I was reading a Mortgage Originator Magazine article in which originators discuss “challenges associated with ethical behavior.” What surprised me was that relatively little space was devoted to finding the best loan for the borrower, providing honest disclosure, the best service possible, and charging fairly for it. Instead, the panelists used a lot of space discussing the ethics of “stealing” loans from other lenders. Um, sorry, as long as I can honestly provide a better deal why shouldn’t a borrower have access to it? Agreements to refrain from working territories or referral sources– Realtors, financial planners, etc., sound a little too “backroom” for my taste. And regarding competition within your own office? My first husband was a stockbroker whose rule of thumb was that if the prospect couldn’t remember his own broker’s name he was fair game.

So how do you define ethics in a complicated industry where divided loyalty is the rule rather than the exception? When you have an obligation to the client to get the best loan, and obligation to the Realtor to do your best to close on time, an obligation to your firm to bring in good business and enhance its reputation, and an obligation to put food on your table. Even when you try to fulfill your promises to everyone, they can be at cross-purposes. I have chosen to put mine in this order. In the long run it worked for me and I sleep at night too.

First place goes to my client, and if I can get him / her a better deal than a competitor I’m acting in the client’s best interest as well as my own. I had a borrower who was locked and all set to sign a hard money deal, pay 9.5% and 3 points – I got him 7.75% at 1.5%. Backing off just because someone else had a deal would have sanctioned an egregious rip off. If the first LO had fulfilled his true responsibility to his client he wouldn’t have been vulnerable to losing this deal. And by the way, permitting or encouraging a client to lie on an application or overreach on a loan amount is NOT in his or her best interest.

Second priority goes to my company. I owe it to my firm to enhance its reputation by keeping my knowledge up to date, providing the best service I can, and being an honest liaison between underwriting and the client. I owe my firm a fair profit—overcharging borrowers means the end of repeat business and long term financial health. This includes giving my best effort to the Realtors, appraisers, and title officers involved. If I can help my company gain a reputation for straight shooting, following up on our promises, and closing deals on time, that helps us all.

Finally I treat myself right, too. I don’t expect people who serve me well to work for free and I refuse to do it myself. And if that means someone else “steals” a client of mine once in a while so be it. Lowballing LOs can only do that for so long before they have go back to selling cars or waitressing (no disrespect intended to these professions, but pro LOs sell with service and knowledge and relationship building, not just cranking through second-rate transactions because they had the lower price that day. The established pros have longevity and experience to get through tough times).

The biggest problems I see with ethics issues are when an LO or company fails to realize that acting in the clients’ best interests means acting in their own as well. Enlightened self interest is more than a catch-phrase, it’s a formula for success.