How do you "blow the whistle" with a Realtor?

Loren,

I think you have to call your "former" client and explain to them exactly what you did and why you did it. You had their best interest at heart (no pun intended) and could not in good conscience put them in a house they simply could not afford. You should probably say it more tactfully (not "you just couldn't afford it!") by running the year 5 numbers past them. There are so many loan products out there and buyers oftentimes don't know all the ins and outs of a particular loan. All they know is that he can do the loan and you can't. Tell the buyer exactly what the loan is.

Loren I believe you have to go where your conscience leads you.  I realize that this Realtor gave you the referral and because you have asked this Realtor to find another L/O to do it you will probably not receive anymore referrals from that Realtor, and you may not care because this in not how you want to do business.  All you can really do is explain the situation to the buyer and explain why you believe this situation is not in their best interest.  Ultimately, it is the buyers decision and if they choose to go through with it they will find someone to do it for them and in 5 years, pay the consequence if their financial picture does not improve.  Will that Realtor be angry with you, probably!  Maybe you can educate that Realtor about foreclosures and why they happen.  Do they want this purchase to be another statistic?  How about selling them what they can afford now and in the future helping this same client move-up?  I hope it all works out for this buyer and for you. 

Loren

You have a strict legal obligation to speak to the borrower.   The fact that your client was referred by a realtor is immaterial.  They are your client now and you need to tell them with brutal honesty why you're unable to do your job.

Lanette said:

All they know is that he can do the loan and you can't. Tell the buyer exactly what the loan is.

I'd make sure the client understands that it's not that you can't it's that you choose not to. 

I have a .xls that charts the recast percentage if they make the minimum and rates stay the same.

I'll put the POA rates and terms into this, show the client when they'll recast and what happens when they do then offer to put them into that loan if they like.  So far I haven't had a taker.  

 

I've done 3 POA in my life - all to contractor types who did them with the plan of getting out in a yesr.

 

I agree that you need to look out for the clients best interest. You have made some very valid points. 1. the clients DTI in 5 yrs being rediculously high. 2. If I am understanding you correctly, the realtor is giving the clients financial advice? 3. You have explained the future situation to the realtor and basically the realtor does not care. The realtor only wants the loan closed. As Cynthia stated, you will not be getting any more referals from this realtor. But that is not the point. The point is that this realtor is only looking for the money, and does not care if the clients end up in foreclosure. If the deal were mine, I would not only call the clients and let them know why you choose not to do this loan, but I would take it a step further. I would partner with my branch manager so that it doesnt come back to bite you. After all... if you had knowledge of wrong doing in the business and you did not at least try to do something about it, you could be held personally liable for not reporting it. It is our job to make sure the housing is affordable.