I just had lunch with a loan officer and he mentioned that reps for sub-prime lenders would often visit his office and tell the loan officers that if a borrower made $3,000 a month but needed $5,000 to get the loan that it was fine to put down $5,000.

And this was the sub-prime lenders representative! The loan officer said it was very common and he would have to go around afterward and tell people not to listen to the rep. I was shocked at the brazenness of the sub-prime industry.

That sub-prime lender, surprise, surprise, is out of business.

I’m sitting here wondering about the dilemma loan officers must have gone through. The borrower wants 100% financing on a home he doesn’t qualify for… unless he uses the stated income, sub-prime loan with exaggerated income, just like the sub-prime lender’s rep told them to do.

Do you follow your client’s instructions and get him that 100% sub-prime, no doc, liar’s loan, and make a ton of money yourself?

Or do you tell him the truth?

And if you do tell him the truth, you know he’ll just go down the street to get the dangerous loan he wants.