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Buying a home is a major goal for many people. It can also be one of the most important and challenging financial endeavors one can undertake. ACCC strives to provide you with as many helpful resources and tools as possible to address your financial issues. Here you will find a number of helpful articles that discuss the many aspects of buying a home.
Reverse Mortgages: Get the Facts Before Cashing in on Your Home's EquityWhether seeking money to finance a home improvement, pay off a current mortgage, supplement their retirement income, or pay for healthcare expenses, many older Americans are turning to “reverse” mortgages. They allow older homeowners to convert part of the equity in their homes into cash without having to sell their homes or take on additional monthly bills.
In a “regular” mortgage, you make monthly payments to the lender. But in a “reverse” mortgage, you receive money from the lender and generally don’t have to pay it back for as long as you live in your home. Instead, the loan must be repaid when you die, sell your home, or no longer live there as your principal residence. Reverse mortgages can help homeowners who are house-rich but cash-poor stay in their homes and still meet their financial obligations.
To qualify for most reverse mortgages, you must be at least 62 and live in your home. The proceeds of a reverse mortgage (without other features, like an annuity) are generally tax-free, and many reverse mortgages have no income restrictions.
The three basic types of reverse mortgage are: single-purpose reverse mortgages, which are offered by some state and local government agencies and nonprofit organizations; federally-insured reverse mortgages, which are known as Home Equity Conversion Mortgages (HECMs), and are backed by the U. S. Department of Housing and Urban Development (HUD); and proprietary reverse mortgages, which are private loans that are backed by the companies that develop them.
Single-purpose reverse mortgages generally have very low costs. But they are not available everywhere, and they only can be used for one purpose specified by the government or nonprofit lender, for example, to pay for home repairs, improvements, or property taxes. In most cases, you can qualify for these loans only if your income is low or moderate.
HECMs and proprietary reverse mortgages tend to be more costly than other home loans. The up-front costs can be high, so they are generally most expensive if you stay in your home for just a short time. They are widely available, have no income or medical requirements, and can be used for any purpose.
Before applying for a HECM, you must meet with a counselor from an independent government-approved housing counseling agency. The counselor must explain the loan’s costs, financial implications, and alternatives. For example, counselors should tell you about government or nonprofit programs for which you may qualify, and any single-purpose or proprietary reverse mortgages available in your area.
The amount of money you can borrow with a HECM or proprietary reverse mortgage depends on several factors, including your age, the type of reverse mortgage you select, the appraised value of your home, current interest rates, and where you live. In general, the older you are, the more valuable your home, and the less you owe on it, the more money you can get.
The HECM gives you choices in how the loan is paid to you. You can select fixed monthly cash advances for a specific period or for as long as you live in your home. Or you can opt for a line of credit, which allows you to draw on the loan proceeds at any time in amounts that you choose.You also can get a combination of monthly payments plus a line of credit.
HECMs generally provide larger loan advances at a lower total cost compared with proprietary loans. But owners of higher-valued homes may get bigger loan advances from a proprietary reverse mortgage. That is, if you have a higher appraised value without a large mortgage, then you may likely qualify for greater funds. Location (for example, your neighborhood) is only one part of the determination of appraised value.
Reverse mortgage loan advances are not taxable, and generally do not affect Social Security or Medicare benefits. You retain the title to your home and do not have to make monthly repayments. The loan must be repaid when the last surviving borrower dies, sells the home, or no longer lives in the home as a principal residence. In the HECM program, a borrower can live in a nursing home or other medical facility for up to 12 months before the loan becomes due and payable.
As you consider a reverse mortgage, be aware that:
If you are considering a reverse mortgage, shop around to compare your options and the offered terms. Learn as much as you can about reverse mortgages before you talk to a counselor or lender. It will help you ask more informed questions, which could lead to a better deal.
Be cautious if anyone tries to sell you something, like an annuity, and suggests that a reverse mortgage would be an easy way to pay for it. If you don’t fully understand what they’re selling, or you’re not sure you need what they’re selling, be even more skeptical.
Keep in mind that your total cost would be the cost of what they’re selling plus the cost of the reverse mortgage. If you think you need what they’re selling, shop around before you buy.
No matter why you decide to take a reverse mortgage, you generally have at least three business days after signing the loan documents to cancel it for any reason without penalty. Remember that you must cancel in writing. The lender must return any money you have paid so far for the financing.
If you suspect that anyone is violating the law, let the counselor, lender, or loan servicer know. Then, file a complaint with:
Whether a reverse mortgage is right for you is a big question. Consider all your options. You may qualify for less costly alternatives. Contact the following organizations for more information:
AARP Foundation
601 E Street, NW
Washington, DC 20049
1-800-209-8085
http://www.aarp.org/money/personal/articles/reverse_mortgage_basics.html
U. S. Department of Housing and Urban Development (HUD)
451 7th Street, SW
Washington, DC 20410
1-888-466-3487
www.hud.gov/offices/hsg/sfh/hecm/rmtopten.cfm
Federal Trade Commission
Consumer Response Center
600 Pennsylvania Avenue, NW
Washington, DC 20580
www.ftc.gov/bcp/menus/consumer/credit.shtm — Click on “Mortgages & Your Home” 1-877-FTC-HELP (1-877-382-4357)
What would you do if a friend or relative asked you to cosign a loan? Before you answer, make sure you understand what cosigning involves. Under federal law, creditors are required to give you a notice that explains your obligations. The cosigner’s notice states:
You are being asked to guarantee this debt. Think carefully before you do. If the borrower does not pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility. You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount. The creditor can collect this debt from you without first trying to collect from the borrower.* The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record. This notice is not the contract that makes you liable for the debt. |
* Depending on your state, this may not apply. If state law forbids a creditor from collecting from a cosigner without first trying to collect from the primary debtor, this sentence may be crossed out or omitted altogether.
