I received a telephone call from a wholesale lender representative whom I have known for eight years. Upon answering the phone her first comment to me was, "John, they're back!" She definitely did not mean "Poltergeist." Her comment referred to people entering the mortgage lending industry because interest rates have come down and thinking they can make a "quick buck." Many new mortgage brokers hope to make money at this time; there being a demand for refinances. Not only are new people jumping into the market, but also individuals who left the business to pursue other opportunities during leaner times. They, too, have come back as another round of refinances occurs or seeing improvement in the local real estate market. She then went on to describe some loan files submitted to her company by these people. Obviously, they do not understand what they are doing and by virtue of this lack of knowledge can only hurt the people with whom they are working.
With this said, let's looked at a word called "Ethics" as defined in the dictionary and by the Department of Real Estate. "Ethics" means "principles of right conduct." I think the vast majority of us want to be considered ethical. For the good of society, it is important to be ethical. It is particularly important to exhibit ethical conduct in any fiduciary relationship. No matter what our business, to be categorized as an "unethical person" would put us in jeopardy as to our job and possibly subject us to civil or criminal prosecution.
Every four years, real estate brokers and salespeople must complete continuing education courses mandated by the California Department of Real Estate. One mandatory course is "Ethics." This course reviews the obligation we have as brokers and salespeople toward our clients. It reenforces the Department's Business and Professions Code which states that we are to give a high level of competent, ethical, and quality service to buyers and sellers in real estate transactions. The Business and Professions Code also covers mortgage brokers and their licensed agents. It is to be expected that the same high quality services be exercised by mortgage brokers and brokers' loan representatives toward borrowers.
So, how does one find an ethical person with whom to transact business? Do you look up a name in the Yellow Pages under "Ethical" lender or real estate salesperson? Do you ask the question during the interview process? Do you quiz a relative or friend as to his/her past dealings with a real estate agent or loan agent? Are your relatives' or friends' standards the same as yours? Is there a fool proof way to find that "ethical person" with whom you would want to do business?
As licensed real estate brokers and agents, we are bound to be ethical and keep the interests of seller, buyer and/or borrower foremost in our dealings. We are bound to represent each party to the best of our ability. This obligation should be understood when we undertake such representation. However, as a seller, a buyer and/or borrower, you have an obligation. Dealing with even the most ethical person, you have the ultimate responsibility to protect your interests and your assets. Above all, you must determine that the person with whom you are dealing is competent. As principled as the individual may be, if he/she is not competent, that person is not being ethical in representing your interests.
The real estate mantra is: "location, location, location." If, however, you are to protect yourself when it comes to one of the most critical decisions of your life, be you a first time home buyer or a buyer with two, three or more home purchases behind you, you must "read the contract, read the disclosures, read the addenda." If you are planning to obtain a real estate loan, read every piece of paper you receive. Know what you are signing. It is easier to avoid a problem in the beginning of the purchase or refinance transaction than look for a solution after the close of escrow. As a borrower, buyer or seller, have as "your mantra," "Read, Read, Read . . . Ask questions, Ask questions, Ask questions . . . Understand, Understand, Understand." Determine to educate yourself either through your own research or by asking appropriate questions of your real estate or loan agent. Find out whether the individual handling your family's finances and future has the necessary level of competency. Look for absolute competency on the part of your real estate agent or loan officer. It is well to remember: a person may be ethical but your goal is to have your representative be both ethical and competent. Read, ask questions and understand.
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