How Can a Buyer Avoid Identity Theft Related to a Full Doc Loan?
I recently posted a detailed explanation of what a buyer can expect when he/she is required to do a full documentation of his/her income, debts and assets. Here is a link to that blog: Lisa's activerain blog on Full Doc.
So the client hands over copies of their social security card, driver's license, taxes, bank statements including their name and full account number on there. They have to lay open their whole financial life, so now this information is "floating around out there." One of my clients recently was about to pull out of a loan because they wanted her line-item bank statement showing funds moving in/out. She had already provided the statement prior to the funds moving. At this point, she "vented" about, what about her risk of identity theft?!
One answer is an example from my life: five years ago in buying a home, we provided a whole lot less information than full doc clients do now. A month or two after signing loan docs, I found an account opened on my credit that was not mine. So clearly, it is not the volume of information that creates the risk of identity theft (though the repeated sending of the information I suppose does); it is also simply the giving of the basic identity information at all (name, social, date of birth), and whose hands rightly or wrongly get ahold of it.
1. Does the client send items via email or fax?
a. Email: Many emails if not all emails are monitored by the client's employer (that is legal), and ISPs from work or home (that is legal). That means people at the client's job or the ISP could at some point use that data to commit identity theft against the client. And according to a simple google search, it is not difficult for hackers to intercept emails; clearly, being someone already committing a crime, the hacker is as well a threat to commit identity theft with the client's information.
b. Fax: A simple google search found articles and comments stating that many fax machines have a data retrieval system where the owner can dial in from an outside line and print out recent faxes. Of course, the existence of this is an opportunity for identity thieves to do the same.
2. Where the client's information goes at a loan brokerage: The email or fax is received by the loan officer, who passes it along to a processor, who uploads it in a secure document upload system with the wholesale bank. At the wholesale bank, the underwriter, an assistant, the loan rep and the funder will review the file for completeness.
3. How can a client protect against identity theft? The client could use snail mail or hand delivery to avoid people totally unconnected from the loan process getting hold of his information. This still leaves the handful of us who make a living putting together the loan package. At some point, if one of those people "goes rogue," they are putting their career in this industry on the line.
a. Monitor billing and financial statements. Watch for anything suspicious such as bills not arriving as expected, unexpectec credit cards or statements, unexpected denials of credit, and calls or letters about purchases you did not make.
b. Monitor your credit report for accounts you did not open. We are entitled to one free copy per year at the credit reporting agencies.
c. Review financial statements every time they are received. Review them line-by-line for incorrect charges or charges you did not make.
d. Move quickly if you detect charges or accounts opened wrongfully with your identity: put a fraud alert on your credit report, close accounts with suspicious activity, and file a report with law enforcement officials.
For more detail and contact info on Identity Theft Defense such as retrieving credit reports, putting fraud alerts on accounts preemptively, and clearing up wrongful charges or accounts on credit, here is a good article to start with: Identity Fraud at getrichslowly.org.