Studies of certain types of lenders show that for cosigned loans that go into default, as many as three out of four cosigners are asked to repay the loan. When you're asked to cosign, you're being asked to take a risk that a professional lender won't take. If the borrower met the criteria, the lender wouldn't require a cosigner.
In most states, if you cosign and your friend or relative misses a payment, the lender can immediately collect from you without first pursuing the borrower. In addition, the amount you owe may be increased — by late charges or by attorneys’ fees — if the lender decides to sue to collect. If the lender wins the case, your wages and property may be taken.
Despite the
risks, there may be times when you want to cosign. Your child may need a first loan, or a close friend may need help. Before you cosign, consider this information:
If you decide that the timing’s right for a home equity loan, ask your friends or family for recommendations of lenders. Then, comparison shop. Comparing loan plans will help you get a better deal.
Contact several lenders, not just the ones that send you mail, call you, or knock on your door. Talk with banks, savings and loans, credit unions, mortgage companies, and mortgage brokers. Remember, brokers don’t lend money: they help arrange loans.
Ask all the lenders you interview to explain the loan plans they have for you. If you don’t understand any loan terms and conditions, ask questions. They could mean higher costs. Knowing just the amount of the monthly payment or the interest rate is not enough. Pay close attention to fees, including: the application or loan processing fee, origination or underwriting fee, lender or funding fee, appraisal fee, document preparation and recording fees, and broker fees which may be quoted as points, origination fees, or interest rate add-on. If points and other fees are added to your loan amount, you’ll pay more to finance them.
Also ask for your credit score. Credit scoring is a system creditors use to help determine whether to give you credit. Information about you and your credit experiences – like your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts — is collected from your credit application and your credit report. Creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points — your credit score — helps predict how creditworthy you are, that is, how likely it is that you will repay a loan and make the payments when they’re due.
Negotiate with more than one lender. Don’t be afraid to make lenders and brokers compete for your business by letting them know that you’re shopping for the best deal. Ask each lender to lower the points, fees or the interest rate. And ask each to meet — or beat — the terms of the other lenders.
Before you sign, read the loan closing papers carefully. If the loan isn’t what you expected or wanted, don’t sign the loan. Either negotiate changes or walk away. You also generally have the right to cancel the deal for any reason — and without penalty — within three days after signing the loan papers. The lender must return any money you’ve paid to date.
Your Credit Report Because your credit report is an important part of many credit scoring systems, it’s very important to make sure it’s accurate before you submit a credit application. To get copies of your report, contact the three major credit reporting agencies: Experian (formerly TRW): (888) EXPERIAN (397-3742) These agencies may charge you up to $9.00 for your credit report. |
For more information about shopping for a home equity loan and a glossary of home loan terms, call the FTC’s Consumer Response Center toll-free at 1-877-FTC-HELP (382-4357). Ask for a free copy of Looking for the Best Mortgage: Shop, Compare, Negotiate; and Home Equity Loans: The Three-Day Cancellation Rule. Or visit us online at ftc.gov.
| Lender A | Lender B | Lender C | |
| What are the monthly payments? | |||
| What is the Annual Percentage Rate (APR)? (the cost of credit expressed as a yearly rate; includes the interest rate, points, broker fees, and other credit charges) |
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| What is the interest rate? (the cost of borrowing money expressed as a percentage rate) |
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| Will the interest rate change? | |||
When? |
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How often? |
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By how much? |
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What will you have to pay in points? |
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What will you have to pay in fees? |
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Application or loan processing fee |
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Origination or underwriting fee |
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Lender or funding fee |
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Appraisal fee |
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Document preparation and recording fees |
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Broker fees |
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| Are any of the application fees refundable if you don't get the loan? | |||
| How many years will you have to repay the loan? | |||
| Is this an installment loan or a line of credit? | |||
| Is there a balloon payment? | |||
| What are the total closing costs? | |||
| If you use a broker, how will he or she be paid? | |||
| Does the loan include optional credit insurance? (You don't have to accept optional credit insurance to get your loan.) |
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| If you want optional credit insurance, can you pay for it monthly instead of financing the premiums as part of your loan? | |||
| Did you get a copy of your credit score? | |||
| Can you afford this loan? |
Many people find it easy and convenient to use credit cards and ATM or debit cards. The Fair Credit Billing Act (FCBA) and the Electronic Fund Transfer Act (EFTA) offer procedures for you to use if your cards are lost or stolen.
Report the loss or theft of your credit cards and your ATM or debit cards to the card issuers as quickly as possible. Many companies have toll-free numbers and 24-hour service to deal with such emergencies. It's a good idea to follow up your phone calls with a letter. Include your account number, when you noticed your card was missing, and the date you first reported the loss.
You also may want to check your homeowner's insurance policy to see if it covers your liability for card thefts. If not, some insurance companies will allow you to change your policy to include this protection.
Credit Card Loss or Fraudulent Charges (FCBA). Your maximum liability under federal law for unauthorized use of your credit card is $50. If you report the loss before your credit cards are used, the FCBA says the card issuer cannot hold you responsible for any unauthorized charges. If a thief uses your cards before you report them missing, the most you will owe for unauthorized charges is $50 per card. Also, if the loss involves your credit card number, but not the card itself, you have no liability for unauthorized use.
After the loss, review your billing statements carefully. If they show any unauthorized charges, it's best to send a letter to the card issuer describing each questionable charge. Again, tell the card issuer the date your card was lost or stolen, or when you first noticed unauthorized charges, and when you first reported the problem to them. Be sure to send the letter to the address provided for billing errors. Do not send it with a payment or to the address where you send your payments unless you are directed to do so.
ATM or Debit Card Loss or Fraudulent Transfers (EFTA). Your liability under federal law for unauthorized use of your ATM or debit card depends on how quickly you report the loss. If you report an ATM or debit card missing before it's used without your permission, the EFTA says the card issuer cannot hold you responsible for any unauthorized transfers. If unauthorized use occurs before you report it, your liability under federal law depends on how quickly you report the loss.
