Red Flag Alert - Effective Nov 1st 2009

According to the Federal Trade Commission (FTC) the new ‘Red Flag’ Requirements for Financial Institutions and Creditors Will Help Fight Identity Theft. Identity thieves use people’s personally identifying information to open new accounts and misuse existing accounts, creating havoc for consumers and businesses. Financial institutions and creditors soon will be required to implement a program to detect, prevent, and mitigate instances of identity theft.

Mortgage brokers and lenders fall under the CREDITOR and COVERED ACCOUNTS category. Under the Red Flags Rules, financial institutions and creditors must develop a written program that identifies and detects the relevant warning signs – or “red flags” – of identity theft. These may include, for example, unusual account activity, fraud alerts on a consumer report, or attempted use of suspicious account application documents. The program must also describe appropriate responses that would prevent and mitigate the crime and detail a plan to update the program. The program must be managed by the Board of Directors or senior employees of the financial institution or creditor, include appropriate staff training, and provide for oversight of any service providers.

All mortgage brokers need to be prepared for the Red Flag Alert which becomes effective Nov 1st, 2009. For further information visit the FTC website.

If you have any comments please post them below or visit PrivoCorp website (the mortgage outsourcing destination) at http://www.privocorp.com/ and submit a request on how you can be compliant with these guidelines.