September 23, 2017

Identity Theft, Mortgages and Home Buying

Identity theft, where criminals use your name and other personal private information to open credit accounts, take out loans, or make purchases, continues to rise and affect unsuspecting victims. According the Federal Trade Commission, 9 million Americans fall victim to identity theft each year, and they lose an average of $3,000, and identity theft has been the top consumer complaint reported to the FTC for the past 15 years, and in 2014, the Commission received more than 330,000 complaints from consumers who were victims of identity theft. Buying and refinancing are hard enough these days without identity thieves making it worse.

The Federal Trade Commission has launched IdentityTheft.gov, a new resource that makes it easier for identity theft victims to report and recover from identity theft. A Spanish version of the site is also available at RobodeIdentidad.gov. The new website provides an interactive checklist that walks people through the recovery process and helps them understand which recovery steps should be taken upon learning their identity has been stolen. It also provides sample letters and other helpful resources.

Because thirty-five percent of a person’s credit score consists of his payment history, an identity thief who steals someone’s Social Security number to open fraudulent accounts can cause that person’s credit score to plummet if these bills go unpaid.

“Too often a victim does not learn of the identity theft until a mortgage originator pulls his credit score in preparation for a home loan,” said Paul Wylie, the founder and former owner of Metrocities Mortgage. “I have watched ideal borrowers walk away from their dream homes or pay significantly higher interest rates because they cannot repair the damage of identity theft fast enough to secure a home loan.”

Those who plan on making a major purchase or refinancing should be particularly concerned about identity theft, taking several steps to help protect their credit scores from would-be thieves.

  1. Prepare early by requesting and reviewing your credit report each and every month. (Contrary to popular belief, a person will not hurt his credit score by pulling his own report.) Check the report for any derogatory accounts or new accounts that do not belong to you.
  2. Consider placing a fraud alert on your credit report. Fraud alert messages notify creditors to verify a person’s identification before extending credit in that person’s name.
  3. Consult with a mortgage originator about maintaining or increasing a credit score to more than 720, the cutoff that usually determines whether you will get the best terms on your loans. By keeping a score that is higher than 720, you have a buffer in the event identity theft causes your score to plunge.

Though consumers can take steps to help protect themselves from identity theft, not all identity theft can be avoided. If you have been victimized and plan to make a large purchase or refinance, the following steps will help you reclaim your identity:

  1. Start by canceling all fraudulent accounts that have been opened in your name. If an existing account has been compromised, change the account number. Either way, contact each credit card company by phone and follow up with a letter and copies of supporting documentation.
  2. Because the identity thief might have your Social Security number, alert all of your creditors, even if those particular accounts have not been affected. Ask your creditors to contact you if any suspicious activity appears on your account.
  3. File an Identity Theft Complaint with the Federal Trade Commission (FTC). The FTC can be contacted by phone at 1-877-438-4338 or in writing at:Identity Theft Clearinghouse
    Federal Trade Commission
    600 Pennsylvania Avenue, N.W.
    Washington D.C.  20580
  4. File an Identity Theft Report with the police department. The police report will help prevent creditors and collection companies from collecting debts that result from identity fraud.  Additionally, filing this report may prevent fraudulent information from making its way onto your credit report.
  5. Call the fraud divisions of each of the three credit-reporting bureaus listed below and ask to place fraud alerts on your credit reports. A fraud alert will mandate that all potential lenders speak directly to you before authorizing a new line of credit. By requesting fraud alerts, you can take steps to ensure that that no new accounts will be opened in your name without your direct consent.Experian, PO Box 1017, Allen, TX 75013; 1888-397-3742Equifax, P.O. Box 740250, Atlanta, GA 30374; 1-800-525-6285

    TransUnion, P.O. Box 6790, Fullerton, CA 92634; 1-800-680-7289

  6. Send copies of your Identity Theft Report and Identity Theft Complaints to each of the three credit-reporting bureaus with all supporting evidence.
  7. Present your lender with all supporting documentation—at a minimum, your Identity Theft Report and Identity Theft Complaints. Some lenders have mechanisms that allow the credit bureaus to fast-track changes to your credit report; others might make an exception to your loan if you give them enough evidence.
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