The Client Who Wants to 'Adjust' the Application
Kenji is meeting a couple, the Ahmeds, for a purchase of a $540,000 townhouse with 5% down. Their verifiable income supports a mortgage of about $430,000, but they need $513,000. During the meeting, Mr. Ahmed suggests that Kenji 'write down' Mrs. Ahmed as earning $22,000 more than her actual salary, saying his cousin's agent did it and 'the lender never checks.' He also proposes that Kenji describe a $30,000 loan from his brother as a gift, and offers to pay Kenji a $2,000 bonus if the file is approved. Mrs. Ahmed looks uncomfortable but says nothing. The couple has already given Kenji their notice of assessment and pay stubs, which show the real figures.
1. Evaluate each of Mr. Ahmed's three proposals and state Kenji's obligations.
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Inflating Mrs. Ahmed's salary. This is fraud. Kenji has the notice of assessment and pay stubs showing the true income; preparing an application that states a different figure would be knowingly submitting false information to a lender. It would also expose Kenji to licensing consequences and potential civil or criminal liability. He must refuse.
Calling the brother's loan a gift. A loan must be disclosed as a loan, because it is a debt that affects the borrower's ability to repay and may affect the lender's calculation. Presenting it as a gift is misrepresentation. If the brother genuinely forgives the debt, that must be documented properly, but Kenji cannot simply relabel it.
The $2,000 bonus for approval. Accepting payment contingent on approval creates a conflict of interest and is improper. It also suggests the client expects Kenji to do whatever it takes to get an approval. Kenji must decline.
Obligations. Kenji must refuse all three, not submit the file on false figures, and explain the consequences to the clients in plain terms. He should document the conversation. He should also be alert to Mrs. Ahmed's discomfort, since she may be under pressure.
2. How should Kenji handle the relationship going forward, including the possibility that the clients go to another agent?
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Kenji should be direct but non-judgmental: explain that lenders verify income and down payment sources, that false information can lead to a declined application, a demand for immediate repayment, or worse, and that he cannot participate. He should redirect to legitimate solutions: a lower purchase price, a co-signer, waiting to save a larger down payment, or documenting the brother's funds correctly as a loan if the lender permits it.
He should speak to both clients, not just Mr. Ahmed, and give Mrs. Ahmed room to raise concerns privately if she wishes. He should document what was requested and what he advised.
If the clients leave for another agent, Kenji has still done the right thing. He should not be swayed by the threat of losing the deal, and he should not share the file or the clients' information with the other agent without proper authorization. If he believes the clients intend to submit false information elsewhere, he should consult his principal broker about whether any further step is required.