You may have seen the latest press releases indicating that the Federal Trade Commission’s (FTC) Red Flag Rule enforcement is now set to begin on Nov. 1, 2009. For those who have been following closely, you are also probably aware that all brokers were supposed to be compliant with the rules as of Nov. 1 of last year. While it may seem like this affords you additional time to get compliant, it was only the enforcement date that was pushed back. That means that you still need to act quickly if you have yet to get your plan in place.
As a reminder, the Fair and Accurate Credit Transactions Act (FACTA) requires you to have a written Identity Theft Prevention Program in place in your office. There are no exceptions to this regulation. The main point is that the FACT Act requires companies to:
► Develop a written plan to detect and respond to potential identity theft.
► Train employees on detection and use the proper tools.
► Update and review your program annually.
► Your plan should outline your company’s potential to have identity theft occur, what warning signs exist (Red Flags), how you detect those signs, and what responses are appropriate (do you call the FBI if you can’t get a marriage license showing a name change?).
Examples of red flags include not only obvious signs, like a fraud alert on a credit report, but also more subtle signs, such as a borrower only wanting to conduct business via phone, fax and e-mail, refusing to meet with third-party involved in the loan. This doesn’t mean the borrower is a thief! It means that the potential for identity theft exists, and you are required to take additional steps to verify identity before proceeding with the loan. How you choose to verify that identity should be written in your plan.
The National Association of Mortgage Brokers has partnered with Microbilt LLC and Majestic Security LLC to offer two different solutions to you. Information on both companies can be found at www.namb.org. Click on the “Red Flag Compliance” graphic to view their solutions. These are meant to offer you two different ways to start becoming compliant. Please read the information carefully and select which option is best suited for your business. Part of the proceeds will help NAMB continue to fight for you, and bring the latest information as it happens.
Once you have your plan written, you must train your appropriate staff on any operational changes and tools that you will be using. The additional identity verification tools are usually readily available through our partners, as well as your current credit report provider. Many lenders require that these be submitted with each loan. Please check with your lenders for their specific details. And finally, remember to update your program at least annually.
Dave Wheeler is a regional account with Credit Plus Inc. is a member of the NAMB Credit Scoring Committee. He may be reached by phone at (610) 462-3763.