For example, if you report the loss within two business days after you realize your card is missing, you will not be responsible for more than $50 for unauthorized use. However, if you don't report the loss within two business days after you discover the loss, you could lose up to $500 because of an unauthorized transfer. You also risk unlimited loss if you fail to report an unauthorized transfer within 60 days after your bank statement containing unauthorized use is mailed to you. That means you could lose all the money in your bank account and the unused portion of your line of credit established for overdrafts. However, for unauthorized transfers involving only your debit card number (not the loss of the card), you are liable only for transfers that occur after 60 days following the mailing of your bank statement containing the unauthorized use and before you report the loss.
If unauthorized transfers show up on your bank statement, report them to the card issuer as quickly as possible. Once you've reported the loss of your ATM or debit card, you cannot be held liable for additional unauthorized transfers that occur after that time.
The best protections against card fraud are to know where your cards are at all times and to keep them secure. For protection of ATM and debit cards that involve a Personal Identification Number (PIN), keep your PIN a secret. Don't use your address, birthdate, phone or Social Security number as the PIN and do memorize the number.
The following suggestions may help you protect your credit card and your ATM or debit card accounts.
For an annual fee, companies will notify the issuers of your credit card and your ATM or debit card accounts if your card is lost or stolen. This service allows you to make only one phone call to report all card losses rather than calling individual issuers. Most services also will request replacement cards on your behalf.
Purchasing a card registration service may be convenient, but it's not required. The FCBA and the EFTA give you the right to contact your card issuers directly in the event of a loss or suspected unauthorized use.
If you decide to buy a registration service, compare offers. Carefully read the contract to determine the company's obligations and your liability. For example, will the company reimburse you if it fails to notify card issuers promptly once you've called in the loss to the service? If not, you could be liable for unauthorized charges or transfers.
The following federal agencies are responsible for enforcing federal laws that govern credit card and ATM or debit card transactions. Questions concerning a particular card issuer should be directed to the enforcement agency responsible for that issuer.
Board of Governors of the Federal Reserve System
Regulates state-chartered banks that are members of the Federal Reserve System, bank holding companies, and branches of foreign banks:
Division of Consumer and Community Affairs, Stop 801
20th and C Streets, NW
Washington, DC 20551
202-452-3693
www.federalreserve.gov
Federal Deposit Insurance Corporation
Regulates state-chartered banks that are not members of the Federal Reserve System:
Division of Compliance and Consumer Affairs
550 17th Street, NW
Washington, DC 20429
877-ASK-FDIC (275-3342) toll-free
www.fdic.gov
National Credit Union Administration
Regulates federally chartered credit unions:
Office of Public and Congressional Affairs
1775 Duke Street
Alexandria, VA 22314-3428
703-518-6330
www.ncua.gov
Office of the Comptroller of the Currency
Regulates banks with "national" in the name or "N.A." after the name:
Office of the Ombudsman
Customer Assistance Group
1301 McKinney Street, Suite 3710
Houston, TX 77010
800-613-6743 toll-free
www.occ.treas.gov
Office of Thrift Supervision
Regulates federal savings and loan associations and federal savings banks:
Consumer Programs
1700 G Street, NW
Washington, DC 20552
800-842-6929 toll-free
www.ots.treas.gov
Federal Trade Commission
Regulates other credit card and debit card issuers:
Consumer Response Center
600 Pennsylvania Avenue, NW
Washington, DC 20580
877-FTC-HELP (382-4357) toll-free
www.ftc.gov
How Can You Tell if You’re a Victim of Identity Theft?
Managing Your Personal Information
A Special Word About Social Security Numbers
If Your Personal Information Has Been Lost or Stolen
Identity Theft Victims: Immediate Steps
Dear Consumer:The Federal Trade Commission has published this booklet to help raise awareness of identity theft. We encourage you to share it with your family, friends, colleagues, and neighbors.
If someone has used your name or other personal information to commit a fraud, please visit www.ftc.gov/idtheft for information on how to proceed and how to file an identity theft complaint. The site has links to useful information from other federal agencies, states, and consumer organizations. The information in your complaint becomes part of a secure database that law enforcement officials across the nation use to help stop identity thieves.
If you don’t have access to the Internet, call 1-877-ID-THEFT, the FTC’s toll-free ID Theft Hotline.
Sincerely,
Lydia B. Parnes, Director
Bureau of Consumer Protection
Federal Trade Commission
In the course of a busy day, you may write a check at the grocery store, charge tickets to a ball game, rent a car, mail your tax returns, change service providers for your cell phone, or apply for a credit card. In each transaction, you reveal bits of personal information, like your bank and credit card account numbers; your income; your Social Security number (SSN); or your name, address, and phone numbers – a goldmine of information for an identity thief. Once a thief has that information, it can be used without your knowledge to commit fraud or theft.
Identity theft is a serious crime. People whose identities have been stolen can spend time and money cleaning up the mess the thieves have made of their good name and credit record. They may lose out on job opportunities, and loans for education, housing, or cars. They may even get arrested for crimes they didn’t commit.
Can you prevent an identity theft? As with any crime, you cannot completely control whether you will become a victim. But according to the Federal Trade Commission (FTC), the nation’s consumer protection agency, you can minimize your risk by managing your personal information cautiously.
Skilled identity thieves use a variety of ways to gain access to your personal information. For example, they may get information from businesses or other institutions by stealing it while they’re on the job; bribing an employee who has access to these records; hacking these records; and conning information out of employees. Or:
Once identity thieves have your personal information, they may use it to commit fraud or theft. For example:
If an identity thief is opening new credit accounts in your name, these accounts are likely to show up on your credit report. You can find out by ordering a copy of your credit report from the three nationwide consumer reporting companies. If you have lost any personal information – or if it has been stolen – you may want to check all your reports more frequently for the first year.
