How do consumers find ethical help?
Tim on 07 13, 2007
This is my Ken Schrammie rant:
- How is it that a perfectly capable buyer of a home with nearly 770 FICO scores is placed into a short term Interest Only Adjustable Rate Mortgage with a start rate of 7%– sold with a 3 yr pre-payment penalty?
How do you handle the situation in which same the borrower who is visibly concerned and states that they are stunned with the loan terms but are going ahead with it anyway because they are under contract to purchase the home within the next day or two? How do you answer the client when the loan officer is their real estate agent? Yes, there are days where you would like to throw a file against the wall and scream at the industry and say when in the hell is the garbage going to stop? What do you say to them that does not cross our escrow neutrality other than just stating the facts?
- And why is it that Title Companies just can’t seem to stay out of the news with fines handed down from State Attorney Generals (including our very own in Washington State) and Insurance Commissioners for alledged kick-backs, sham captive reinsurance companies and other affiliated business relationships with major builders, banks and brokers? I mean, it’s hard not to get a picture in my mind (laughable really) of these folks getting together and actively sitting down and figuring out how to arrange business dealings to circumvent RESPA rules and form ghost companies in the Cayman Islands or Bermuda or some other exotic hiding place.
- Lastly, what do you say to a client sitting across the table signing loan docs and the borrower has their agent on the speaker phone who says, “sorry, I’m out golfing and there is no way I can get an addendum together in the next two days.”
So the question remains: there are some professional and ethical people and businesses out there. How do consumers find them?
About the Author: Tim Kane
- Author's website: http://www.legacyescrow.net
- More posts by Tim
- email the author
58 Responses to “How do consumers find ethical help?”
Leave a Reply
Live Comment Preview
Popular Posts
Recent Posts
Recent Comments
- Rhonda Porter: Okay--I'm biased...
- ARDELL: Scott, There's a
- ARDELL: David, If an appr
- David Losh: Every property has a
- Scott Seppi: I base the comment "
What a terrible position to be in! Knowing how your escrow client is being taken advantage of and yet not being in the position, as a neutral party, do anything about it.
Unscrupulous people exists in all industries, and it is very frustrating when we see it and it affects those around us. Made worse because of codes or rules that we have to adhere to that restrict our ability to right a wrong.
Of course being able to have a family member, friend, co-worker, neighbor or other trusted person refer a service provider is the tried and true way to find an ethical professional. Unfortunatly that course does not work for everyone in all situations.
The Better Business Bureau and newer internet places like Angie’ list try to fill the void for a comsumer to find reliable, ethical service providers but they don’t meet every need completly.
Hopefully other internet options like blogging will help consumers fill-in the gaps for finding good service providers.
Wow, that IS an ugly escrow story and I’m sorry that someone had to go through it. This kind of scenario is one reason I am not a fan of agents also being lenders. We get spammed all the time with companies trying to get us to be on both sides of the house, so to speak, and we just aren’t interested because we like that there is a bit of cross-checking of each service provider.
Hi Tim,
Well, I’ve been thinking about your blog article tonight and here are my observations.
The people whose actions you’re describing aren’t around to talk to, so without being able to directly ask them “why,” we’re left to ponder their behavior from our own perspective.
One person’s unethical behavior is another person’s ethical behavior simply because people in general have a VERY wide view of what’s considered ethical v. unethical. First let’s tackle the golfing real estate agent.
The Realtors have a Code of Ethics that describes what a Realtor ought and ought not do. Here is Realtor Standard of Practice 11-2:
“• Standard of Practice 11-2
The obligations of the Code of Ethics in respect of real estate
disciplines other than appraisal shall be interpreted and applied in
accordance with the standards of competence and practice which
clients and the public reasonably require to protect their rights and
interests considering the complexity of the transaction, the
availability of expert assistance, and, where the REALTOR® is an agent or subagent, the obligations of a fiduciary.”
“Article 12
REALTORS® shall be careful at all times to present a true picture in their advertising and representations to the public.”
Perhaps this agent could add a disclaimer in with his or her advertising: “My availability is limited during golf season.”
Not all real estate agents are Realtors. If there’s language in the agency law that speaks to how the golfing real estate agent ought to have acted in the above scenario, we’re now talking about a legal issue and not an ethical issue.
A consumer could be directed to contact the agent’s broker for the needed assistance.
Since my comments might get too long, I will leave the golfing real estate agent behind now and address the other two scenarios.
Anyone wishing to read the Realtor Code can find it here:
http://www.realtor.org/mempolweb.nsf/pages/printable2007Code
Hi Deborah,
Can you say more about this comment? I’m not following you. Thanks!
“Made worse because of codes or rules that we have to adhere to that restrict our ability to right a wrong.”
Tim,
On to the title companies.
