Ethics In Mortgage Lending
A lot of people are buying houses right now, which means that mortgage lenders are working overtime and processing large numbers of applications. This means that errors and even ethical or illegal issues can occur.
In the past, those looking to buy a house typically worked with their local banks to secure a mortgage. In the past few decades, though, mortgage lenders have been increasingly common. It’s easy to go online, enter a few pieces of personal information, and receive emails and calls of interest from dozens of lenders.
The goal of mortgage lenders nowadays is to churn out as many loans as possible. They don’t have relationships with the borrowers. There are no emotions involved; these are simply transactional deals.
This has led to ethical concerns in the past, particularly with the housing collapse in 2008, when borrowers were given adjustable rate mortgages in order to qualify. Lenders weren’t concerned about the borrowers’ ability to pay; they just wanted a quick buck.
This may be legal, but it’s not ethical. Ethics can be tricky in the mortgage industry, but for the most part, the basic tenets are to treat everyone equally, be honest in all situations, maintain thorough documentation of everything, give full disclosure without being prompted, and not take advantage of people.
How to Improve Ethics
When it comes to ethics, actions speak louder than words. Companies that market themselves as “ethical” are actually seen as suspicious. To be seen as ethical, banks and lenders should focus on the following:
- Instead of pressuring borrowers to spend more than they can afford, lenders should try to instead educate borrowers. Many borrowers don’t have a concept of financing a home and how it affects them. Lenders should do their part to set them up for success.
- Confidentiality must be taken seriously. Lenders are given large amounts of personal information that could be used inappropriately for leverage. They must use this information only as needed.
- Many times, lenders are not held responsible for their unethical behavior. Nothing will change unless there is more individual accountability within banks and lenders. It’s a good idea for lenders to encourage and reward ethical behavior.
Potential home buyers can also do their part by increasing their knowledge about the real estate and mortgage industries. This means understanding the housing market, doing their research on mortgage rates and options so they can make the best decisions possible.
Keep Your License With Help From a Tampa Mortgage Lenders Licensing Lawyer
The housing market is hot right now. Mortgage lenders are busy trying to process as many loans as possible and this means they aren’t always making the right decisions.
If you are facing administrative issues with your license, see how a Tampa mortgage lenders licensing lawyer from The Law Offices of David P. Rankin, P.A. can help. I’ll work quickly to resolve your issues. Schedule a consultation today by calling (813) 968-6633 or filling out the online form.