Of Donkeys and DecencyChris Sanderintegrity, mortgage originators, fraud and deception, Code of Ethics There's been a joke going around lately that Id like to share with you: It seems that, upon moving to the country, a city boy purchased a donkey from a farmer for $100. The farmer agreed to deliver the donkey the following day, but when he arrived, he brought unfortunate newsthe donkey had died. When the boy asked for his money back, the farmer replied, I cant. Ive already spent it. "Well, then at least give me the donkey," the boy retorted. "What are you going to do with it?" The boy replied, "I'm going to raffle it off. I just won't tell anybody that it's dead." A month later, the farmer once again met up with the boy and inquired about the donkey. "I raffled him off, the boy told him. I sold 500 tickets at $2 apiece and made a profit of $898." "Did anyone complain?" asked the farmer. "Just the guy who won, the boy said, smugly. So I returned his money." That little boy grew up to be the chairman of Enron. You have to admit, it's a funny joke. Or is it? Over the past several years, I've seen many mortgage loans and schemes that are as strange and fraudulent as the dead donkey raffle. And we wonder why government involvement is becoming more prevalent. The solution to this problem seems simple: Integrity. Unfortunately, however, some mortgage originators lack this characteristic, which is desperately needed within our industry today. I realize that may sound like gnarled fingernails running down a chalkboard, but consider that most peopleeither first-hand or through a friend or relativehave been victims of mortgage fraud. Also, consider that six of the 10 largest corporate bankruptcies in history have occurred within the past year, all involving fraud and deception of their clients. Does this sound like a coincidence? We must change how we conduct our business right now if we are going to survive. The principal is pretty basic. Deliver what is promised, period. If you tell a borrower that their rate will be "A," then deliver an "A" rateno matter what! It's the right thing to do! Think back to the last loan you wrote, and answer the following questions honestly: *When you took the application, did you apply the rate based on the lowest monthly payment for the borrower, or was it based upon yield spread? *Did you then figure what you could charge the borrower in order to make up for any shortage this may have cost you? If you answered "yes" to either of these questions, you may need to reevaluate your priorities. Now don't get me wrong, anything worth doing is worth doing for a profit. But there's a fine line between making a profit and gouging someone. All I am suggesting is, the next time you sit down to take an application, ask yourself, "Am I doing the right thing, or am I selling a dead donkey?" Chris Sander is Vice President of Missouri Association of Mortgage Brokers and an executive officer at IMS Mortgage Services LLC. He may be reached by phone at (314) 984-2520 or e-mail [email protected].