Yes, I too was NOT amazed to find the WA State Insurance Commissioner’s latest report, released on a sunny Friday afternoon, to the media. Here is the report. Link opens PDF:
http://www.insurance.wa.gov/publications/news/2129-report_titlejuly2007.pdf
This latest news is no surprise. WA State title companies are required by Insurance Commissioner rules to only spend $25 per year on their clients. Title companies have been violating this rule since the day it was first passed. Last fall, the Insurance Commissioner audited the title companies and was horrified by what he found. He did not levy any fines and just gave them a warning: Next time, I will fine you. Well, here we are with more violations. What does our Insurance Commissioner do? He levies fines BUT says he will suspend the bulk of the fine IF the companies keep clean.
What a joke. What’s he going to do next time? Issue a stern letter starting out “I thought I told you to stop it last time? What is the meaning of this?” Talk about an enabler.
Let’s get real. With fines being practically non-existent and pressure from corporate executives on down to managers to produce PROFITS, the managers, shielded by the corporate veil, make decisions to violate state and federal law (everything described in his report is ALSO a potential RESPA violation) every day. It’s a game called capitalism.
Here’s how the game is played: Title companies issue proclaimations about how they operate with high ethics and integrity (a favorite word of corporate CEOs), and then proceed to plan how to make the most money possible. If a state or federal law must be violated to make the most profits, the decision is weighed against the potential fine.
Do all title companies operate this way? Yes and no. It varies depending on corporate culture and the pressure to produce profits at all costs. We have some very conservative managers here in the Northwest who try like hell to stay within the $25 limit. Those title companies do not hold the largest market share.
Hi Tim,
On to the last scenario, the hybrid loan officer/real estate agent. We need to break this scenario into two parts.
Part One:
First, there is nothing in agency law (that I’m aware of) that specifically forbids a real estate agent from also acting in a dual role as the loan officer.
There is nothing in the WA State Mortgage Broker Practices Act (for sure) that forbids a loan originator from also acting as a real estate agent.
In this scenario, the hybrid LO/Realtor must present the client with a disclosure form.
There is nothing in the Realtor Code prohibiting an agent from originating loans while also acting as a Realtor.
There is no mandatory code for loan originators that we can refer to(as I have blogged about extensively).
It’s up to each individual real estate broker to determine if this is an allowable business practice. In all real estate classes I teach, there is at least one if not two or three hybrid LO/Agents.
I see nothing unethical about hybrid LO/Agents earning a fee for work performed.
They don’t.
After writing once again a long diatribe I erased it. The Tim guy over at the Seattle Bubble puts out more usable information for the consumer than any ten other blogs, or web sites I look at on a regular basis.
He’s not in the business, he’s just asking questions. The real estate agent, with the bad loan, closing a client is a normal transaction today. Attorneys dispensing advice designed to generate further fees is what we expect. Escow officers, title companies, or professional associations all hire who they can to generate profits, and make the investors happy.
The investor is a god in today’s real estate market and god help anyone who stands in the way of profit. The entire system is corrupt, we all know it, and do nothing but look for our next pay check.
How do we fix this system? What can stop the daily swindle of the American Home Buyer?
For me this is the most important issue today. Just like Health Care, which is completely screwed up, Home Ownership should be available to every one. It shouldn’t be a game, it should be a right.
What nationality were they? Sorry I know that is a loaded question, but often applicable.
Hi Tim,
Hybrid LO/Real Estate Agent
Part Two
It is difficult to judge the Hybrid LO/Agent without being in the room when the conversation took place between the customer and the Loan Originator/Agent.
I have often found that when people say “that’s unethical,” people are often missing important facts.
Who knows how this couple ended up with this loan?
Since I have blogged to the point of carpal tunnel syndrome about the RETAIL relationship between LOs and consumers, and how consumers often BELIEVE that the relationship is more of a professional trust relationship, I will not go into that here. Anyone who wants to read more can click on my picture and read away.
The real question you have, Tim, is “what can Tim do about this?”
Well, here are some suggestions, FWIW.
1) Make an appointment to meet the loan originator for a cup of coffee. Find out how he or she works. In conversation, you will be able to determine quickly whether the deal in question was “a sweet way to make a killing, dude” OR if there is more to the situation than what we know. If you determine that this client’s values do not match your own, ask the client to take his or her business to another escrow firm.
2) You ask “how do consumers find ethical help?” Answer: They ASK the service provider BEFORE they agree to work with him or her.
Consumers who BLINDLY trust a referral from a friend or relative or Realtor are trusting another person to do the job for the consumer. This means the CONSUMER is acting unethical toward himself or herself by NOT probing deeper into the business practices of the service provider.
3) I suggest using the system we’re living in: Capitalism. Your firm can make a business decision to only work with ethical loan originators, lenders, title companies, and Realtors. Advertise this to the general public. Let the service providers know that you’ll be interviewing them on their business practices before sending them any business, or receiving any business in the door. THEN advertise this to the consumer.
Hey David,
You know what I kept thinking as I was sitting in the movie theater watching “Sicko?” “If Michael Moore decides to take on real estate and mortgage lending, all hell will break loose.”
HOWEVER, I absolutely disagree with you on this statement:
“Home Ownership should be available to every one. It shouldn’t be a game, it should be a right.”
