Ethics and Percentage Earned

Quote:

Originally Posted by Jorel

I saw two post and thought combining them might be an interesting topic. My industry Mortgage brokering charges anywhere from 1% up to 5%. Either way it is disclosed to the consumer so do you think it is ethical to charge as much as you can as long as you tell the client what you are charging? Stop and think before you answer this one please.

What an interesting question...I stopped to think about this one. Although not in the same industry we all deal with ethics in whatever industry we may be in...I run an ISO for a merchant account company - we compete with banks as well as other ISO for countless merchant service companies.

I beleive that ethics start with customer service - our prices are sometime higher than those of my competitors, I'm COMPLETELY upfront about those fees, but I also show them where we beat our competition. It's give and take.

Now, in your industry - there HAS be a reason someone would pay 5%, what is it? What do they get in return for the higher percentage rate?

Being totally upfront with my clients all the way through our sales process eleminates all possibility of ethical liability.

As I said - excellent question...I'm enjoy my new found forum and look forward to learning lots while I'm here. Thanks to everyone!

Quote:

Originally Posted by brandonmorris

Now, in your industry - there HAS be a reason someone would pay 5%, what is it? What do they get in return for the higher percentage rate?

If anyone here is in lending correct me if I'm wrong but a mortgage broker can charge as much as he wants up to the maximum allowed by the bank as long as he can sell it to the customer --- with no added value to the customer whatsoever.

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Originally Posted by Houston

If anyone here is in lending correct me if I'm wrong but a mortgage broker can charge as much as he wants up to the maximum allowed by the bank as long as he can sell it to the customer --- with no added value to the customer whatsoever.

It could be that the customer/client had poor credit and willing to pay increased percentages just to close the deal. Perhaps it's a timing issue and the customer/client needs to close the deal ASAP, or maybe customer service - I'd pay extra to KNOW that when I needed a go to person I can call and talk to someone I know and/or trust - I'm not in the industry but these to me may be added value to the customer. I guess that's the reason I ask is just to find out if there is an added value for the increased percentage

Quote:

Originally Posted by brandonmorris

It could be that the customer/client had poor credit and willing to pay increased percentages just to close the deal. Perhaps it's a timing issue and the customer/client needs to close the deal ASAP, or maybe customer service - I'd pay extra to KNOW that when I needed a go to person I can call and talk to someone I know and/or trust - I'm not in the industry but these to me may be added value to the customer. I guess that's the reason I ask is just to find out if there is an added value for the increased percentage

A consumer can pay as much as they want for anything including a loan and mortgage brokers can charge as much as they want within prescribed limits.

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Originally Posted by fred

Timing is everything. Retailers don't tell you the price of the product after you've decided to buy it.

Fred I don't see the price changing after the fact. I see this as Bank A offers the borrower a rate of say 6%. The mortgage broker calls the borrower and tells them they were approved at Bank A at a rate of 7.25% and pockets the yield-spread premium. If this was disclosed upfront and agree upon then the borrower could decide if he wanted to pay the points or suffer the higher interest rate over the course of the loan.

to me you have to be consistent. I think you run into problems if you do some at one percent and others at 3 etc... i don't know how ethical it is to try to knock off some peoples heads and not others.....

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Originally Posted by benjamin-benjamin

to me you have to be consistent. I think you run into problems if you do some at one percent and others at 3 etc... i don't know how ethical it is to try to knock off some peoples heads and not others.....

I don't think I agree completely - let me caveat by saying, I agree in consistency - but if you have one client that all they have to do is fill out the sales app, turn it in and your done and you have another that you have to jump through burning rings of fire to get the account for whatever reason, they need to pay for it. Perhaps have a set rate for "good or easy" clients and one for "difficult" clients.

Just my two cents

Quote:

Originally Posted by brandonmorris

I don't think I agree completely - let me caveat by saying, I agree in consistency - but if you have one client that all they have to do is fill out the sales app, turn it in and your done and you have another that you have to jump through burning rings of fire to get the account for whatever reason, they need to pay for it. Perhaps have a set rate for "good or easy" clients and one for "difficult" clients.

Just my two cents

but then where do you draw the line on "difficult" and "easy" I can promise you the as time goes on you will have more and more people you will catorgize as difficult....

Quote:

Originally Posted by benjamin-benjamin

but then where do you draw the line on "difficult" and "easy" I can promise you the as time goes on you will have more and more people you will catorgize as difficult....

I agree...where do you draw the line - you have to have a MEASURABLE way to tell difficult & easy (now that is something I couldn't know as I'm not in that industry)...but I charge for MY time and - I believe it IS ethical as well as business-minded to charge for your trouble/labor.

Quote:

Originally Posted by SpeedRacer

Fred I don't see the price changing after the fact. I see this as Bank A offers the borrower a rate of say 6%. The mortgage broker calls the borrower and tells them they were approved at Bank A at a rate of 7.25% and pockets the yield-spread premium. If this was disclosed upfront and agree upon then the borrower could decide if he wanted to pay the points or suffer the higher interest rate over the course of the loan.

First off if bank A offers a rate of 6% then the mortgage broker can attually get that rate cheaper. Why? Wholesale/Retail.

Also. Bank A may have some conditions like must be owner occupied, must be at same job for last two years, can not be self employed. Must use credit score of both husband and wife. I could go on but I won't. The bank does not tell you this, the mortgage broker will.

Now Joe borrower goes down to bank and gets denied. Because he is self employed or his wife has bad credit. He now feels bad ... and does not get the money to build a pool for his family.

The mortgage broker knows this ahead of time and saves the borrowers the time and grief of having to go to this bank and finds another lending institution that is fine with all these circumstances but the borrower has to pay a higher rate.

All the differences are never disclosed in the media, that would be to boring for the average Joe to read or watch so they skip that part. And say look at these bad mortgage brokers. Yes there are some, but there are bad priets and bad firemen and bad judges. I am sure in your field there are less then ethical sales people as well.

Ethics and Percentage Earned

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