Ethics
Core concepts
Ethics items reward the boring answer: disclose, document, and never get paid for a referral. Understand the duties of good faith and fair dealing, honesty in advertising, confidentiality of nonpublic personal information under GLBA, fair lending, and antifraud obligations. RESPA Section 8 and state inducement bans reach desk rental, co-marketing arrangements, marketing service agreements, and lead fees that are not fair market value for services actually performed. UDAP and state UDAAP statutes cover deceptive or unfair acts. Predatory-lending red flags include steering to a costlier product, equity stripping, loan flipping, and pressure on appraisers to hit a value. Conflicts of interest include ownership in a title agency, a relative in the realtor's office, or gifts above regulated value.
Traps
- "Everybody does it" and "the borrower agreed" are never defenses.
- A payment tied to a genuine service is lawful only when it is reasonably related to the value of that service and disclosed.
- Inflating income at the borrower's request is fraud, not customer service.
- Sharing a customer's information with a marketing partner without authorization violates privacy rules.
- A conflict of interest is a problem even when the terms are otherwise competitive.
Worked example
A title company offers $500 per closed loan for "marketing." No services, deliverables, or fair-market analysis are described, and payment is purely per referral. That is an unearned referral fee under Section 8, not a permissible marketing agreement.
Rule of thumb
Apply the headline test: would you be comfortable if the transaction were described on the front page? If not, escalate to compliance before closing.