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In Response To:
Thread Starter: Anonymous
Title: Re: loan officer conflict of interest question

Loan officer advised me that two of his customers were about to partner and purchase shipping containers of trading cards for resale. The customers were looking for ‘a third partner’ and asked loan officer to be the third partner. Loan officer asked if that would be allowed. I advised that if the loan officer participated in the deal as a third partner, he would need to move their existing loan relationship to a different serving officer.

Loan officer closes a loan to the two customers for the purpose of purchasing the cards for resale. There is no reference to his present or future involvement in the loan file.

I overheard the loan officer discussing his participation in the acquisition of cards for resale as a third partner.

I researched and found the closed loan.

Loan officer now advises that he was told by one of the customers that he should make the loan to just the customers and then have his wife buy in 1/3 after the closing. The loan officer asserts there is ‘no paper trail’ tying him to the transaction and, thus, no conflict exists. He likewise asserts that the CEO approved the structure while the two were on the golf course together.

Am I wrong in thinking this is a conflict of interest and the loan officer should not be allowed to continue to be the servicing officer for these customers?