Have you ever worried about the extremely personal information you supply to mortgage brokers or loan officers when you apply for a bad credit mortgage? Think about it -- you give them your Social Security number, home address, employment, birth date -- pretty much everything an identity thief needs to wreak havoc on your financial and personal life. And how well do you really know these people? For example, a mortgage broker in Boston was just convicted of using clients' personal data to involve them in a mortgage fraud scheme. Their information was used to purchase real estate in their names at inflated values and obtain mortgages. And this was not an isolated incident.

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You have a right to financial privacy by law, but how to you know your lender is respecting it? There are the precautions you should take to safeguard your private information when dealing with a bad credit mortgage lender.

First, one law that protects you, the Fair and Accurate CreditTransactions Act (FACTA) details the extent that businesses must safeguard your information in the age of computerized record-keeping and online access. Second, the Right to Financial Privacy Act requires lenders to keep your information private unless you specifically authorize its release. But if a bad apple lender wants to illegally use your info, you can protect yourself better than the government can.

Don't give out private information to anyone who contacts you, unsolicited, about your mortgage. You get an email about a mortgage for people with bad credit with a 4% rate! There is a link you can click and a helpful form for you to input your name, Social Security number, address, income, and birth date. You won't get that mortgage, but the boiler-room crooks who sent you that email may and up on a yacht in the Caymans at your expense! Even if you instigate the transaction, don't offer up your private data. For example, the form on this site doesn't require personal data from you; you can get bad credit mortgage offers without risking your privacy.

Work with lenders that are licensed in your state. The lenders that work with Mortgage Credit Problems are licensed. Many states also maintain Web sites where you can search for lenders and see which ones have complaints against them. You don't want to send all your personal info to some fly-by-night guy working out of his garage, even if he does have a very cool Web site and offers great rates. Make sure he's with a real company and the rates are real too.

Practice good data hygiene. The Office of Inspector General says protecting yourself from ID theft means vigilance. Such as:

 

  • Shred pre-approved credit applications and other financial documents before discarding them.
  • Order credit reports every year from each of the major credit reporting agencies and thoroughly review them for accuracy.
  • Never give personal or financial information over the phone or Internet unless you initiated the contact.
  • Report lost or stolen credit cards immediately.
  • Check your monthly credit card and bank statements for unusual activity.
  • Use a firewall program on your computer, especially if you leave your computer connected to the Internet 24 hours a day.
  • Do not download files sent to you by strangers or click on hyperlinks from people you don’t know.

Shopping for a mortgage online is a great way to compare a lot of mortgage quotes in a short time. A little caution can make it a good and profitable experience.