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Having Lenders Compete Can Cost You Your Identity

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Online Mortgage Requests Can Lead to Identity Theft


Risk Factor

One of the ways homeowners use to obtain the best mortgage deal is to use online mortgage forms to get multiple lenders  to offer their best rates.  While this may be a good start, there are some pitfalls that could prove very costly.

One of the problems with shopping around is getting caught up in the lowest rate and fees game, which can prove costly in of itself.  But that is not what I want to talk about here.  Instead, I want to talk about the potential for Identity Theft to occur to those unsuspecting folks out there shopping around.

Has It Happened Before?

Some of you already know I am an Identity Theft specialist as well, having obtained the Certified Identity Theft Risk Management Specialist (CITRMS) designation as part of my commitment to my own clients and as many others as I can.  One of the best ways to protect yourself is minimizing your exposure to the risks associated.  Sounds simple enough, but using online mortgage forms to gain multiple lender offerings can, and has, proven to be a risky method.

Lending Tree was found to have had a breach of security of their database a week or so ago, highlighting the problem.  Of course, they downplayed this, saying that the information was used by one or more mortgage companies to compete for borrowers loans.  They provided only a minimalistic view of the impact that could have occurred, mitigating their exposure to liability.

Just How Bad Could It Be?

If you believe that this data breach couldn’t end up in a much worse case than harassing phone calls, you could be sorely mistaken.  Many mortgage companies have been caught using such data for fraudulent means, including Identity Theft.  Several companies in Florida had employees, even owners, taking the data and using it to secure new loans in the unsuspecting homeowners name.

The data breach included everything needed to get a loan; name, address, phone, social security number, even employment information such as salaries.  Even a secure online transaction cannot be guaranteed to protect your identity unless you know the company and trust them to se that information properly.  If you feel the need to complete an online application to get one or more offers, I suggest you go directly to the company’s website after ensuring they are not being brought up on charges themselves.

Using online forms to gain multiple offers is a gamble that is not worth taking.  The end result could cost you much more, even destroying you financially.  Take a good look at the FTC’s wording and you will see the following statement in their Identity Theft regulations (you can download the document here):

If an identity thief changed the address on your account and you didn’t receive the bill, your dispute letter still must reach the creditor within 60 days of when the creditor would have mailed the bill. (Failure to do so results in you being liable for the entire amount).

There are plenty of instances where this has held true in courts, forcing the victims to declare bankruptcy and/or lose their homes.  Since most of us only check our credit report once every four months at best, you could find out you are a victim way too late.

What Should You Do?

The next time you feel the urge to shop around in your efforts to get the best deal on a mortgage, think again.  At least be extremely cautious about who you give your information to or you could suffer severe consequences.  Make sure you do enough research on the company to be certain your information is not going to be compromised.  Every mortgage company should have safeguard procedures which is not limited to just a privacy notice, but insludes procedures for securing and properly disposing of non-public information (NPI).

Writer for national real estate opinion column AgentGenius.com, focusing on the improvement of the real estate industry by educating peers about technology, real estate legislation, ethics, practices and brokerage with the end result being that consumers have a better experience.

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8 Comments

8 Comments

  1. Cyndee Haydon

    June 2, 2008 at 8:59 am

    Robert – you make a great point that few people stop to think about. We were victims of someone who hacked our Visa company at christmas and drained $44,000 out of our bank account – luckily it all got returned and I spotted it immediately because of online banking however it meant closing ALL our accounts at Christmas – what a nightmare. Luckily all our money wasn’t in one place. Your clients will certainly benefit from your skill and knowledge.

  2. Jennifer in Louisville

    June 2, 2008 at 9:30 am

    Great advice. Buyer beware definitely applies. Making a mortgage application furnishes a lot of personal information – and there are a lot of bad people out there that would love to get their hands on it. Getting good references can help. That will at least provide some means of identifying if this particular mortgage provider has been around for a little while, and what their reputation is within the community.

  3. Vance Shutes

    June 2, 2008 at 9:47 am

    Robert,

    Excellent, timely advice. If only you’d been around with this a couple of years ago, during all of the re-fi boom. Perhaps some who lost their digitial identity (uh, who am I?) using those on-line mortgage services may have been spared the nightmare.

    All of this further supports my posture with buyers – work with a local lender. Nothing can replace the ability to go pound on a desk when the lender is not working in your best interests.

  4. Barry Cunningham

    June 2, 2008 at 11:19 am

    Identity theft sucks. It’s a crime that should be at the top of the list of the Treasury Department. Has any one used LifeLoc?

  5. Ken Smith

    June 2, 2008 at 1:25 pm

    Great information. This is just another reason not to work with these types of sites. Like Vance I believe that clients are better served by local lenders.

  6. Mack in Atlanta

    June 3, 2008 at 7:21 am

    Thanks for sharing this insight Robert. Identity theft should be a capitol offense.

  7. Robert D. Ashby

    June 5, 2008 at 10:20 am

    I am glad everyone liked the information. I felt the need to ensure you all were aware of the problems with these type of mortgage applications after the Lending Tree mishap.

    Most people do not realize that the FTC is actually in charge of handling ID Theft and its enforcement. They also do not realize that the wording of the law favors the creditors in that you are responsible even if you never knew it occurred in many cases.

    Another problem with companies throughout the real estate industry, especially mortgage companies, is the lack of knowledge on what is required by them to mitigate misuse of NPI data. The fines for their lack of knowledge can reach astronomical proportions, so if you own a business, read up on your requirements.

    As for ID Theft protection, I have not used LifeLoc, so I cannot say anything about them. I personally use (and offer as part of my services) the Identity Theft Shield from Pre-Paid Legal. I can tell you I have not encountered any problems and have seen activity reports come to me within one or two days of adding credit card accounts and even changing addresses (very important and often overlooked aspect of protection).

    Everyone should have something in place, but do your research to determine which one is best for you as there are many worthless ones out there as well. Credit monitoring alone is not adequate protection.

  8. Thomas Johnson

    June 6, 2008 at 2:58 pm

    What really blows my mind is that a home buyer goes to the trouble to give me a bogus email on a listing posted on the web, and yet they will cough up everything for an online lender website. Go figure…

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?

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NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<

#CarsonHUD

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Economic News

Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.

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Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

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The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.

#JobOpenings

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Economic News

Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.

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Gas taxes and your bottom line

Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.

Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.

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Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.

The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.

Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.

Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.

“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”

Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.

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