Stricktly Strickland Q1 2021
Be Careful What You Say and How You Say It.
Choose Your Words Carefully!
Pamela J. Strickland
California Compliance Consulting
The most common way of interacting with clients in this day and age is through e-mails, especially as we navigate business dealings in the age of COVID. It is incredibly important that in each communication our words are chosen carefully.
When the DRE requests copies of files during an investigation or audit, they ask for all e-mails, letters and conversation logs related to the transaction(s). Many times I’m contacted by brokers and attorneys to review files before submission to the DRE and I’m often shocked by the content and how the licensee didn’t think it through before writing it down.
Several years ago I was hired by an attorney to review a file in which the borrower was claiming that the broker had discriminated due to race. Even though there was nothing in the evidence to show that there was racial enmity, the conversation log had this entry from the loan officer to the processor: “This borrower is a real bitch. Charge her 2 points instead of 1 point.” In plain language, this was in the conversation log that was a part of the file. Even though this is an over-the-top example, it is the type of thing that without thinking it through (and being incredibly stupid, to boot) can get you in a world of hurt.
In another instance, the broker needed a Profit and Loss statement from the borrower. He sent an e-mail to the borrower asking him to “make one up” and send it to him ASAP. The broker was merely asking the borrower to “prepare” a bona fide and accurate statement for inclusion in the loan file, but several years later when the loan was part of a lawsuit brought by the borrower’s heirs they claimed that the broker instructed the borrower to make a false P&L. Once the DRE started to investigate (after the borrower’s heirs reported the broker to the DRE), the first question from the DRE Special Investigator was “During the loan process or refinance, did you ever instruct the borrower to make a false profit and loss statement? If so, explain in detail.”
In still another case, the loan officer blatantly wrote in the conversation log in an instruction to the processor “The rental agreement provided by the borrower doesn’t show enough income. Create a new lease that shows an additional $500 a month and shred the other one.”
I know that these examples seem far-fetched and you are sitting there thinking “Who would do something like this?” but I need for you to think about things you might write that could be misconstrued.
The following tips regarding e-mail communications are from Setliff Law in Glen Allen, Virginia, and are worthy of your attention and adherence.
1. E-mail Messages Are Business Records.
Mr. Setliff suggests that you remind employees in your company e-mail policy (and, yes, you should have a written e-mail policy!) that e-mail messages are official business records subject to corporate retention requirements and discovery. Further, he writes, that you remind employees that all e-mail communications, including internal e-mail communications, should reflect the same professionalism and attention to detail that would be afforded other forms of written communication. Obviously, if you wouldn’t put it on letterhead, it doesn’t belong in an e-mail (or conversation log)!
2. Label legitimate communications as “Privileged & Confidential – Attorney Client Communication.”
Attorney Setliff writes that all communications to your lawyer are privileged, but such a label on potentially privileged documents may help highlight your intention and draw the attention of the reviewing attorney.
3. Avoid exaggeration and inflammatory rhetoric.
Superlatives and dramatic language may be useful in getting your point across, but may also take on a life of their own in litigation.
4. Watch forwards and attachments.
These are discoverable too.
5. Consider public perception.
And, lastly, those of you who have heard me speak on this subject know that I always say (as does Mr. Setliff): “Don’t write anything you wouldn’t want shown to the judge and jury on an eight-foot screen projected on the wall in the courtroom!”
Pam Strickland is the owner of California Compliance Consulting in Santa Barbara and assists brokers with DRE licensing and compliance. She can be reached via e-mail at email@example.com.