Protecting Yourself Against Mortgage Fraud

The current mortgage crisis has left many homeowners feeling as if they either can’t afford their payments, or that they’ve lost all of their hard earned equity. But it might be doing them even more harm than that. With so many reputable mortgage companies going belly up in this economy, identity theft and mortgage fraud is on the rise. What’s the correlation? When these companies go under, many of them dispose of sensitive client information in unethical and unsafe ways. A recent string of mortgage brokerage closings raised awareness of this problem. 

Instead of properly shredding sensitive client data like income statements, social security numbers, checking account numbers and the like, these companies are filling public dumpsters with boxes upon boxes of other people’s financial information. When you think about the nature of the documents you must produce in order to secure a home loan—past tax returns, bank statements, retirement account statements, etc…--thinking about those items floating around in a trashcan that’s fair game for dumpster diving identity thieves is an open invitation to mortgage fraud and enough to make anyone panic.

Technically, disposal of sensitive financial information in this manner should be considered a violation of the 2003 Fair and Accurate Credit Transactions Act (FACTA). On June 1, 2005 FACTA was amended to include what is now known as the “Disposal Rule”. Through this rule, the Federal Trade Commission advises companies to properly dispose of sensitive consumer financial information. But the rule remains vague on what exactly that means. Because the rule is unclear and leaves it up to companies to determine the best and most cost effective ways for them to dispose of information, it can be hard to hold them accountable for violating the rule and leaving customers vulnerable to identity theft as well as mortgage fraud. 

Since the implementation of the Disposal Rule, the Federal Trade Commission has only pursued one case—against American United Mortgage Co. of Northbrook, Ill.—which was settled out of court with a measly $50,000 fine despite the fact that American United was a repeat offender when it came to dropping sensitive information in public dumpsters.   

Part of the problem is that many of these companies file bankruptcy and quickly disappear. This leaves victims of mortgage fraud (and the government) with no legal recourse. A company that is no longer in existence no longer has to comply with safeguard rules.

Problems become multiplied when newly bankrupt companies attempt to sell of their computer equipment in an effort to pay off their creditors. Unless they use specific hard drive wiping software, all information that they once held on their computers could easily be recovered by people with the right computer software. This could be potentially harmful if an identity thief succeeded in purchasing these computers.

What Does This Mean for You?

The hardest reality to come to terms with in cases like this is that the mortgage fraud victim’s really couldn’t do anything differently to protect themselves—even if they had it all to do over again. When applying for a mortgage, withholding sensitive personal information will either result in denial of the loan or a significant increase in the interest rate. Not producing those documents could literally wind up costing a person thousands of dollars. So, what’s a person who wants to buy a home to do?

Since preventing identity thieves from getting their hands on your personal information may be out of your control, you need to focus your efforts on making sure that any thieves who may get their hands on your information can’t do anything with it. How do you do that? By purchasing a product like ID Secure. 

Purchasing a product like ID Secure might greatly increase your peace of mind as well as the level of protection guarding your identity. For just $1 for the first month, and just  $12.99 a month after that, a professional identity monitoring company will use advanced web crawling technology to search the internet and public records to make sure that your social security number, credit and ATM cards and other personal information isn’t being fraudulently used in any way, including for mortgage fraud. ID Secure makes sure your identity is being monitored 24 hours a day seven days a week helping to keep it safe. If fraudulent activity is suspected, you will be informed immediately. You can learn more about ID Secure by clicking here.

Identity theft is the fastest growing crime in America, and you cannot rely on other people or companies to protect your information for you. So, protect yourself and give ID Secure a try today.