Abstract. With his bank account dwindling in a new country, Javed finally landed a job as a sub-mortgage broker with the Great Canadian Mortgage Company. Mere months into his position, however, Javed had more rejected mortgage applications than any other broker in the company. A colleague and top broker, Jerry, stepped in to show Javed his secrets to success. In essence, Jerry frequently misrepresents his clients financial data to make their applications appear more attractive to lenders. Jerry rationalized his behavior by noting everybody wins: clients, buyers, lenders, and the Great Canadian Mortgage Company. Javed recognizes that Jerrys actions are wrong, but ethical behavior is not paying his bills. Keywords: ethics, mortgages, sub-prime mortgage brokering, British Columbia Mortgage Brokers Act, case study, immigrant, property assessments, lenders. Javed, a 48 year old civil engineer, left an uncertain future in Tanzania and immigrated to Vancouver, Canada with his wife and two young children in search of more financial and social security. Because of currency controls imposed by the government of Tanzania, Javed and his family were only able to leave the country with CAD $15,000 which would scarcely cover food, housing and other necessities for six months in one of the worlds most expensive cities. As the sole income earner in his family, Javed did not wait to start looking for a job. In four months, he had approached 20+ engineering firms for employment. Javed discovered that the scarcity of jobs in engineering combined with the employers preference for North American educated and experienced engineers made it improbable for him to practice locally. He needed to find a job before his family ran out of money. After completing one of many disappointing meetings with a potential employer, Javed walked over to a bus shelter to catch a bus home. While waiting for his bus, his eyes gazed at the advertisement on a bench featuring a mortgage broker, The Great Canadian Mortgage Company (GCMC). The advertisement showed an impeccably dressed man standing next to a brand-new Porsche SUV vehicle. The message in the advertisement read: NOW HIRING! Sub-mortgage brokers to join our mortgage service team. * Great pay * Flexible work hours * No experience necessary * We pay for your training and licensing

Desperate for a job, Javed applied for the sub-mortgage broker position with GCMC. He subsequently obtained an interview with Dave, the manager of GCMCs branch in North Vancouver. Dave explained to Javed that GCMC is a closely held Canadian company that specializes in securing mortgages for non-prime clients; borrowers with poor credit histories. We have the highest closing rate in town for non-prime applications, he effused. As a sub-mortgage broker, Javeds job would be to assist high-risk clients in financing a new property purchase or refinancing an existing property through one of GCMCs lenders. His role would entail gathering a clients financial information to prepare and submit a mortgage loan application to a potential lender. As for compensation, Dave explained to Javed that once the lender approves the mortgage loan application and the borrower signs the relevant documents, the lender advances a one-time commission of .50% to 1.20% of the amount of the loan, depending on the type of mortgage sold. All commissions are split 50-50 between the mortgage broker and GCMC. With his personal bank account dwindling, Javed confirmed his interest in the position and was hired, subject to completing the Mortgage Brokerage in British Columbia course (the Course) required for registration as a submortgage broker under the British Columbia Mortgage Brokers Act (the Act). Four months into his employment, after having completed the Course, Javed was the least successful broker with GCMC. He had more rejected applications than anyone in his branch. Concerned about Javeds performance, Dave suggested he shadow the top closer in the branch, Jerry. Jerry had over 12 years of experience as a broker10 years with GCMC. Jerrys performance was legendary and Javed soon realized a secret to Jerrys success. Jerry had a good eye for problem applications. If a client were short on qualifications in an application, Jerry would moderately misrepresent income, asset and debt reporting in the application. If one lender rejected the application, Jerry would massage the numbers again and submit to a different lender. Brokers are not mandated to disclose to a lender that a previous lender has rejected an applicant. In addition, Jerry arranged all property appraisals with his brother-in-law, Tom, who consistently inflated his property assessments to influence lenders to agree to higher loan amounts. Jerry then, persuaded his clients to borrow more than they required. As a result, many of his clients took on larger debt obligations than necessary which earned Jerry and GCMC more in commissions. Javed marvelled at Jerrys ability to continuously complete successful mortgage transactions for applicants who may not otherwise be approved. However, he also felt uneasy about how Jerry operated. He knew that Jerrys practices conflicted with the Act and the Code of Ethics and Standards of Professional Conduct (the Code of Ethics) of the Mortgage Brokers Association of BC (MBABC), but he got the job done and was rewarded by GCMC for his actions. The Code of Ethics prohibits members from making false or misleading representations to any parties including lenders. Moreover, members have a duty to notify the MBABC Board of Directors if they become aware of any breach of the Ethics Code. Consequences of a breach can result in disciplinary actions including suspension of MBABC membership, permanent expulsion from MBABC, a reprimand letter or a referral of the matter to the Registrar of Mortgage Brokers (the Registrar). Under the Act, the Registrar could order the broker and brokerage to pay monetary penalties. When Javed expressed concern about Jerrys methods, Jerry smiled and said, Lenders do not really care. They make a lot of money from non-prime borrowers. In the end, Javed, everybody profitsthe borrower gets the financing, the lender profits from servicing the mortgage and GCMC and I get our commission. After three weeks of shadowing Jerry, Javed returned to his desk and stared out of the window. He resented that Jerry is profiting from illicit behaviour. To date, Javed has been unable to generate enough commissions to make a living wage by adhering to the Act and Code of Ethics. His familys savings are almost gone. What should Javed do

Q1. What are the ethical issues that Javed is facing in this situation?

Q2. What are the competing pressures Javed is facing in this situation, which may influence his willingness to practice moral courage?

Q3. Who are the stakeholders and what are their respective needs and interests that Javed should consider in responding to this dilemma?

Q4. How should Javed respond to this situation and what are his alternatives?

Q5. How the ethical framework of Utilitarianism could support a recommendation of whether Javed should blow the whistle on Jerry? Discuss the potential benefits and harms of whistleblowing in this case.

Q6. How do the ethical frameworks of Rights, Justice and Virtue approach support the whistleblowing recommendation? Discuss.