Monitor the balances of your financial accounts. Look for unexplained charges or withdrawals. Other indications of identity theft can be:
An amendment to the federal Fair Credit Reporting Act requires each of the major nationwide consumer reporting companies to provide you with a free copy of your credit report, at your request, once every 12 months.
Free reports have been phased in during a nine-month period, starting with states in the West and ending with states in the East. Beginning September 1, 2005, free reports will be accessible to all Americans, regardless of where they live.
To order your free annual report from one or all the national consumer reporting companies, visit: www.annualcreditreport.com; call toll-free: 1-877-322-8228; or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can print the form from ftc.gov/credit. Do not contact the three nationwide consumer reporting companies individually; they provide free annual credit reports only through www.annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
Under federal law, you’re also entitled to a free report if a company takes adverse action against you, such as denying your application for credit, insurance or employment, and you request your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company that supplied the information about you. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud. Otherwise, a consumer reporting company may charge you up to $10.50 for additional copies of your report.
TO BUY A COPY OF YOUR REPORT, CONTACT: TransUnion: 1-800-916-8800; www.transunion.com Equifax: 1-800-685-1111; www.equifax.com Experian: 1-888-EXPERIAN (1-888-397-3742); www.experian.com |
Under state law, consumers in Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey, and Vermont already have free access to their credit reports.
If you ask, only the last four digits of your Social Security number will appear on your credit reports.
How can a responsible consumer minimize the risk of identity theft, as well as the potential for damage? When a situation involves your personal information, exercise caution and prudence.
Place passwords on your credit card, bank, and phone accounts. Avoid using easily available information like your mother’s maiden name, your birth date, the last four digits of your SSN or your phone number, or a series of consecutive numbers. When you open new accounts, you may find that many businesses still have a line on their applications for your mother’s maiden name. Ask to use a password instead.
Secure personal information in your home, especially if you have roommates, employ outside help, or are having work done in your home.
Ask about information security procedures in your workplace or at businesses, doctors’ offices, or other institutions that collect your personally identifying information. Find out who has access to your personal information and verify that it is handled securely. Ask about the disposal procedures for those records, as well. Find out if information will be shared with anyone else. If so, ask how your information can be kept confidential.
Don’t give out personal information on the phone, through the mail, or on the Internet unless you’ve initiated the contact or are sure you know who you’re dealing with. Identity thieves are clever, and have posed as representatives of banks, Internet service providers (ISPs), and even government agencies to get people to reveal their SSN, mother’s maiden name, account numbers, and other identifying information. Before you share any personal information, confirm that you’re dealing with a legitimate organization. Check an organization’s website by typing its URL in the address line, rather than cutting and pasting it in. Many companies post scam alerts on their sites when their name has been used improperly. Or call customer service using the number listed on your account statement or in the telephone book.
Treat your mail and trash carefully. Deposit your outgoing mail in post office collection boxes or at your local post office, rather than in an unsecured mailbox. Promptly remove mail from your mailbox. If you’re planning to be away from home and can’t pick up your mail, call the U.S. Postal Service at 1-800-275-8777 to request a vacation hold. The Postal Service will hold your mail at your local post office until you can pick it up or are home to receive it.
To thwart a thief who may pick through your trash or recycling bins to capture your personal information, tear or shred your charge receipts, copies of credit applications, insurance forms, physician statements, checks and bank statements, expired credit or charge cards that you’re discarding, and credit offers you get in the mail. To opt out of receiving offers of credit in the mail that are based on your credit report, call: 1-888-5-OPTOUT (1-888-567-8688). The nationwide consumer reporting companies use the same toll-free number to let you opt out of receiving credit offers based on their lists. Note: You will be asked to provide your SSN, which the consumer reporting companies need to match you with your file.
Don’t carry your SSN card in your wallet; store it in a secure place.
Give your SSN only when absolutely necessary, and ask to use other types of identifiers. If your state uses your SSN as your driver’s license number, ask to substitute another number. Do the same if your health insurance company uses your SSN as your policy number.
Carry only the identification information and the credit and debit cards that you’ll actually need when you go out. If your wallet is stolen – or if you lose it – report it immediately to the card issuers and the local police.
Be cautious when responding to promotions. Identity thieves may create phony promotional offers to get you to give them your personal information.
Keep your purse or wallet in a safe place at work; do the same with copies of administrative forms that have your sensitive personal information.
When ordering new checks, pick them up from the bank instead of having them mailed to your home.
Your computer can be a goldmine of personal information to an identity thief. Here are some ways to help you keep your computer – and the personal information it stores – safe.
If you are a member of the military and away from your usual duty station, you may place an active duty alert on your credit reports by contacting any one of the three major consumer reporting companies. Active duty alerts can help minimize the risk of identity theft while you are deployed. To place an alert on your credit report, or to have it removed, you will have to provide appropriate proof of your identity, including your SSN, name, address, and other personal information requested by the consumer reporting company. You may use a personal representative to place or remove an alert.
Active duty alerts are in effect on your report for one year. If your deployment lasts longer, you can place another alert on your credit report.
When a business sees the alert on your credit report, they must verify your identity before issuing any credit. As part of this verification process, the business may try to contact you directly. Be sure to keep your contact information updated, or you may experience delays if you are applying for new credit.
When you place an active duty alert on your credit report, you’ll also be removed from the credit reporting companies’ marketing list for prescreened credit card offers for two years unless you ask to be put back on the list before then.
If you’ve lost personal information or identification, or if it has been stolen from you, you can minimize the potential for identity theft if you act quickly.
Once you have taken these precautions, watch for signs that your information is being misused, and that your identity has been stolen.
If your information has been misused, file a report about the theft with the police, and file a complaint with the FTC, as well. If another crime was committed – for example, if your purse or wallet was stolen or your house or car was broken into – report it to the police immediately.
