Identity theft 101: what is housing fraud?

September 9, 11:22 AMIdentity Theft ExaminerJoe Campana

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               Identity theft can involve housing fraud

Identity theft involving housing fraud occurs when an identity thief obtains a home with a mortgage loan or more commonly when the identity thief rents housing. It also includes “home takeover” by the thief.

This type of identity theft may lead to other types of identity theft such as utilities and insurance fraud. Once the thief has housing, they may need or be required to obtain insurance. When they order utilities they will likely put those utilities (gas, electric, water, telephone and cable) under the same alias that was used to obtain housing.

Housing fraud also occurs when identity thieves pose as the homeowner and obtain a loan or mortgage against a victim’s property or sell the victim’s property. This is another reason why it is critical that local governments limit the accessibility of mortgage documents and social security numbers through the web.

Today, rental housing may be obtained without providing a social security number. Some local governments bar landlords from requiring prospective tenants to provide their social security number on a rental application. The purpose of these regulations is intended to create safe havens for illegal immigrants, felons and others. Although some may argue that such bans are intended to protect social security numbers of consumers. But often, the same local governments that ban landlords from requiring social security numbers are the ones that make social security numbers and other sensitive information web accessible to anyone with an Internet connection.

This practice may result in ambiguity in the identity of the applicant when credit reports are used to verify the applicant’s credit worthiness. Landlords need to be careful to use additional verifiers such as the date of birth and previous addresses to confirm that the credit report corresponds to the applicant and not someone else with the same first and last name.

Despite local government efforts to prevent landlords from obtaining an applicant’s social security number and to create safe havens for illegal immigrants, the Federal Red Flags Rule provides an additional check against these policies. Under the Red Flags Rule (a law), utility companies are required to validate the identity of the person opening any new utility account. If utility companies comply with the Red Flags Rule, identity thieves may be denied services, and as a result, they may not be able to comply with a lease by obtaining utilities in their name. Many major utilities are currently complying with the Red Flags Rule. Compliance is required by November 1, 2009.

Identity theft can affect many different facets and create a complicated situation for the identity theft victim to untangle.