We have a Loan Officer who is also a full time Realtor, and has their own personal lender that is not affiliated with the bank. Whenever we deny a loan, she sends it to them and their personal lender originates the loan. Also, whenever we make a decision on a loan request (based on LP/DU findings, etc.) she contacts her personal lender to verify if we did it correct and then sends us information about special loan programs that the borrower would fit in (products that we don't offer, but her personal lender does). This information was just disclosed to me, when she questioned our decision on an application. This doesn't sound right to me. Has anyone experienced this before or have any advice on how to handle it?

My first thought is this is a conflict of interest. Perhaps get your HR and legal departments involved for a possible violation of the Bank's Code of Ethics/Conflict of Interest policies (assuming you have one).

Additionally, is she disclosing this to the applicants? Is she sharing NPI with the other lender without the borrower's consent?

I totally agree with happy on this one.

Unless she has the applicant's expressed written consent to be discussing this with her "personal lender" she has put the bank in the position of violating all sorts of privacy rules.

How would you handle this?

Give her 10 supervised minutes to clean out her office and show her the front door with instructions not to return.

What does your code of ethics or personnel handbook say about employment outside the bank? There is no need to deal with the specifics if your bank has had the forethought to deal with the larger issue.

Are you an FHA lender??

In 2006, the Federal Housing Administration (FHA) updated its Mortgagee Approval Handbook and said that employees of approved mortgagees “May have other employment including self-employment. However, such outside employment may not be in mortgage lending, real estate or a related field.”

Not an FHA Lender. We do Freddie/Fannie loans. This Lender/Realtor also gives her opinion of market value to borrowers and disagrees with the appraisers when the values come in. She has also given borrowers ideas on building additions that would be good for marketability. We have had a few Realtors calling asking if it is a conflict to have her working here as a Lender and the Senior VP is fine with it.

IMHO this person needs to be shown the door. You are already getting a bad rep with other Relators in the area and from what little you have disclosed the bank is vulnerable for compliance sanctions, possible monetary penalties and law suits.

This reads bad news. Show them the door.

I'm sure you already know this but make sure to document your efforts to get this fixed. If upper management wants to keep her employed then document that too.

And make sure to update us on the outcome, like on what happened after your regulator found out about this.

Very big conflict of interest. And you will not be getting referrals much longer from your local realtor base and rightfully so.

Oh boy. This alone should be enough to shut that "program" down and fast.

Today we found out that the Mortgage Originator is friends with and works professionally as a Realtor with one of the Paralegals at our Attorney's office and scheduled a closing outside of bank hours without informing our Mortgage Closer or any consideration to TRID timelines. She said that they were talking about other business when the borrower came up. We spoke to the Attorney and he didn't like hearing about this and will be talking to the Paralegal. Management doesn't think there is a problem.

"We spoke to the Attorney and he didn't like hearing about this...."
"Management doesn't think there is a problem"

hhhhmmmm

Hopefully Management will change their tune when their own attorney gets through talking to them.

Wondering what level of management you're talking about too. I doubt the Board would go along with this.

Frankly, I am shocked that this is allowed by the management. They are inviting all sorts of trouble.

What an absolute compliance/ethics rat's nest. Can't wait to see how this turns out. I would be going over some heads here and showing someone the door. I cannot/would not work next to this situation. JMHO

The lunatics are in charge of the asylum. The senior vice president is "all right" with this? This lender is a loose cannon. There's more than enough reason to contact the state board of real estate agents (or similar government body in your state) to report these actions, too. Consumers don't stand a chance when there's someone like that on the loose with a real estate license.

Management doesn't think there is a problem.

You need new management.

I assume from the bank's perspective it gets first crack at the loan and that is why it's OK. But it smacks of privacy issues and at least the appearance of impropriety. What happens when that loan could have been done in the bank, but was denied and referred to his private lender? Are there RESPA referral disclosures being made saying, go here, I can help you another way outside the bank? And when a borrower complains about the product or treatment and was sent there by the bank...

Your management is willing to accept more risk than mine was. There is a lot more to go wrong, than right.

Today the Lender sent an email with incorrect information that I was included on. When it was mentioned to her that the information was incorrect, her response was "My fingers did not type all of my thoughts". I am not making this up.

Clearly you have a loan officer who does not care. Once again I think you have to have a meeting with your supervisor or the president and discuss the issues.

Anon,

You LO is such a loose cannon, and mgmt. is okay with it; makes you wonder what else is going on that you don't know about.

At best mgmt. wakes up and gets rid of her; at worst you polish up your resume and start looking.

One more from the Mortgage Originator - when it was pointed out that he email contained numerous misspelled words - she said "the computer keys didn't work when she pressed them". LOL. By the way, I will no longer be worried about this stuff as I will not be working with her anymore.