If you are a victim of identity theft, take the following four steps as soon as possible, and keep records of your conversations and copies of all correspondence. You also should get a copy of the FTC publication, Take Charge: Fighting Back Against Identity Theft, a comprehensive guide that describes what to do, your legal rights, how to handle specific problems you may encounter on the way to clearing your name, and what to watch for in the future. The guide also includes the ID Theft Affidavit to help you report information to many companies. For more information, see www.ftc.gov/idtheft.
1. Place a fraud alert on your credit reports, and review your credit reports.
Fraud alerts can help prevent an identity thief from opening any more accounts in your name. Contact the toll-free fraud number of any of the three consumer reporting companies below to place a fraud alert on your credit report. You need to contact only one of the three companies to place an alert. The company you call is required to contact the other two, which will place an alert on their versions of your report, too.
Once you place the fraud alert in your file, you’re entitled to order free copies of your credit reports, and, if you ask, only the last four digits of your SSN will appear on your credit reports. Once you get your credit reports, review them carefully. Look for inquiries from companies you haven’t contacted, accounts you didn’t open, and debts on your accounts that you can’t explain. Check that information like your SSN, address(es), name or initials, and employers are correct. If you find fraudulent or inaccurate information, contact the consumer reporting companies to get it removed. Continue to check your credit reports periodically, especially for the first year after you discover the identity theft, to make sure no new fraudulent activity has occurred.
2. Close the accounts that you know, or believe, have been tampered with or opened fraudulently.
Call and speak to someone in the security or fraud department of each company. Follow aup in writing, and include copies (NOT originals) of supporting documents. It’s important to notify credit card companies and banks in writing. Send your letters by certified mail, return receipt requested, so you can document what the company received and when. Keep a file of your correspondence and enclosures.
When you open new accounts, use new Personal Identification Numbers (PINs) and passwords. Avoid using easily available information like your mother’s maiden name, your birth date, the last four digits of your SSN or your phone number, or a series of consecutive numbers.
If the identity thief has made charges or debits on your accounts, or on fraudulently opened accounts, ask the company for the forms to dispute those transactions.
Once you have resolved your identity theft dispute with the company, ask for a letter stating that the company has closed the disputed accounts and has discharged the fraudulent debts. This letter is your best proof if errors relating to this account reappear on your credit report or you are contacted again about the fraudulent debt.
3. File a report with your local police or the police in the community where the identity theft took place.
Then, get a copy of the police report, or at the very least, the number of the report. It can help you deal with creditors who need proof of the crime. If the police are reluctant to take your report, ask to file a “Miscellaneous Incidents” report, or try another jurisdiction, like your state police. You also can check with your state Attorney General’s office to find out if state law requires the police to take reports for identity theft. Check the Blue Pages of your telephone directory for the phone number or check www.naag.org for a list of state Attorneys General.
4. File a complaint with the Federal Trade Commission.
By sharing your identity theft complaint with the FTC, you will provide important information that can help law enforcement officials across the nation track down identity thieves and stop them. The FTC can refer victims’ complaints to other government agencies and companies for further action, as well as investigate companies for violations of laws the agency enforces.
You can file a complaint online at www.ftc.gov/idtheft. If you don’t have Internet access, call the FTC’s Identity Theft Hotline, toll-free: 1-877-ID-THEFT (438-4338); TDD: 202-326-2502; or write: Identity Theft Clearinghouse, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580.
Be sure to call the Hotline to update your complaint if you have any additional information or problems.
Back to TopProduced in cooperation with the Board of Governors of the Federal Reserve System, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Federal Trade Commission, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, Securities and Exchange Commission.
You've probably been receiving privacy notices from banks and other financial companies. These notices explain:
Companies that May Send Privacy Notices
Companies involved in financial activities must send their customers privacy notices, including:
Financial companies share information for many reasons: to offer you more services, to introduce new products, and to profit from the information they have about you. If you like to know about other products and services, you may want your financial company to share your personal financial information; in this case, you don't need to respond to the privacy notice. If you prefer to limit the promotions you receive or do not want marketers and others to have your personal financial information, you must take some important steps.
First, it is important to read these privacy notices. They explain how the company handles and shares your personal financial information. Keep in mind that not all privacy notices are the same. This guide tells you about the other steps you can take to help protect the privacy of your personal financial information.
Federal privacy laws give you the right to stop (opt out of) some sharing of your personal financial information. These laws balance your right to privacy with financial companies' need to provide information for normal business purposes. (For more information on these laws, see the appendix.) You have the right to opt out of some information sharing with companies that are:
But you cannot opt out and completely stop the flow of all your personal financial information. The law permits your financial companies to share certain information about you without giving you the right to opt out. Among other things, your financial company can provide to non-affiliates:
If you opt out, you limit the extent to which the company can provide your personal financial information to non-affiliates. If you do not opt out within a "reasonable period of time"--generally about 30 days after the company mails the notice-- then the company is free to share certain personal financial information. If you didn't opt out the first time you received a privacy notice from a financial company, it's not too late. You can always change your mind and opt out of certain information sharing. Contact your financial company and ask for instructions on how to opt out. Remember, however, that any personal financial information that was shared before you opted out cannot be retrieved.
A privacy notice contains information about the company's data collection and information sharing policies. If a financial company does not plan to share your information except as permitted by law, the notice will tell you this; in this case, you don't have a right to opt out.
Non-affiliates. If you have the right to opt out (that is, if the company plans to share your information), the privacy notice will include instructions on how to opt out of sharing some information. Unless you opt out, your financial company can provide your personal financial information (for example, information on the kinds of stores you shop at, how much you borrow, your account balances, or the dollar value of your assets) to non-affiliates for marketing and other purposes.
Affiliates. The privacy notice may also give you the right to opt out of certain information sharing with affiliates. For example, if a company intends to provide an affiliate with personal information from your credit report or loan application, you will usually first be given a chance to opt out. Companies, however, can share information about you with affiliates when the information is based solely on your transactions with that company (transaction information includes whether you pay your bills on time, the type of accounts you have with the company, and so forth). Read your notices carefully to see if this type of opt out applies.