Business is a game and homeownership is most definitely not a right.
Perhaps you meant “a safe place to live?” As in, “safe and affordable housing for everyone, including the homeless?”
Hi Jillayne,
My comment:
“Made worse because of codes or rules that we have to adhere to that restrict our ability to right a wrong.”
Was about my frustration concerning the occassional things I come across in real estate that hurt a consumer (another agents’ client) and because of a rule (NWMLS, etc.) I can’t approach that consumer to help them because they are the client of another agent. Which of course on the other hand is a good thing because it protects consumers from an unscrupulous agent hounding another agents’ client.
Tims’ post on his frustration struck a similar cord of frustration in me.
Your comment about an individuals’ own resposibility to investigate a service provider is on target, but many people don’t have the time or energy to do this over and over again for all their service needs, I know I don’t. I can see how people can fall prey to the unscrupulous, they want to believe that the person they have choosen is going to do their best and help them, not take advantage of them.
I like your plan for working only with other service providers who share the same high ethtical standards, that is what I have been working towards although more informally than you outlined.
It is very frustrating to be sitting across from people at the signing table being 99% sure they’re getting screwed. When I was in escrow/title, it made me sick that as a “neutral 3rd party”…you’re not allowed to say anything. Back then, when a client would ask or show concern, I would encourage them to get their LO or golfing agent on the phone. If they could not be reached, or if the consumer was not satisfied with the response, the consumer could instruct escrow not to close the transaction until XYZ takes place.
I’m sure that there are good LO/Agents out there. It seems to me that a majority of the time, it’s not what’s best for the consumer. I see conflict with these so-called “hybrids”. For example, sometimes I’ll have a buyer who can qualify to buy a home up to $700k…they don’t want their agent to know this because they only want to buy a $600k home and are concerned they’ll be directed to more expensive ones. There are times when an agent will ask me: What are their incomes? How much more can they buy? etc. If a buyer has instructed me to not let an agent know how much, I answer: M/M Buyer are very well qualified and would like to buy up to $600k.
When you’re the agent/LO, I think you have too much information and there’s one less person looking out for the consumer.
And, I think Tim could back me up on this, the notion that consumers are saving money usng a LO/Agent is a joke. A LO/Agent is making $$$ and instead of the consumer getting two professionals working for them, they’re getting half of that while the LO/Agent is raking it in (over compensated).
Even though it’s legal, I think it’s wrong. Again, a small handful might do a good job at it…most just have both paws in the cookie jar.
Yep Rhonda, I agree.
Tim, you’re commenting as if you’re sitting across the signing table from me!
Tim,
Out of the transactions that you see where an agent is also the LO, what percentage are reducing their commissions?
And, what percentage would you say the consumer was better served (or even served as well) than having two professionals do two jobs instead of one person doing two paychecks, oops…I mean, jobs?
What we, as consumers are looking for is that magic blend of “character and competence” in a service provider. When we find someone who has high personal standards and really knows what they are doing, we WANT to do business with them, and we are rarely let down.
Character comes from a person’s internal make-up and belief system. Competence happens through education, mentorship and experience.
Tim, I hate those stories about our industry. Mostly because I know they’re true. Negative stories are important because they illustrate what can go wrong. However, for every 2 negative story out there, I believe there are 8 positive consumer experiences that rarely get written about — because they’re not sexy or controversial.
I’m not saying that there is plenty that needs to be cleaned up in the industry. The Title Insurance Comapany’s practice alone of bribing agents for business is abysmal. However, the consumer has more information available to them –instantly– than any time in history. Anything they want to know about the process they can Google and get. How many articles are written [i]every single day[/i] on how dangerous it is as a Buyer to make an offer directly through the listing agent, yet it still happens [i]every single day[/i]. The consumer needs to research, ask for referrals and interview. When they do that, they’ll find ethical professionals that will take care of them properly. When they don’t, they’re playing “Russian Roulete” with the system.
With regards to title companies and agents and/or loan officers, it’s a two way street. Many agents will make contributing towards advertising or their marketing a requirement to work with them. They’ll explain that the business they receive from their advertsing benefits the title rep or LO (who ever else is on the food chain being asked to pay up). When you explain what is RESPA compliant, the agent typically scoffs at you. I don’t work with (nor have I in my previous career) agents who ask for dollars that are non-compliant–those agents are always for sale to the next highest bidder.
With the ABA relationships that the three major real estate companies have with mortgage, title and escrow companies; it’s getting tougher for outside reps to have any access to agents. I think this almost promotes or tempts outside reps to do what they can (I’m saying this right) to work with these real estate agents. Many brokers in the major three real estate companies will do everything within their power to control where the title, escrow and/or mortgage business goes. Follow the money….
Greg, I really debate whether to even bother posting this stuff because of the negativity and fearful of always coming across that I don’t enjoy housing, which is not what I want to portray. But discussing escrow issues alone is not terribly exciting for the sales folks—Drama of transactions is.
