How to Be an Ethical Mortgage Loan Officer

The Importance of Being an Ethical MLO

As a Mortgage Loan Officer, it’s your job to help clients through one of the largest financial decisions of their lives. This also means it’s your responsibility, as a knowledgeable industry professional, to inform your clients on the nuances of mortgage products to the best of your ability. Learn how to conduct your mortgage business honorably and why it’s so important to be an ethical professional.

Mortgage Loan Officer Rules and Regulations

In the past, we’ve seen situations where unethical mortgage practices led to significant changes in the mortgage industry. The most prominent example is the subprime lending crisis of 2008, which was caused by tremendously unethical mortgage lending operations. When unethical behavior comes to light, legislators often step in to draft new rules and regulations to protect consumers, including but not limited to the following:

• The Consumer Credit Protection Act of 1968

  • The Truth in Lending Act

• The Fair Housing Act

• The SAFE Act of 2008

It’s important to note that the titles “Mortgage Loan Officer” and “Mortgage Loan Originator” are often used interchangeably, including in the SAFE Act.

Although these regulations (and many others) have been put into place to protect consumers, it’s your responsibility as a mortgage professional to uphold and enforce these practices through your day-to-day work. While you don’t need to have these laws memorized in order to act as an ethical MLO, it certainly doesn’t hurt to brush up on them from time to time. Aside from following these pieces of legislation, there are other ways you can act as an ethical professional.

How to Be an Ethical Mortgage Loan Officer

As a Mortgage Loan Officer, you work directly with clients and their finances. Therefore, you are the first line of defense to prevent discrimination in the industry. Here are just a few ways to continue being an ethical professional:

Stay Up to Date on Your Education

As a professional in the mortgage industry, you’re required to complete annual Continuing Education to maintain your MLO License. Dictated by the SAFE Act, NMLS requires 2 hours of your annual Continuing Education to be about Ethics, giving you a chance every year to brush up on ethical ways to conduct business.

Treat Everyone With Respect

A good rule of thumb when creating a hospitable and fair environment for clients is to approach everyone the same way. Every client deserves (and is legally entitled) to be treated with equal rights and respect, no matter what their background is.

Find Loans Based on Clients’ Wants and Needs

When helping your clients find a mortgage loan, keep their best interests top of mind. You work hard to provide the best possible outcome for your clients, so be sure you’re presenting them with all of the appropriate information and options. Their wants and needs should come before any thoughts of your commission check.

Be an Eye in the Field

You are the eyes and ears for your clients when you’re conducting business. Not only can you work to provide them with the best experience, you can also serve as a role model for others in the industry. Unethical mortgage professionals can radically change the industry as we know it, so be sure to report any unethical behavior you encounter out in the field.

Looking back at the history of the mortgage industry, it’s clear that it cannot grow sustainably without ethical practices in place. It’s up to you as a mortgage professional to ensure the safety of your clients as well as promote transparency within the industry. Now go forth, and get ethical!