Credit bureaus may also sell information about you to lenders and insurers who use the information to decide whether to send you unsolicited offers of credit or insurance. This is known as prescreening. You can opt out of receiving these prescreened offers by calling 1-888-567-8688.
If you want to opt out of information sharing, you must follow the directions provided by your financial company. For example, you may have to call a toll-free number or fill out a form and return the form to the company.
In some cases, your financial company may give you the choice to opt out of different types of sharing. For example, you could opt out of certain categories of information the company provides to other companies but allow the company to share other kinds of information.
Initial Privacy Notice. You will usually receive a privacy notice when you open an account or become a customer of a financial company. If you open an account over the phone, however, and you agree, the company may send you a notice at a later time.
Annual Privacy Notices. Each financial company you have an ongoing relationship with--for example, the bank where you have a checking account, your credit card company, or a company that services your loan--must give you a notice of its privacy policy annually.
Notice of Changes in Privacy Policies. If a company changes its privacy policy, it will either send you a revised privacy notice or tell you about the changes in the company's next annual notice.
A privacy notice may be included as an insert with your monthly statement or bill, or it may be sent to you in a separate mailing. If you agree to electronic delivery from an on-line financial company, the notice may be sent to you by e-mail or it may be made available to you on the company's web site.
If you have more than one account with the same company, the company may send you only one privacy notice for all of your accounts or it may send you separate notices for each of your accounts.
If you have a joint account with another person (for example, a joint checking account or a mortgage loan), the financial company may send a notice to one of you or to each person listed on the account. If the company provides an opportunity to opt out, it must let one of the account holders opt out for all joint account holders.
If you have questions or concerns about a company's privacy policy, first contact that company directly. If you still have questions about your privacy rights in dealing with a financial company, you can contact the federal or state agency that oversees that type of company:
Regulates state-chartered banks that are members of the Federal Reserve System, bank holding companies, and branches of foreign banks
Division of Consumer and Community Affairs, Stop 801
20th and C Streets, NW
Washington, DC 20551
202-452-3693
www.federalreserve.gov
Regulates commodity brokers, commodity trading advisors, commodity pools, and introducing brokers
Privacy Officer, Office of Chief Counsel
Division of Trading and Markets
Three Lafayette Center
1155 21st Street, NW
Washington, DC 20581
202-418-5430
www.cftc.gov
Regulates state-chartered banks that are not members of the Federal Reserve System
Division of Compliance and Consumer Affairs
550 17th Street, NW
Washington, DC 20429
877-ASK-FDIC or 877-275-3342 toll-free
www.fdic.gov
Regulates any financial company not covered by the other federal regulators such as mortgage brokers, tax and investment services, finance companies, credit bureaus, nonbank lenders, auto dealers, leasing companies, appraisers, real estate settlement services, credit counseling services, and collection agency services
Consumer Response Center
600 Pennsylvania Avenue, NW
Washington, DC 20580
877-FTC-HELP or 877-382-4357 toll-free
www.ftc.gov
also see www.consumer.gov/idtheft/
Regulates federally chartered credit unions
Office of Public and Congressional Affairs
1775 Duke Street
Alexandria, VA 22314-3428
703-518-6330
www.ncua.gov
Regulates national banks, District of Columbia banks, federal branches and federal agencies of foreign banks, and subsidiaries of such entities. These typically include banks with "national" or "N.A." in their names.
Customer Assistance Group
1301 McKinney Street
Suite 3710
Houston, TX 77010
800-613-6743 toll-free
www.occ.treas.gov
Regulates federal savings and loan associations and federal savings banks
Consumer Programs
1700 G Street, NW
Washington, DC 20552
800-842-6929 toll-free
www.ots.treas.gov
Regulates brokerage firms, mutual fund companies, and investment advisors
Office of Investor Education and Assistance
450 5th Street, NW
Washington, DC 20549-0213
202-942-9634 fax
www.sec.gov/complaint.shtml
More Information About the Laws Affecting Your Personal Financial Privacy
Two federal laws cover different aspects of how companies can share your financial information, as described in this guide: the Fair Credit Reporting Act and the Gramm-Leach-Bliley Act.
The Fair Credit Reporting Act protects the privacy of certain information distributed by consumer reporting agencies (CRAs). Most CRAs are credit bureaus that gather and provide information about you, such as if you pay your bills on time or have filed for bankruptcy, to creditors and other businesses. Under the law, credit bureaus and other CRAs can release your information only to those third parties that have certified that they have a purpose permitted by the law to obtain your consumer report, such as to evaluate your application for credit, insurance, or employment, or to rent you an apartment.
When a financial company obtains your credit report from a credit bureau, it may want to share that information with an affiliate, meaning a company that owns your financial company, that your financial company owns, or that is part of the same parent organization or corporate family. Under the Fair Credit Reporting Act, however, if the financial company plans to share certain information--for example, from your credit report or your credit application--with its affiliates, it will usually first notify you and give you an opportunity to opt out. This notice is likely to be included in the privacy notice you receive from the financial company under the Gramm-Leach-Bliley Act.
The Gramm-Leach-Bliley Act requires financial companies to tell you about their policies regarding the privacy of your personal financial information. With some exceptions, the law limits the ability of financial companies to share your personal financial information with certain non-affiliates. A non-affiliate is a company that is unrelated to your financial company, and may include:
Under the Gramm-Leach-Bliley Act, your financial company can provide your personal financial information to non-affiliated service providers including joint marketers. But before it shares your information with other third-party non-affiliates (outside of these exceptions), your financial company must tell you about its information sharing practices and give you the opportunity to opt out.
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Back to TopFraudulent tele-marketers have found yet another way to steal your money, this time from your checking account. Consumers across the country are complaining about unauthorized debits (withdrawals) from their checking accounts.
