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).