I’m sorry, I said that correctly, Home Ownership should be a right. We all choose, on a daily basis, if we excercise our rights. Every aspect of the American Dream is in place today and available to the public. The Real Estate industry is trying to figure out how to maximize a return on time and investment. Our system of buying or selling a home was created to level the playing field. It’s just that the rules have been circumvented by greed.
The example of the Health Care Industry was deliberate. Good doctors, nurses, and health care workers bemoan the system they work in every day. Let me repeat that, every day. We in the Real Estate Industry bemoan the fact that our business has been over run by con men, the term men is deliberate, every day.
What are we going to do about it? What concrete steps are you going to take today to make the Real Estate Industry better?
OK you’re the escrow person and you know the consumer is being taken advatage of. If you point this out you will lose a deal, so what? The agent on the other side will bad mouth you, so what? You lose money, your children don’t eat, you end up living in a basement apartment working at Wal Mart, so what? This is America, you’re not going to starve to death.
I’m going to come out of the closet. I’m an old hippie, as if you couldn’t guess. Hundreds of thousands of dollars pass through my hands every year. I’m in the Real Estate business and have never done a deal, or participated in a deal, where the highest ethical standards were not followed. Could I make more money? You betcha!
What’s also interesting to me is that the people who mentored me back in the bad old days of Real Estate of the 1970s, the used car era, are twice as ethical as anyone I’ve met recently. For all the Board of Realtor, education crap, this batch of next generation Real Estate professionals are less than stellar in my opinion.
What are we going to do to make it better?
David, I don’t believe the escrow person is allowed to point out to a consumer if they escrow person feels they think they’re being taken advantage of. It’s not about worrying about losing business…I would bet the LPO would rather not have that type of business.
Plus, the EO/LPO does not know the circumstances of the client. With Tim’s example, maybe the person was doing a “no job/no doc” loan. The LPO does not know the entire background of what’s going on. Although, I’m sure their hunches are usually correct.
Escrow is suppose to be a NEUTRAL third party.
Tim,
I understand both your frustration when experiencing incompetency creating drama inside the transaction. Incompetcy and bad ethics is frustrating for every professional in our business.
I have a challenge for you. Maybe you can keep your eyes and ears out for a few examples of “heroic customer service” from a professional in the industry and make a post those the stories in the next couple of weeks? I think it’ll make a great post!
Greg
Greg,will do so.
[...] Ken Schrammie rants on How Do Consumers Find Ethical Help? with a brutal story of a consumer getting screwed. [...]
May I add my two cents?
Jillayne said on 7/13/2007,
“It’s a game called capitalism” (I assume this is regarding the practices of financial businesses due to extinct compliance regulation)
First, I respect Jillayne probably among my top ten in the industry as an expert. And that should mean that I can disagree respectfully. I am not a capitalist, but I am not a socialist (not saying this is the only other alternative or that you were advocating that, Jillayne).
The question is this: Who’s going to regulate and enforce the law protecting the people? The government or the businesses? It seems if you have big businesses, then you must have big government to compensate for the avarice amongst dishonest lenders. However, may I ask who will regulate the government when it is corrupt???
Greg Perry said on 7/14/2007,
“Character comes from a person’s internal make-up and belief system…”
I would like to say that this hits the inner cords of the financial industry. YOU are the best regulator. When you see something wrong, report it. It doesn’t matter if that report won’t be looked at because the DFI is so backed up…that’s not the point (while it may be a good point) in this particular matter.
Lastly, strive to love everyone as you love yourself…regardless of your creed/worldview/et cetera. If you do this, you will be rewarded. Do these time-honoured principles not outlast the petty bonds of corporate abuse or even other types of abuse?
Kindly.
David, reporting LO abuse to DFI is great if the LO is regulated by the DFI. What if it’s someone who works for one of the big name bank-mortgage companies?
The people need to do a lot of research upfront to make sure they’re working with the right team of people for their transaction. The people (consumer) has the power.
If the “perfectly capable buyer of a home with nearly 770 FICO scores is placed into a short term Interest Only Adjustable Rate Mortgage with a start rate of 7%– sold with a 3 yr pre-payment penalty” would have asked 3 people whom they respect and trust who they use for a real estate agent and a mortgage professional and would have selected their team from there…I would bet Tim would not be blogging about them now (I’m sure he would have someone else to write about and I give him kudo’s for talking this).
Sharing stories here at RCG, both the good and the bad are good for people.
The bad stories help people to be aware of what to look out for so that they can avoid them. Why make the same mistake when you can learn from someone else’s story?
The good stories highlight the difference between bad service and good service so that people know what kind of service they should expect.
When we avoid sharing “negative” stories because it’s “bad for the industy”, we become part of the problem because it helps allow it to continue. When we expose problems, whether in stories, or making a formal complaint, we help draw awareness to it.
That awareness helps people to avoid those types of service providers because the consumer now knows what to look out for, so the service provider either makes postiive changes in their business practices, or loses business.
So Tim, thanks for sharing your story with us and helping people to question what their service provider is doing for them!
