Canons of Ethics & Standards

As last amended September 15, 1977
Amended in accordance with the recommendations of the
Ethics and Standards of Practice Committee

The members of THE MORTGAGE BANKERS ASSOCIATION OF NEW JERSEY, mindful that soundness, usefulness, prosperity and future of mortgage banking depend on the honor, integrity and fidelity of all personnel engaged in this business, and of their great responsibility in the administration and conservation of the interest committed to them and conscious of the confidence reposed in them, establish and pledge themselves to maintain the following standards of conduct in their dealings with the public and with each other.

The conduct of the Mortgage Banker shall always be characterized by candor and fairness. The Mortgage Banker shall not use his position to attain personal gain in violation of the trust reposed in him by his associates, principals and clients.

The Mortgage Banker shall hold inviolate any information given him in confidence by his client. This canon shall not be construed to proscribe the use of the furnished data in the reasonable pursuit of the purposes for which such information was transmitted.

The Mortgage Banker shall familiarize himself with all aspects of the mortgage banking industry so that he may integrate properly the various interests and problems which confront him daily, including but not limited to the following:

(a) Real estate appraising
(b) Commercial law as it applies to the mortgage banking industry
(c) Credit evaluation
(d) Federal and State legislation and regulation affecting the mortgage banking industry
(e) Proper servicing procedure

All oral agreements shall be accorded the some sanctity given to written contracts, and no agreement or commitment made by a Mortgage Banker shall be breached by evasion or equivocation.

A Mortgage Banker shall not willfully and knowingly make or circulate any false statement or rumor, written, printed or by word of mouth, which is untrue in fact or calculated to mislead any other party.

It is deemed to be an unethical practice for any member to:

(a)Quote to a prospective borrower interest rates or other loan terms impossible or unlikely of realization with the intention of rejecting the loan terms applied for and making a subsequent counter offer.

(b)Refuse to release an FHA conditional commitment to another member upon his written request, provided the request is accompanied by a certification of the existence of a bona fide Contract of Sale for the subject property together with a processing fee not to exceed $50.00, including cost of application for FHA conditional commitment.

(c)Lend financial assistance to real estate brokers as a means of exercising control of the brokers' mortgage origination business and/or to secure points or fees in excess of those customarily charged.

(d)Participate, encourage or condone in any manner whatsoever, the submission of a contract of sale to an investor in connection with the offering of a mortgage loan or a proposed mortgage loan, if such contract states a purchase price in excess of the true and actual sales price for the property therein described.

(e)Participate, encourage or condone in any manner whatsoever, in the preparation or submission of any false, misleading or incomplete credit report concerning a mortgagor or proposed mortgagor in connection with the offering of a mortgage loan or proposed mortgage loan to an investor.

(f)Participate, encourage or condone in any manner whatsoever, as either broker or lender, in the practice whereby the mortgage lender sets or agrees to the fixing of a discount price on the origination of a mortgage loan in a manner designed directly or indirectly to accrue to the account of the mortgage supplier, for use in defraying discounts in any other mortgage transaction for the benefit of the mortgage supplier. This practice is commonly known as the "Point Bank," or by other names.

A member who has procured and accepted a commitment from an investor to purchase a loan originated or to be originated by the member, shall deliver such loan as provided for in the commitment, unless delivery shall be prevented by reasons beyond the control of the member.

The departure of advertising copy from a clear, simple and truthful statement of fact is contrary to sound business practice and is unethical. The Mortgage Banker shall not advertise financing terms which do not represent the terms generally available through his efforts, unless the advertising copy expressly sets forth the special qualifications pertinent to the financing terms advertised.

The Mortgage Banker shall not strive for an absolute monopoly of the business in his area, it being recognized that competition is legitimate and conducive to more efficient service.

The Mortgage Banker shall maintain and deposit in special accounts separate and apart from personal or other business accounts, all monies received as trust or escrow funds.

The Mortgage Banker shall use all efforts at his command to effect the proper servicing of the accounts entrusted to his care. This duty shall be performed with an awareness that a conscientious discharge of the obligations to both principal and debtor will result in increased respect of the community for the mortgage banking industry.

The Mortgage Banker shall act in conformity with applicable laws and regulations and shall cooperate in every appropriate way with all governmental bodies in the interest of establishing and maintaining an efficient and fair framework for mortgage credit.

The Mortgage Banker shall conduct his business without regard to the race, color, sex, religion, marital status, national origin or age of the persons with whom he deals.

This Association shall have a standing committee to be known as the "Ethics and Standards of Practice Committee." It shall be the duty of the committee to continue to study the question of fair practices in general. The Committee shall recommend, from time to time, upon a majority vote of its members, to the Board of Governors for approval, such amendments to the Canons of Ethics and Standards of Practice as may to the Committee appear to be appropriate. 
Pursuant to the performance of its functions, the Committee may:

(a)Upon its own initiative, investigate alleged occurrences of violations of the Canons of Ethics and Standards of Practice, or any other situation generally and reasonably within the scope of the function of the Committee; and/or

(b)After written request by any member of the Association, and after all interested parties have received reasonable notice and been given a reasonable opportunity to be heard, upon a majority vote of the members of the Committee, file complaints and recommendation for penalties, both in writing, with the Board of Governors.

In the event the Committee shall file any written complaint with a recommendation for penalty, the Board of Governors shall, after affording the member against whom the complaint is lodged a reasonable opportunity to be heard, by majority vote of the Board of Governors, make a determination of guilt or innocence and, in the event there shall be determination of guilt, the Board of Governors shall determine the penalty in such a case by majority vote at the Board. In the event of a determination of guilt, the penalty may be any one of the following:

(a)A warning
(b)A fine not to exceed $ 1,000
(c)Suspension from the Association, for a period not to exceed one year
(d) Expulsion from the Association

The determination of guilt and the penalty fixed shall be accompanied by written findings of fact, which shall become part of the permanent minutes of the Board of Governors and it shall be furnished to the member charged by the complaint.

In the event the Committee shall decline to file a complaint after consideration as herein provided of a written request by any member, the member filing such written request with the Committee shall have the right to file a complaint, in writing, directly with the Board: of Governors, provided, however, that such right to file a complaint directly with the Board of Governors shall not be exercised for a period of three months from the date that the written request to file the complaint with the Board of Governors shall have been received by the Committee. Following the filing of such written complaint by a member directly with the Board of Governors in accordance with this procedure, further proceedings shall be in accordance with the practice above stated.

The Committee, subject to the approval of the Board of Governors, and the Board of Governors may promulgate rules and regulations to further implement the foregoing as may be appropriate. 

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