The trash is picked up once a week outside your office building.
As the container is dumped, the wind blows away a few pieces of paper.
The first page of the 1003 ends up along the side of the road.
A news reporter picks it up and finds a name, address, social security number and employment information listed on the sheet of paper.
You make the national news.
This story is true. It happened to a mortgage company recently. Someone did not take the time to shred documents.
In fact, it happens all the time - and loan officers, processors and closing agents never even give it a second thought.
Loan officers - Someone calls you on the phone. You offer to run a copy of their credit report for them. You write down their name, address, social security number and pull the report. You throw away the scrap of paper without even thinking that someone could be going thru your trash every evening looking to steal someone's identity.
Processors - A client calls you and wants to change the loan amount. You run a new 1003 and throw away the old one. Not only does it contain their important information, it lists bank account numbers, credit card numbers and assets. A thief looking to steal a classic car or jewelry (assets section) or credit card information only needs to look in the trash bin.
Closing agents - Many states require that the buyer and seller of real estate list their social security number on the purchase agreement. If that document gets into the wrong hands (maybe even the courier service employee), they not only have the buyer's information, but the seller's information as well.
While there are many federal and state laws regarding the customers' Right of Privacy, very few mortgage companies take the time or the necessary steps to insure that their clients' private information is not getting into the wrong hands.
Mortgage Associations are Not Up
to Speed on this Issue Either!
In searching the website of the Mortgage Bankers Association (www.mbaa.org), they do offer an online course about the Right of Privacy Act, but it has not been updated since 2001. I could not find ANYTHING by the National Association of Mortgage Brokers (www.namb.org) on their website addressing this issue or offering guidance to their members.
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Here are a few suggestions:
Company Policy - While the Gramm-Leach-Bliley Act requires you to provide each of your clients with a Right of Privacy Statement; I suggest that you (or your company attorney) create an additional statement that discloses exactly what you will do with their information. For instance, if you work for a mortgage company owned by a real estate firm and it's your policy to pass on leads to the real estate agents, you might consider disclosing that to your clients. If you have a referral network developed - or belong to a "Leads Club" where you regularly "refer" clients, you may wish to re-think what information you are transferring and if you have the customer's permission to do so.
Company Procedures - Do you have procedures in place so no one outside your company has access to private information? Do you have a paper shredder in your office? Are hand-written notes with your clients' personal information ripped up before being thrown away? Have you held a company meeting to discuss the different ways social security numbers, bank statements or paycheck stubs could inadvertently get into the wrong hands?
Privacy Statements on Your Website - While it's not required by federal law (it maybe required by your state's law) very few mortgage websites contain a "privacy statement" that a customer can click thru to and find out how your mortgage company protects their privacy if they should decide to do business with you. The National Assocation of RealtorsTM (www.realtor.com) has a 10-page "Privacy Policy" that is available to consumers who visit their website. I suggest you print and review their privacy policy. It will provide you with some great ideas on what to include on your website's privacy statement.
Background Checks on Staff Members - Some states' licensing laws require background checks on loan officers. The National Association of Mortgage Brokers is attempting to implement a "national registration" system for all loan originators, which would also require them to re-register if they quit and went to another mortgage company. More and more companies have found employees who have stolen and sold client information (an inside job) and a simple background check and credit report would have revealed past problems.
By taking just a few simple precautions, you could save yourself from being the headline story on the evening news.
Karen Deis, Publisher
Copyright, 2004, LoanOfficerMagazine.com