Hi Rhonda and David Young,
I agree with you both in this way:
When we (including Tim!) see what we believe are abuses of power by an industry person over an unsuspecting consumer, it is my opinion (and I think David Young’s, too) that we would want to do more than complain to others and do nothing to solve the problem.
We could call the person’s government regulator, OR we could call THE PERSON and talk to the person over the phone about what happened.
I ask this question in the ethics classes I teach:
If YOU accidentally messed up ethically, or you made a mistake and were unaware of your mistake, would you want an escrow closer or a competitor to contact your regulator OR would you rather have that escrow closer or your competitor place a friendly call to you, pointing out, from that person’s perspective, the mistake?
100% of the time, students answer that they would rather be contacted by that friendly, helpful person. If you would want this for yourself, then one test of an ethical act would be to also give the same treatment to others.
Tim: Call the hybrid LO/real estate agent. Perhaps you’re missing more of the facts. Maybe the hybrid gave the consumer options, and one of the options was a lower payment for an interest only loan. Maybe a better option was to secure a loan with a prepayment penalty in order to gain an even lower interest rate. Perhaps the hybrid did everything he or she could have done to explain all the possible consequences, and the couple still make the decision they made. Without all the facts, it it very difficult to call an action unethical.
I would be very interested to read more about how Tim’s conversation went. It would make a great follow-up article.
David Young says:
“Lastly, strive to love everyone as you love yourself…regardless of your creed/worldview/et cetera. If you do this, you will be rewarded.”
This is a re-statement of the golden rule, which doesn’t logically work. Why? Because not everyone loves himself or herself.
A better formulation of the golden rule would be: Treat others as THEY wish to be treated.
When the borrower is talking about the terms of the transaction 18″ from your nose, it is not difficult to get a clear picture of the situation.
True, ethics depends upon one’s virtues and morals. Mine are distinctly different than the next citizen. But, talk is cheap in this business. Slogans are hollow and remind me of nicely painted piece of wood that is strangely lightweight— because it is full of Wood Destroying Organisms & Dry Rot. I’ve long ago paid no attention to slogans and what people say–what they do speaks volumes. In my opinion, this borrower is needlessly paying a higher interest rate, loan fees and a hefty pre-payment penalty if in fact they do try to refinance within 36 months post closing. This borrower put down some good cash. This is a consumer in which any LO with their head screwed on straight would WANT as a long term customer, not a- short-term-rebate-cash-cow-I’ll-never-call-you-back-after -closing client.
No advice is given to the borrower. But we do tell them that they do not have to sign anything and if the situation warrants it, we can only refer a concerned borrower back to their loan officer or Realtor, which was done.
Thank you, and absolutely the best thing that can be done. We are the regulators of our industry.
I think people’s greed is a clear sign of their shortsight. The growth in mortgage and real estate business is predominanty based on referrals. So, how is one expecting to get them from a client they shortchanged?
The best way for consumers to protect themselves against the unscrupulous people in every industry is to educate themselves on the best way to go about filtering those people out. Unfortunately too many people use tactics while shopping for a mortgage that filter out the good folks and pre-select for the unethical ones.
While mortgages are commodities the service providers are not. You can’t get a mortgage like you can order a book at Amazon. When homeowners stop shopping on rate and fees they will begin to have better experiences and better loans. The laws and system of good faith disclosure work together to reward those people in our industry willing to risk attempting the bait and switch knowing that prosecution is unlikely, and further; that the customer can be placated at some point later with a concession of minor consequence to the originator.
Tim: Thank heavens you are back and back with a vengeance. I feel your pain.
The good news is that over these last few months light has been cast on bad practices and folks who – strangely – didn’t realize they were engaged in slimeball practices are re-evaluating business methods. This is where real peer pressure will help. These folks don’t have a good internal barometer and so those of us who do have to help them walk the line.
The other good news is that with truth breaking out all over we aren’t as frightened to cry out and identify predators when we see them. Reminds me of the movie the Body Snatchers in reverse. When you encounter someone who is just really outside of ethical boundaries, you’ve got to call them on the carpet or if they are really bad, call the FBI or some other enforcement mechanism.
That’s how we help consumers. We know and understand the ethical boundaries and you’ve got to cross that “escrow line” sometimes and just call a spade a spade.
Consumer are also well served by blogs like this one. Lots of people are surfin the web looking for advice and when you have a post like this that says consumers should not automatically assume that their mortgage broker or Realtor will guard their interests – add attorneys and title agents to that list, too – it helps them to think for themselves.
Hey, in an era when even on your previous posts seemingly professional good guys can’t tell the difference between co-ercion for future business and just being nice – it’s hard, but things are looking up and glad to see you back.
It never ceases to amaze me that many buyers of real estate just assume they know as much about the transfer of real estate as the people who make it their full-time professions.
Just this weekend I was having a discussion with a friend who had just lost $2500 of a $15,000 earnest deposit – he was lucky he didn’t lose it all. Most of the blame can be laid on the buyer because he just “assumed” he would get the money back when backing out of the deal. But the real problem was he was represented by the listing agent of the property.