Automatic debiting of your checking account can be a legitimate payment method; many people pay mortgages or make car payments this way. But the system is being abused by fraudulent tele-marketers. Therefore, if a caller asks for your checking account number or other information printed on your check, you should follow the same warning that applies to your credit card number - do not give out checking account information over the phone unless you are familiar with the company and agree to pay for something. Remember, if you give your checking account number over the phone to a stranger for "verification" or "computer purposes," that person could use it to improperly take money from your checking account.
You either get a postcard or a telephone call saying you have won a free prize or can qualify for a major credit card, regardless of past credit problems. If you respond to the offer, the tele-marketer often asks you right away, "Do you have a checking account?" If you say "yes," the tele-marketer then goes on to explain the offer. Often it sounds too good to pass up.
Near the end of the sales pitch, the tele-marketer may ask you to get one of your checks and to read off all of the numbers at the bottom. Some deceptive tele-marketers may not tell you why this information is needed. Other deceptive tele-marketers may tell you the account information will help ensure that you qualify for the offer. And, in some cases, the legitimate tele-marketer will honestly explain that this information will allow them to debit your checking account.
Once a tele-marketer has your checking account information, it is put on a "demand draft," which is processed much like a check. The draft has your name, account number, and states an amount. Unlike a check, however, the draft does not require your signature. When your bank receives the draft, it takes the amount on the draft from your checking account and pays the tele-marketer's bank. You may not know that your bank has paid the draft until you receive your bank statement.
It can be difficult to detect an automatic debit scam before you suffer financial losses. If you do not know who you're talking to, follow these suggestions to help you avoid becoming a victim:
IT'S THE LAW: Since December 31, 1995, a seller or tele-marketer is required by law to obtain your verifiable authorization to obtain payment from your bank account. That means whoever takes your bank account information over the phone must have your express permission to debit your account, and must use one of three ways to get it. The person must tell you that money will be taken from your bank account. If you authorize payment of money from your bank account, they must then get your written authorization, tape record your authorization, or send you a written confirmation before debiting your bank account. If they tape record your authorization, they must disclose, and you must receive, the following information:
If a seller or tele-marketer uses written confirmation to verify your authorization, they must give you all the information required for a tape recorded authorization and tell you in the confirmation notice the refund procedure you can use to dispute the accuracy of the confirmation and receive a refund.
If tele-marketers cause money to be taken from your bank account without your knowledge or authorization, they have violated the law. If you receive a written confirmation notice that does not accurately represent your understanding of the sale, follow the refund procedures that should have been provided and request a refund of your money. If you do not receive a refund, it's against the law. If you believe you have been a victim of fraud, contact your bank immediately. Tell the bank that you did not okay the debit and that you want to prevent further debiting. You also should contact your state Attorney General. Depending on the timing and the circumstances, you may be able to get your money back.
Back to TopYou may have seen Web sites or received unsolicited email offering credit reports, sometimes for free. Be aware that some of these online operators may not actually provide credit reports, but may be using these sites as a way to capture your personal information. From there, they may sell your information to others who may use it commit fraud, including identity theft.
This is a variation on "phishing," also called "carding," a high-tech scam that uses spam or fraudulent Web sites to deceive consumers into disclosing their credit card numbers, bank account information, Social Security numbers, passwords, and other sensitive information.
The Federal Trade Commission (FTC), the nation's consumer protection agency, urges you to take the following precautions when visiting sites or responding to email that offer credit reports:
For a copy of your credit report from the major credit bureaus, contact:
Consumers also can call their local office of the Secret Service.
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Apply for Newly Approved Slave Reparations!
Claim $5,000 in Social Security Reimbursements!
Flyers with these instructions, circulating in many Southern and Midwestern African-American communities, are attempting to trick people into revealing personal identifying information that could, in turn, cost them money or damage their credit ratings.
The flyers, distributed in churches or placed on the windshields of parked cars or bulletin boards in senior centers and nursing homes, claim that African Americans born before 1928 may be eligible for slave reparations under a so-called "Slave Reparation Act" and that those born between 1917 and 1926 can apply for Social Security funds they are due because of a "fix" in the Social Security system.
According to law enforcement officials, the claims are false. They are being made by skilled identity thieves, who are asking people to reveal their name, address, phone number, birthdate and Social Security number in order to access their credit cards or open accounts under their names without their permission or knowledge.
If you receive a flyer promoting slave reparations or Social Security reimbursements, the Federal Trade Commission encourages you to report it to your local law enforcement agency or state Attorney General, the Social Security Administration or the FTC at its toll-free Identity Theft Hotline,1-877-IDTHEFT (1-877-438-4338).
Can you minimize your risk of identity theft? The FTC says by managing your personal information wisely, cautiously and with increased sensitivity, you may be able to thwart an identity thief. The federal agency recommends that you:
When you think of your own personal assets, chances are your home, car, and savings and investments come to mind. But what about your Social Security number (SSN), telephone records and your bank and credit card account numbers? To people known as “pretexters,” that information is a personal asset, too.
Pretexting is the practice of getting your personal information under false pretenses. Pretexters sell your information to people who may use it to get credit in your name, steal your assets, or to investigate or sue you. Pretexting is against the law.
Pretexters use a variety of tactics to get your personal information. For example, a pretexter may call, claim he’s from a survey firm, and ask you a few questions. When the pretexter has the information he wants, he uses it to call your financial institution. He pretends to be you or someone with authorized access to your account. He might claim that he’s forgotten his checkbook and needs information about his account. In this way, the pretexter may be able to obtain personal information about you such as your SSN, bank and credit card account numbers, information in your credit report, and the existence and size of your savings and investment portfolios.
Keep in mind that some information about you may be a matter of public record, such as whether you own a home, pay your real estate taxes, or have ever filed for bankruptcy. It is not pretexting for another person to collect this kind of information.
Under federal law — the Gramm-Leach-Bliley Act — it’s illegal for anyone to:
The Federal Trade Commission Act also generally prohibits pretexting for sensitive consumer information.
