It’s difficult to admit but we all lie at one time or another. Mostly we lie so as not to offend with the usual “don’t you look nice?” whilst trying not to wear our true feelings on our faces. Sometimes we lie to our kids to protect them from torment or unnecessary fear. Sometimes we lie to our partners “I swear I only had one [insert your weakness here]!”
Then there are the lies that hurt. When someone promises to do something and they don’t. Or they promise not to do something and they do.
Usually lies are told when the liar has a reasonable level of certainty that their lies won’t be found out.
In the last few months we’ve learned that is not the case.
My business partner Nick, who diligently processes all our home loans and has been known to visit potential clients in their homes, has been very busy of late.
As part of his usual checklist of things that the banks will want Nick asks these clients the usual questions like:
- What is the estimated value of your home?
- How much do you earn?
- How much is your credit card limit?
Among many other personal questions.
I’ll be the first to acknowledge that it’s difficult to estimate the value of your home. So, let’s not dwell on that one. But when you’re asked by the person who’s about to submit a home loan application for you how much you earn that should be an easy answer. You would think.
It is extraordinary how many people inflate their salaries. I’m not talking about small business owners whose income fluctuates from month to month or year to year. No, I’m talking about regular salary earners.
What makes this lie so extraordinary is that Nick asks these potential clients for their pay slips even before he attends the meeting. So, the usual immunity from being found out is immediately exploded.
It’s the same with the credit card limits. When asked what their credit card limits are clients sometimes halve these limits. We then get the bank statement (which we have to provide as part of our application) and the lie is found out.
If there’s a psychology professional reading this please let me have your views. It’s intriguing to us and it wastes a lot of time. Not just for us but for the client and usually a referrer who has referred the client to us.
I have been an ardent critic of bank processes for many years. However, I understand that processes are necessary so as to check and cross check what clients tell you. I get that. As part of our process we follow due diligence procedures similar to our lenders. The difference is that we can intervene in the process at any time when it is just wrong for the client. Bank employees can’t.
I can hear many bankers taking a holier than thou attitude with people who lie about their personal financial status. It speaks to the client’s character and therefore the application should be rejected at once.
I would generally agree.
Sometimes though, it’s easy to put everyone in the same basket and not dig deeper.
There may be cultural reasons (ethnic and/or socio economic) for wanting to inflate one’s income. Usually we interview clients as a couple and in some cultures a man’s earning capacity determines his standing in his wider family and community. So, the lie may be directed at his spouse – not us. This doesn’t make it right but depending on the cultural background of the client, we can choose to ignore what they say until we see the evidence.
It must be said that we are there to see if they qualify for a loan not educate them on moral issues.
We have learned that in business not all is black and white. It’s the shaded parts that can make or break a transaction. Part of our job is to take that world of colour and monochrome it for our lenders.
We’re learning all the time.