When I suggested that he wasn’t represented in that transaction fairly a glazed look came over him – agency is a tough thing to understand, especially if you don’t work with it every day.
But to answer your rant I believe it is just too easy to become a Realtor or a loan officer. If you want to be an appraiser you need two years apprenticeship in most states before you can work by yourself.
I hate more government interference but I believe that should be the model that loan officers and Realtors will need to move toward.
Buyers and sellers can help buy using people they have been referred to instead of being subjected to general marketing to select their professionals.
Jillayne said,
“This is a re-statement of the golden rule, which doesn’t logically work. Why? Because not everyone loves himself or herself… A better formulation of the golden rule would be: Treat others as THEY wish to be treated.”
I realise this isn’t a philosophy post, but I just gotta comment.
Everyone loves themselves, even the most depressed person in the world with ‘low-esteem’. That person just thinks about how bad everything is for themself. And they keep thinking that day in and out. The point is, ‘They are dwelling on themself’…hence, they love themself.
If we are to treat others as they wish to be treated, then what standard are we to use? Our’s? Conventional reasoning? If so, why is that better over their own standard?
Again, I know this isn’t a philosophy post, and you can delete this if you want. Thank you so much for letting me blab.
Kindly and Respectfully.
Hi David Young,
Ruminating about depressing thoughts is not a form of self love. But now we’re entering the psychological side of the philosophical.
When one enters a role as a professional, such as a loan originator, an escrow closer, a real estate agent, and so forth, we would want to treat a client as they wish to be treated, and not put ourself as the starting point for treating other people. That’s taking the ego-centric position, which is very American and very modern. We live in a post-modern world; not every person wants to be treated the way we do. That’s like saying we know what’s best for other people.
That’s the position the male dominated religious right takes when trying to prescribe pro-life rules for every female. (Definitely not saying this is you, just giving an easy example.)
Really: People often already know how to solve their own problems and people often can verbalize how they wish to be treated. We just need to ask.
Exceptions would be a clinically depressed person or any person without the mental capacity to make decisions such as a schizophrenic. Another exception would be a person of limited mental reasoning ability such as a person with a very low IQ. These cases require different treatment.
I’m with David on this one. A civil society is based on morals and ethics that fit the norm. The Golden Rule is a very basic ethical guideline that works in 99.99999999999999% of the time.
Simple works. Do unto others as you would have them do unto you.
Easy to think of real fast before you open your mouth to answer a consumer’s question. It works.
Golden Rule Sucks! Sorry, not following this thread, but I’m with Jillayne on this one. Trying to lump everything into “just follow the Golden Rule” is ludicrous for an industry or any business. How’s a Masochist supposed to apply that rule?
Some people expect to be cheated…and so in turn cheat. Some people expect everyone to be all about the money…and so in turn follow the money.
Golden Rule is too “Everyone’s Doing It”, and we have way too much abuse going on in the name of Golden Rule and Everyone’s Doing It.
Time for a much higher standard.
While I agree with Jillayne, I’d change the emphasis to “treat others as they WISH to be treated”.
If Wishes Were Horses, Beggars Would Ride…let’s ride a little higher.
Hi Tim,
I’m a little late getting in on this thread; but I’ll add my $0.02 anyway.
You’ve brought to light several bad points of the dark, seedy underside of our R/E industry. Your examples speak to our profound need to have more legitimate LEADERS in our industry, and also our country as a whole (on both the micro- and macro-levels too). I certainly don’t have all the answers; but It should go w/out saying that our Insurance Commissioner should boom-down on the title companies’ violations. Furthermore, allowing one person to be both a real estate agent AND LO should be prohibited…too much power & info vested in one person…the consumer is at a profound disadvantage in this situation. Finally, consumers need to demand a higher standard of conduct from their leaders…get rid of selfish, ding-a-ling agents too busy golfing to write up an addendum to a PSA (could be grounds for a lawsuit, depending on circumstances).
Great post, btw!!
“The Golden Rule or the ethic of reciprocity is found in the scriptures of nearly every religion. It is often regarded as the most concise and general principle of ethics. It is a condensation in one principle of all longer lists of ordinances such as the Decalogue.
You shall love your neighbor as yourself.
Judaism and Christianity. Bible, Leviticus 19.18
Whatever you wish that men would do to you, do so to them.
Christianity. Bible, Matthew 7.12
A man should wander about treating all creatures as he himself would be treated.
Jainism. Sutrakritanga 1.11.33
Try your best to treat others as you would wish to be treated yourself, and you will find that this is the shortest way to benevolence.
Confucianism. Mencius VII.A.4
One should not behave towards others in a way which is disagreeable to oneself. This is the essence of morality. All other activities are due to selfish desire.
Hinduism. Mahabharata, Anusasana Parva 113.8
Tsekung asked, “Is there one word that can serve as a principle of conduct for life?” Confucius replied, “It is the word shu–reciprocity: Do not do to others what you do not want them to do to you.”