Pretexting can lead to identity theft. Identity theft occurs when someone hijacks your personal identifying information to open new charge accounts, order merchandise, or borrow money. Consumers targeted by identity thieves often don’t know they’ve been victimized until the hijackers fail to pay the bills or repay the loans, and collection agencies begin dunning the consumers for payment of accounts they didn’t even know they had.
According to the Federal Trade Commission (FTC), the most common forms of identity theft are:
Credit Card Fraud — a credit card account is opened in a consumer’s name or an existing credit card account is “taken over”;
Communications Services Fraud — the identity thief opens telephone, cellular, or other utility service in the consumer’s name;
Bank Fraud — a checking or savings account is opened in the consumer’s name, and/or fraudulent checks are written; and
Fraudulent Loans — the identity thief gets a loan, such as a car loan, in the consumer’s name.
The Identity Theft and Assumption Deterrence Act makes it a federal crime when someone: “knowingly transfers or uses, without lawful authority, a means of identification of another person with the intent to commit, or to aid or abet, any unlawful activity that constitutes a violation of federal law, or that constitutes a felony under any applicable state or local law.”
Under the Identity Theft Act, a name or SSN is considered a “means of identification.” So is a credit card number, cellular telephone electronic serial number or any other piece of information that may be used alone or in conjunction with other information to identify a specific individual.
Even though the laws are on your side, it’s wise to take an active role in protecting your information.
Your credit report contains information on where you work and live, the credit accounts that have been opened in your name, how you pay your bills and whether you’ve been sued, arrested or have filed for bankruptcy. Checking your report annually can help you catch mistakes and fraud before they wreak havoc on your personal finances.
If you think you’ve been a victim of pretexting, the FTC recommends that you:
If you’ve been a victim of identity theft, file a complaint with the FTC by contacting the FTC’s Identity Theft Hotline by telephone: toll-free 1-877-ID-THEFT (1-877-438-4338); TDD: 202-326-2502; by mail: Identity Theft Clearinghouse, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580; or online: www.ftc.gov/idtheft.
The FTC has published a free booklet, Take Charge: Fighting Back Against Identity Theft. This comprehensive guide includes information on what consumers can do to reduce their risk of ID theft; how consumers can protect their personal information; the steps consumers can take if they do become victims of ID theft; and a directory of government resources available to ID theft victims. For your copy, visit www.ftc.gov/idtheft.
Back to TopEvery day you share personal information about yourself with others. It’s so routine that you may not even realize you’re doing it. You may write a check at the grocery store, charge tickets to a ball game, rent a car, mail your tax returns, buy a gift online, call home on your cell phone, schedule a doctor’s appointment, or apply for a credit card. Each transaction requires you to share personal information: your bank and credit card account numbers; your income; your Social Security number (SSN); or your name, address, and phone numbers.
It’s important to find out what happens to the personal information you and your children provide to companies, marketers, and government agencies. These organizations may use your information simply to process your order; to tell you about products, services, or promotions; or to share with others.
And then there are unscrupulous individuals, like identity thieves, who want your information to commit fraud. Identity theft — the fastest-growing white-collar crime in America — occurs when someone steals your personal identifying information, like your SSN, birth date, or mother’s maiden name, to open new charge accounts, order merchandise, or borrow money. Consumers targeted by identity thieves usually don’t know they’ve been victimized. But when the fraudsters fail to pay the bills or repay the loans, collection agencies begin pursuing the consumers to cover debts they didn’t even know they had.
The Federal Trade Commission (FTC) encourages you to make sure your transactions — online and off — are secure and your personal information is protected. The FTC offers these tips to help you manage your personal information wisely, and to help minimize its misuse.
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
For more information, see Your Access to Free Credit Reports.
For More Information
To learn more about more about privacy issues and how they affect your life and the decisions you may make in the marketplace, visit ftc.gov/privacy.
If you are having trouble paying your mortgage, you are not alone. Many Americans are facing this same problem and mortgage companies are very familiar with this situation.
The first thing you need to do once you realize that this is becoming a problem for you and your family is contact your mortgage lender immediately. Contacting your lender as soon as possible is the best way to deal with your situation. Mortgage lenders are in the business of making money therefore they are more willing to work with you. By contacting your lender they may be willing to work something out with you and in some cases renegotiate your loan terms. Lenders may offer you:
Many lenders wouldn't have considered such deals 6 months ago, but since mortgage delinquencies have skyrocketed and the housing market has plummeted, banks are eager to avoid foreclosures. This is a great opportunity to work with your lender and come up with a plan that is going to keep you in your home and lenders happy too.
You may also want to consider contacting a credit counselor to help you with your monthly budgeting. This is a very stressful time in your life and seeking a professional budget counselor may be the best way to help identify areas that you can cut back in, in order to ensure you are meeting your monthly mortgage commitments.
If you need further assistance with your mortgage you may contact the Mortgage HopeLine or if you would like to discuss your specifics with one of our counselors feel free to contact us.
Back to TopDeciding to refinance your home can be very beneficial especially if you bought when interest rates were high or you chose a more creative financing option such as an adjustable rate mortgage which matures after. There are several factors to consider before you choose to refinance.
Reasons to refinance:
All of these are excellent reasons to pursue refinancing, but several issues should be considered first.
Refinancing is similar to the process you encountered when you closed on your first mortgage. It requires an application, credit check, new survey and title search, as well as an appraisal and inspection fees. As you know, this process can be quite lengthy and expensive.
As a rule of thumb, it pays to refinance if you can get an interest rate at least two percentage points lower than what you are currently paying. However, every situation is different. Some lenders are offering reduced fees or no points. Asking yourself a few questions may help you determine if you can save money:
Once you ask yourself these questions, the next thing you need to do is figure out what you still owe on the house, how much you're paying each month, and how much you initially paid for the house. Itemize all the expenses of the refinance and estimate your new monthly payments. With this, you can figure out where you break even and when you begin saving money.
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