Make Sure Your Florida Home Loan Information is Protected by Lenders

After scandals in 2005 involving ChoicePoint and LexisNexis, concern over identity theft during the Florida home loan process has arisen. Real estate experts, however, say sellers and buyers’ information is well-protected.

It’s easy to see why Florida home loan protection would be necessary. Late last year, the nonprofit Identity Theft Resource Center in San Diego reported 110 security breaches affecting 56.3 million individuals in the United States.

Also last year, Nationwide Mortgage Group settled Federal Trade Commission charges that the company failed to adequately protect customers’ personal and financial information.

Placing a safe guard on your finances

Because mortgage brokers and Florida home loan officers have access to so much personal information, it’s clearly important that they place a high value on safeguarding it.

“(Consumers’) information is safe and getting safer all the time,” said John Hall, a spokesman for the American Bankers Association. “All the mortgage information sitting at a bank is protected.”

Employee training and accountability, privacy policies, security standards and technology such as encryption and fraud detection software are some of the approaches banks use to safeguard data, Hall said.

“If a bank should send information elsewhere, even over a secure network, it is going to encrypt that information. They use Pentagon grade information technologies before sending any of your financial information across networks,” Hall said.

Madhavi Mantha, a senior analyst at Celent, a firm that scrutinizes banking technology, said, “Financial institutions have put a great deal of emphasis on security.” Mantha said banks have taken additional steps in one of the areas of greatest concern, outsourcing, to make sure information doesn’t fall into the wrong hands, such as using dumb computers instead of computers that would store information.

More Florida home loan protection strategies

Justin Vedder, managing director of the Prieston Group, which insures companies against fraud, said, “Just from a standard practice, no matter whether in the mortgage industry or not, people are using greater firewalls. Their e-mails are encrypted. The exchange of data has become more secure.”

Vedder said that one of the biggest challenges is when identity theft does occur and a person’s stolen identity is used to apply for a real estate loan. This is a common form of mortgage fraud and the person with the purloined identity is colloquially referred to as a “straw buyer.”

“There are tools out there and certain skill sets to help identify those loans that don’t make sense” because they involve identity theft or other fraudulent elements, Vedder said. Indeed, there is a plethora of software companies offering technology tools to help combat mortgage fraud.

Vedder cautioned that the tools are “not the be-all and end-all.” In a quarterly study done by the Prieston Group of around 200 to 300 lenders this February, 75 percent of lenders said technology tools reduce the incidence of fraud less than 25 percent.

“Well, 25 percent is a significant factor when you look at the industry as a whole,” Vedder said.

A unique security proposition

A novel idea recently suggested by an MIT professor in a white paper is e-notarization laws to help stem the rising tide in forgeries and frauds in identity, Florida home loan and immigration transactions.

In the paper, “Electronic Notarization: Why It’s Needed, How It Works, And How It Can Be Implemented To Enable Greater Transactional Security,” published by the National Notary Association, Daniel J. Greenberg, director of MIT’s E-Commerce Architecture Program, outlines the legal and technological issues that must be addressed to ensure convenient and secure e-commerce in an era of rising document forgery and identity fraud.

Many paper-based transactions, from real estate conveyances to international adoptions to last wills and testaments, are notarized to prevent, detect and prosecute fraud.

As government agencies and industry move toward a complete paperless workflow, electronic documents will need to receive the same level of security as their paper counterparts. The MIT professor’s proposal highlights the importance of human oversight in the technology surrounding mortgage transactions.