Mortgages and Identity Theft

Did you know that everyday tasks like tossing unsolicited credit offers or paying for your morning cup of coffee could put you at risk for a crime?

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 topped FTC’s consumer complaint list for the 12th consecutive year [1].

John Sileo knows the cost and frustration firsthand. Years ago, his identity was used by a woman to purchase a $300,000 house. “It was stunning that she could use my name and Social Security number for such a large purchase,” says Sileo, who is now a leading privacy expert and founder of ThinkLikeaSpy.com [2], a Denver-based identity theft prevention company.

It Takes a Thief

Sileo, who actually had his identity stolen twice, thinks he was compromised by “dumpster divers,” thieves who sift through trash to find personal information like a letter from your mortgage company (with your loan number and address) or a pre-approved credit card offer. From there, the thief visits social media sites to find out more about you—your pet’s name, names of your relatives, and your hometown just for starters—and then tries these words as passwords to access your bank and credit accounts.

Other thieves take a higher-tech approach. For example, when you purchase a home many details about the transaction—when you bought, sales price, mortgage company, etc.—are typically posted as part of the public record by your city or county. Is your personal information part of this online record? Search on your property address to find out. (Editor’s note: You can contact government agencies to have your personal information hidden on these websites.)

Thieves find information about you in other ways too, and may even get your unwitting help. They may call posing as someone from your mortgage company, providing your correct loan number and transaction close date, and ask you other bits of personal or financial information to help them “close the file.” If you provide this information to them viola!—they may be able to open credit accounts, purchase phone contracts, access your bank accounts, or buy a house!

Frozen Out

According to Sileo, the number one way to lower exposure to identity theft is to freeze your credit when you won’t need to open new accounts or have others review your credit. While you wouldn’t want to do this before you purchase, refinance or get help with your mortgage, it can be particularly important after when a mortgage transaction will be public record and you will receive unsolicited offers for a range of products.

Because states laws vary, you will need to contact the three main reporting bureaus (listed below) to submit requests that will prevent anyone from opening new accounts with your name or Social Security number attached.

A credit freeze won’t affect your existing credit accounts or credit scores. Explains Sileo: “It only freezes access to your account unless someone has a password to get in. It’s like having a PIN number on your ATM card. It’s the best step you can take to protect yourself, it can be done online, and takes just a few minutes,” he adds.

To unfreeze your credit, you will have to contact each agency (with your password) and possibly pay an unfreezing fee of about $10, but that’s a small price to pay compared to the thousands you could lose to an identity thief. To freeze your credit, contact:

Equifax Credit Freeze [3], P.O. Box 105788, Atlanta, GA 30348, phone 800-685-1111

TransUnion Credit Freeze [4], Fraud Victim Assistance Department, P.O. Box 6790, Fullerton, CA 92834, phone 888-909-8872

Experian Credit Freeze [5], P.O. Box 9554, Allen, TX 75013, phone 888-397-3742

Protect Yourself

Don’t want to freeze your credit? There are other basic steps you can take too:

• Never give out your bank account/routing information until you have verified and confirmed the source.
• Carry just a few credit or cards and have the account numbers and contact information listed and in a safe place so you can contact issuers if the cards are lost or stolen.
• Check monthly statements for unauthorized use and contact creditors immediately if you suspect fraud.
• Opt out from pre-approved credit card applications and other unsolicited commercial mail by calling 888-567-8688 (888-5-OPTOUT).
• Shred all documents and files before discarding.

If you think you’ve been the victim of identity theft, contact the Federal Trade Commission [6] through its website or by calling 877-ID-THEFT. The FTC can help you determine what steps to take to remedy the situation and restore your credit.