ITRC Solution 28
Mortgage Identity Theft
In general, mortgage identity theft occurs when the individual whose information is being used is NOT party to the financial negotiations or contract. It is a federal crime to misrepresent any information in connection with a loan application. There are two types of mortgage identity theft this ITRC Solution addresses.
- Fraud for profit: The thief will obtain a loan with the victim’s home as collateral. These types of loans are commonly called equity lines of credit (cashing out) or second mortgages. The home equity loan is most often on the house that you are residing in. Knowledge of an individual’s date of birth, social security number, as well as address makes it easy for victimization to occur.
In some extreme cases, the thieves have even transferred ownership into their names and re-sold the home illegally without the owner’s consent. This type of crime will often involve an industry insider. Thieves also target second or vacation homes since this can help them keep up their scams undetected for a longer period of time.
- Fraud for housing / property: The simple motive behind this type of fraud is to acquire and maintain ownership of a house under false pretenses. A thief will steal someone else’s social security number and other personal information to buy property by using the victim’s good credit and identity.
How can homeowners prevent identity thieves from stealing their property?
FBI officials suggest the following:
- If you receive any payment books or information from a mortgage company that is not yours -- whether your name is on the envelope or not -- do not throw it away. Instead, open the envelope, figure out what the documents state, and contact the company.
- Periodically check all information about your home with the recorder of deeds office in your county. If you find any paperwork you don't recognize -- or any signatures that are not yours -- immediately contact your mortgage company and county officials.
- Check your credit reports regularly.
How to clear your name from a fraudulent mortgage:
- Place a fraud alert on all three credit reports and request your free copy of your credit reports, due to identity theft. Please refer to ITRC Solution SN 03 - Contacting the CRA’s to Place a Fraud Alert.
- File an identity theft police report. Use any letters or phone calls from the mortgage company or the information on the credit report as proof. Obtain a physical copy of the police report as soon as possible.
- DO NOT PAY ANYTHING to the collection agency or mortgage company. Payments can be interpreted as that you are assuming responsibility for the debt.
- Contact the mortgage company and get the following loan details: loan provider, servicer and borrower. Speak with the Fraud Department and explain that this is a case of identity theft. Never use the words “I want to dispute this account.” You want to get an address to send a fraud affidavit packet.
- Write to the mortgage company within 30 days. Send them a copy of ITRC Letter Form LF 116 (customized as necessary) along with the necessary documents including a copy of the police report. Request a Letter of Clearance from the mortgage company.
- Send your statement of fraud, copy of your police report and any supporting documentation to your local county recorder’s office, tax assessor, county clerk, district attorney and the FBI.
- You may also want to notify the National Notary Association (NNA) if you have notarized stamp on any loan documents or deeds.
- Send everything Certified Mail Return Receipt Requested. Do not fax them. This way you will have proof they received your documents because you will get back a postcard with their signature on it.
Under the Fair Debt Collection Practices Act, the lender or collection agency must stop all collection activity during the investigation. They cannot sell, trade, give away, donate, or loan this account to another entity.
Keep a record of everyone you speak to over the phone. In addition, keep all paperwork you receive and make copies of everything you send out.
For more information, contact an ITRC Victim Advisor toll free at 1-888-400-5530 to guide you through the more specific steps needed in your case.
National Resources for Reporting Mortgage Fraud and Scams:
The Federal Bureau of Investigation (FBI)
(202) 324-3000 – National FBI Financial Institution Fraud Unit
Mortgage Fraud Hotline 1-800-4FRAUD8 (1-800-437-2838)