ethical decisions trump everything – even if it means losing a relationship.

I would argue that throughout our day, each of us make a variety of decisions, most fairly unimportant, a few completely banal and every once in a while one that is of real consequence.  These are the ones that make our work lives interesting.  I ran into just such a situation a few weeks ago.  I had a customer that was pursuing a refinance on their current house during the time we were putting together their financing for the purchase of a new home.  These were very well qualified people and I felt very comfortable working with them and our transaction was coming together smoothly and without any drama.

The week before our new purchase transaction was set to take place it became apparent that the large institutional lender that was handling their refinance was trying to do so as a primary residence.  True, our customer was living in the home at the time of the refinance; however, the lender and the customer both knew that there was another purchase being put together.  That “other” transaction was mine and it was for a purchase of a primary residence.  As a Loan Officer, I couldn’t allow two transactions to take place for two different addresses in which both were primary residences.  Occupancy fraud is serious stuff.  And, I have to give my customers credit – when they saw the legal documents they questioned the lender handling the refinance.  And that’s where the problem truly began – their Loan Officer handling the refinance told them that it wasn’t an issue for there to be two primary residences at the same time.  My response was something along the lines of “are you kidding me?”

I eventually called the lender handling the refinance and asked to speak with the Loan Officer.  This led nowhere – I couldn’t get her to answer or get my phone calls returned.  Finally, in frustration, I called the lender’s “recorded line” and made sure the person answering my call understood they were fraudulently trying to close a loan.  I was placed on hold for about 20 minutes and eventually they cancelled the loan.  A couple of days later our loan closed on time and under proper circumstances.  Mission accomplished right?

Well, yes and no.  Yes, our actions prevented fraud from taking place but at the same time, the lack of action on the part of the lender handling the refinance introduced doubt into the transaction.  Looking back at the situation, I would say that I gave the other Loan Officer too much credit and assumed that they would do the right thing without me having to take further action.


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