What does integrity mean to you? Dictionaries define it as adhering to a moral and ethical code, practicing honesty and fairness.
Closing loans has never before been so difficult. Underwriters behave as if they were the CIA, FBI, NSA and Secret Service combined. Clients misrepresent income and assets. Referral partners expect you to convert manure into chocolate cake.
Seemingly arbitrary guidelines for loan approval create enormous temptation to compromise one’s integrity. While many anti-fraud countermeasures exist, one can still omit or manipulate certain aspects of a file. But is a deal worth losing your livelihood and your reputation?
Telling the truth, up front, while it may seem to jeopardize the deal, many times will result in future business.
After extensive analysis, Kabir told a client that getting a Federal Housing Administration-insured loan was the only viable option. A local bank’s loan officer told the client he could get a conventional loan. The client wanted to avoid higher FHA payments, and chose to work with the bank. Three weeks later, the client called Kabir back and said the bank denied his loan. Only two weeks remained to closing, and the client asked Kabir if he could still get an FHA loan.
Kabir said, “Yes, of course,” but rates had risen, and the payment had increased. The client responded that he would gladly move forward because he trusted Kabir to do the right thing, because Kabir had told him the truth, knowing he could lose the deal. The loan closed just a week later than planned, and the client referred several colleagues to Kabir for more loans.
When issues arise, rather than deal with them, some people lie and point fingers rather than face the music. Inevitably, the truth catches up at deadlines, things blow up, and relationships and reputations get destroyed.
Have you ever been tempted to blame the underwriter for an issue that you should have caught when you took the application and reviewed borrower documents? Underwriters have been thrown under the bus so often they have undeserved tire tracks tattooed on their backs.
Your job is to review the file before the loan gets to underwriting and look for issues that could complicate loan approval.
When you or someone on your team makes a mistake, as soon as you discover it, figure out how to correct it, then notify everyone involved and take the blame! If the mistake kills the deal, you never had it to begin with. If it can be corrected, but it will cost the client more, make it up to them or offer, with their permission, to send the file to a trusted competitor. Most clients will stick with you because of your honesty and humility.
Tell the referral partner the complete truth. If they won’t forgive you, either you demonstrate a pattern of making mistakes (incompetence) or they aren’t true partner. Either way, time to move on.
When you learn that a property didn’t appraise or needs repairs, call your client’s buyer’s agent and ask them to present the issue to the client. The buyer’s agent gets paid to negotiate and resolve such issues, and if the appraisal seems to kill the deal, again, it never was going to close. If the agent blames you or threatens to take the deal away, offer to send the file to another lender and re-evaluate the relationship. (Hint: Rejoice. It’s over!)
Remember: it’s not your job to make the appraisal fit the price; your job is to protect the lender from having inadequate collateral.
Did a borrower tell you that she gets a lot of cash income and doesn’t declare it on her income tax return? How does that make you feel, knowing that you pay taxes on every penny shown on your pay stub?
Trust is bilateral. If someone reveals himself to be dishonest, why would you want to do business with him?
Even when you coach a client to shade the truth, you undermine their trust in you. Never, ever, alter documentation or omit material facts. No excuse justifies fraud. If a borrower plans to retire or to quit his job shortly after the loan closes, make sure his income after closing can be documented as sufficient for underwriting or you must decline the application. Your job is to ensure the income will continue per the loan guidelines, usually 36 months.
This does not mean that you must disclose everything. For example, if a borrower has plenty of funds to close outside an account which shows several legitimate, documentable transactions (all requiring further explanation), spare the borrower and yourself the extra work and omit the account. But if the multiple transactions are all cash deposits, ask some questions to avoid a money laundering situation. Your job is to obey the currency laws but also avoid superfluous documentation.
The highly successful loan officer aligns with others who also possess integrity to create a circle of trust. This leads to consistent business. Most people establish new business relationships through referrals from someone they already trust.
A powerful and simple way to reinforce your reputation for integrity is to return phone calls and emails promptly and proactively share good and bad news.
Your loved ones, employer, colleagues, friends, and referral partners all rely on you to do what you say you will do. The person with high with moral and ethical principles achieves success as a direct result.
Kabir Mahadeva and Ralph LoVuolo have over a half century of sales expertise in the mortgage industry. Ralph has coached successful mortgage originators for almost 25 years. Kabir has conducted sales training seminars and coaches financial professionals in marketing and client management.