Confucianism. Analects 15.23″
I challenge anyone to create a higher standard from which we can draw ethical guidance on the fly working with our customers. The Golden Rule is the centerpiece of our cultural ethics and is the standard to which we aspire.
Diane,
Well said.
Thank you.
This is fun stuff! Thanks for the comments Jillayne, Ardell, Diane, Joe, and Tim…nice quotes Diane.
Jillayne exposes me for what I am: an egocentrical-religioseismic-rightist-masculinocerous…. ….grunt….. …hppmh…..
Seriously though, it all boils down to what standard we choose. Ardell asks for a higher standard. That sounds well and good, and I’d like to see what new standard she would propose in a nutshell?
Again, fun stuff and thanks for letting me gripe. I’m going to listen to some blues now.
Kindly.
David, that is why I love ya! You’re so honest!
I think it’s time for you to listen to some punk rock now.
Diane, your comment is worthy of a much longer reply that I have time for at 11:32PM tonight. I’ll write a follow-up article for everyone.
Briefly:
We cannot solve ethical dilemmas in business using principles found in religion. There are literally thousands of religions in the world and religions are basically rule-based.
When conducting business such as the roles we hold in this industry like loan originator, escrow closer, and Realtor, a person can surely use his or her foundational religious knowledge as a place to start. But ethical thinking requires that we move BEYOND rule-following.
ONLY using religion and only using one (golden) rule does not make a person ethical.
It makes a person a rule follower. No thinking person in the world today would be able to support that a rule-follower is ethical. It just means a person knows how to follow rules.
ONLY using golden rule principles does a grand disservice to a person: it keeps the person in rule-following mode. It inhibits ethical thinking and limits moral development.
However, golden rule teaching works okay for small children. When humans move into about age 12-16 or so, they begin questioning the rules, which is a normal part of their own moral development. That’s why teenagers are always questioning why a rule is so “unfair!” They’re wrestling with the justice phase of moral development.
Sticking with the golden rule in business means limiting oneself to the moral development level of about a 10 year old. Ethical dilemmas are never that easy in business. But a rule makes it SEEM so easy to follow. This is self-deceptive. Ethical thinking requires us to move beyond our own personal reasons for wanting fast, easy solutions.
I will write more in a longer, follow up post including examples of how the golden rule does not work in business. I always look forward to your comments. I’ll be teaching a day-long class tomorrow and won’t be able to respond to comments until later on Friday evening, or I would write a longer article right now for us.
“Oops, I did it again.” Stewart Title in the news again. Tosses $1.5 Million to the California Insurance Commission. Issues 2,173 policies written by unlicensed title examiners.
Hmmm….probably over $10Million in revenue for those policies and I have to pay a fine of $1.5 Million. That’s a good ROI for any business.
Solution: Cease and Desist Order for 6 mos. will get their attention. Oh rats, that’s going to get politicians all worked up because of all the state sales tax revenue lost. We’ll,lets just fine them, again.
http://www.inman.com/inmannews.aspx?ID=63925
While most of our cultural ethical base evolved from religion, the rules of a civilized society require that we best live together in harmony with some ethical structure regardless of one’s personal beliefs in a God or otherwise.
The ethical methodology you support, Jillayne, is really ethical anarchy. Perhaps it’s just a mirror of our society at large today because in many ways we’ve lost much of our social structure.
Imagine, if you will, driving in traffic without simple rules of the road. How would we fare if we allowed each person to make their own decisions about where to drive and how? It would be anarchy.
Living in a civil society requires rules. The very diverse nature of humanity and personal belief systems require that to live together and do business together that we agree to follow a structure of rules.
So, we aspire to follow the Golden Rule and others like it, just as we learned as children.
Tim, the news about local title companies is just beginning. The fines that recently were charged were after review of 3 of the local outfits. Info on the others will follow soon…stay tuned.
Hi Diane,
Rule-following (including living only by the golden rule) equates to living ones life as morally developed as about a 10 year old. A person’s ethical development ought not stop at rule following, indeed every one of us, with some very minor exceptions, has the capacity for great moral development throughout our lives, but this requires moving our reflective thinking beyond relying on simple rules to solve complex, professional ethical dilemmas.
The methodology I support is the opposite of ethical anarchy.
Many, if not most of the real estate industry (Realtors are the exception as their class is required) have never attended a class on applied professional ethics, and received their college degree (if they have one) long ago, before ethics was a required course.
I will do my best to help readers understand in a separate post.
Diane, most of our cultural ethical base absolutely did not evolve from religion, however, religious leaders might have told followers otherwise.
Ethics is a branch of philosophy that came about way before religion.
Rules are a great way to start, but following rules does not make a person ethical, it makes a person a rule follower.
Once, long ago, we had laws/rules to enslave African Americans. We decided that that rule was immoral and we moved beyond it. We use to have CC&Rs that governed the way land could be used in the United States in which we determined, for example, that people of Chinese descent were not welcome in a specific subdivision. Then we decided those rules were immoral.
Rules are a good place to start, but not finish, when a person is trying to figure out how to solve a complex, ethical dilemma in business.
