Kick Backs

It is not so important that business people get kick backs rather it is how they disclose them. For, example a Mortgage Broker presents a contract for a five year loan on a house. The barrower pays up front five points or five percent of the loan to the broker. On a $500,000 house this would be $25,000. Only a savvy loan applicant would know that every such loan receives a kick-back from the actual loan originator. This is noted in the contract as the "yield spread premium." And it is more often than not buried in the contracts in the most out of the way place. It could be any where from three points to ten, maybe even more. That translates at a minimum of  $15,000 to say $50,000 for the life of the contract. If the life of the loan is thirty years it does not matter that much, but if it is short term it raises some serious ethical questions. Kick backs are a normal part of business, but for much lesser amounts of money. This is where conventional ethical theory and real time ethics collide.

• Customary Ethics