I always try to do the right thing, don’t you? The sad and sometimes surprising fact is that not everyone does.Our NRMLA Code of Ethics prompts us to conduct business with fairness, integrity and professionalism, and requires that member companies employ individuals determined to be “of good moral character.” I am proud to say that everyone I work with, and everyone whom I have met through various NRMLA events (and every reader of this article, I’ll bet), adheres to this code, but I have indirectly encountered loan originators who clearly do not.

Recent news regarding CFPB complaints about reverse mortgage advertising tells me that there are marketers producing pieces that do not adhere to regulations. Is this by their own initiative, or do we assume there is a lender directing them to do so? Are they ignorant of marketing restrictions or are they pushing the regulatory limits? I suspect this may be a glimpse of a loan originator soliciting business in a less-than-ethical manner, but I also suspect that it is not a NRMLA member advertising in this way.

Advertising is relatively impersonal, but its purpose is to lead to a personal encounter. A loan originator becomes the primary source of information after a potential borrower has responded to an advertisement or submitted an electronic request for more information.

The LO subsequently encountered through any means becomes the voice of the industry. We hope that it is the true, honest voice of a responsible, ethical person. Unfortunately, not all reverse mortgage horror stories are from the distant past.

I recently heard from a couple in the Midwest who were very interested in a HECM-to-HECM refinance, but that’s not how they phrased it. Mrs. D told me she had just turned 62 and “needed to be added to the reverse mortgage.” The originating lender is no longer in the reverse business, and the servicer directed them to NRMLA’s Locate a Lender page, where they found me. Mrs. D sent me a copy of a recent statement, where I saw that the current outstanding balance is 15 percent higher than the current principal limit.

She did not suggest that she or her husband had been coerced in any way when the loan was originated, but she was under the misperception that her name could be added to the deed and the reverse.

Our job is not just to extol the virtue and value of a reverse mortgage, but also to make sure borrowers fully understand the consequences of their actions. A failure to provide all the facts may not seem unethical to a less experienced LO because the omission goes unrecognized, but the situation of borrowers like these tells me this demands industry concern. I had to explain that unless their home increased in value, or if they were able to make some kind of contribution toward paying down their debt, the chances of a refinance were slim.

The most disturbing situation I have come across was a call last year from a younger man just three days before his mother-in-law’s reverse mortgage was scheduled to close. He found my name through a colleague in the mortgage business when he and his wife were feeling uncomfortable about her mother’s loan. They were particularly concerned by instructions she had received to draw the maximum disbursement at closing, then to pay it back into the account. This was required, this borrower was told, in order to set up a credit line.

Not the advice or instructions I would have given. This was clearly a violation of the code’s values, perhaps indicating a lack of competence but more likely a lack of integrity. I explained to the man that a draw was not required and that it sounded fishy to me, too. By this time, his mother-in-law felt obligated to close the loan because of all the work already done, and nothing her daughter or daughter’s husband could say would change her mind.

A little detective work on Google uncovered additional discrepancies: The person who contacted the borrower and took the application was not the LO who signed the documents, nor was he listed in NMLS. At that time, I called NRMLA and was told that the borrower could lodge a complaint with the attorney general.

Shortly after the loan closed, the son-in-law forwarded a communication the borrower had received from the “LO” via her daughter, urging her to invest her money in an annuity. A company and contact was named. Here was a clear violation of ethics and possibly the law.

What is a NRMLA member’s, or any individual’s, responsibility when we see indications of unethical behavior on the part of someone in our industry? It pains me to think that that person represents our industry to potential clients. The only thing we can do is provide an avenue for complaint to the injured party.

With Mrs. D.’s permission, I forwarded the facts of her case to an acquaintance at the CFPB. I do not know the outcome, or if she even filed a complaint.