When we teach business ethics to people in a position of trust, who intend to serve the public, especially licensed persons, the Golden Rule is still, in my opinion, the most reliable barometer for an individual faced with an ethical choice.
All rules in general aren’t the issue. We’re talking about good sense commonly held values, easily understood, which if aspired to will likely result in fulfillment of the trust promised in the professional or fiduciary relationship.
Here’s a quote from The Mortgage Fraud Blog in which Kathleen Rice, Nassau County district attorney, explains why she will be so tough with the accused:
“Attorneys have more than just a professional responsibility to represent their clients’ interests,” said Rice. “These are professionals working in a position of trust, very often for clients who are not familiar with the law and may be going through an incredibly difficult episode in their lives. We will be very aggressive in going after professionals violating this trust and preying upon the vulnerabilities of their clients.”
I maintain that this is true for Realtors, mortgage lenders, title agents and attorneys – and that’s what we are discussing, trust and the ethical treatment of the consumer in a real property transaction.
I think it’s a fair bet that consumers would choose a professional who aspires to the Golden Rule in business transactions, which they understand, rather than a professional whose transactional ethical standards can’t easily be defined.
I realize everything is not black and white. We certainly have lots of shades of gray but by aspiring to some simple easy to understand – commonly held values – is a good thing in our business.
Much of the heartache of the current industry-wide correction may have been avoided if traditional standards were embraced by leadership and supported by peer pressure.
We have to heal our collective professional relationship with the consumer and with each other. The Golden Rule is not a bad place to start.
You are definitely right the following rules does not make a person ethical but it may create ethical outcomes. Peer pressure is a good thing when it supports right outcomes. So when we have a rogue Realtor, operating outside of the agreed ethical code, fellow Realtors put pressure on that individual to perform in an acceptable manner or face the consequences.
We have to face the facts that there are lots of personalities operating in our business and most will never be vetted with any kind of ethical scrutiny. So absent a good selection process, we can espouse simple guidelines like the Golden Rule, which most understand. It’s not a panacea, but it moves us forward in the right direction.
Hi Diane,
We agree on many points.
The golden rule is easy.
For complex, business ethical dilemma, we must move beyond the golden rule and consider how the other person wants to be treated, instead of assuming everyone wants to be treated the way we do.
Most everyone understands the golden rule as it was taught to us. Rarely, if ever, would the golden rule solve our ethical dilemmas in the practice of real estate, escrow, title, or lending.
Thanks, Jillayne. As always, an interesting discussion.
[...] Escrow closers for being a neutral, powerless, third party observer to the madness; [...]
I don’t think, when they formulated escrow’s neutrality, they thought we would be neutral (and silent) in the face of fraud on our desk.
Good point Nancy. And, I don’t think agents nor loan officers realize the discussions that go on between escrow or title firms (behind the scene)s in which we share information to reduce fraud or put others on notice regarding potentially fraudulant behavior/transactions.
Tim, my personal disclaimer: I have had this darn head-cold for over a week…so forgive me if this is a real dumb question… are you only a neutral third party when you’re entered into a transaction? You can refuse to do business with anyone and you can also report fraud…correct?
I think most title companies (I know mine has) have endeavored to do some kind of Fraud Awareness training and require that closers go through Management if there are transactions which have “red flags”.
Personally, I have turned business away or demanded to speak with the underwriter to content myself that the lender clearly understands exactly what is going on with the transaction.
This, of course, doesn’t answer the concerns an investor may have or where the deal I turn away goes when we won’t close it.
I do know that the Uniform Closing Instructions (promulgated by MBA, AEA and ALTA) have mandatory fraud reporting by the settlement agent settlement agent. It’s likely those will be rolled out sometime next year.
Nancy & Tim: You are right on. Reputable escrow/title agents will refuse to do business and refuse to enable fraud.
A coupleof years ago we had a 1000 red flag alert come up when some fellows from NYC arrived in Johnstown to buy up massive numbers of modestly priced homes. They literally drove into and out of town in velvet sweat suits in big cars with bags of cash.
They had mob written all over them and we were very careful but didn’t allow them to control or change our business methods. As soon as we were able, we told them to hit the road – nicely so as not to die in the process.
The lenders we tried to protect against fraud really didn’t want to know. A few of the Realtors shut their doors to them but the ones who were hungry took the deals and their sellers suffered.
An inexperienced, hungry title agent took the deals and thought we were nuts.
Think about all of the stories we hear about fraud and think how many of them would have been stopped had they just had a strong, reputable escrow/title agent in control.
Happy to hear this news. We’ve turned down clients where we found out that lender fraud was going to occur or had in the client’s background. Case in point, the investor buying new construction condos to flip after completion. We’ve had several people tell us that they get the loans under the auspices of “owner occupied” when they have no intention of living in the unit at all. We tell them that it is a felony to conduct lender/mortgage fraud and we walk from the client in the first interview. I’m not about to risk my business just so some guy can make an extra $2000 (example only) on a deal.