6 guidelines for stopping real estate identity theft

Protect your clients by following these guidelines

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As pervasive as identity theft is these days, you might be surprised by how few real estate agents take steps to protect their client’s personal financial and other confidential information during the course of applying for a mortgage loan or buying and selling a home. The volume of information exchanged starts at the very beginning of an agent-client relationship, and at any given point in time a client’s identity can be compromised … possibly resulting in the disintegration of the transaction before closing.

But with a little bit of knowledge, you can help protect your clients, their confidential information and your reputation. Here are the basics you need to know:

1. No matter what type of real estate transaction is taking place, agents should be hyperattentive to exactly what information is being exchanged, where that information is stored and how secure a storage area might be.

2. Given all the paperwork involved in a real estate transaction, it can be easy to forget that these reams of paper contain very personal information about your clients, and that many eyes might have a chance to see that information. Make sure you lock it up, encrypt it or password-protect it.

3. Clients should understand what each document means and ask you to explain those they don’t. They also should only give out personal information on a need-to-know basis. If your client seems to be indiscriminately providing Social Security numbers (SSNs), credit card data or addresses to anyone who asks just because they ask for it, you might want to take extra care with the transaction or even have a talk with your client about being more protective of his or her identity.

4. At some point, personal information must be exchanged, but this should happen only after a professional relationship has been established and the transaction is under way. Ideally, a SSN should be given in person, and only at the time it’s absolutely necessary, such as during a credit check.

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5. At the closing, make sure your client receives the Real Estate Settlement Procedures Act (RESPA) and Housing and Urban Development (HUD) documents. The RESPA documents should not have an SSN on them. In fact, don’t write an SSN on any forms at the closing; the client should already have completed a W-9 form with his or her taxpayer ID number on it.

6. Shred any unnecessary documents. You also should know how any firms involved in the transaction (real estate firms, mortgage firms, title firms, etc.) dispose of their outdated documents. They should be shredded, not simply thrown in a recycling bin or wastebasket and then dumped outside, where anyone could find them.

7. Can you answer all of your clients’ questions about data encryption and website security? Although many identity thieves rely on poorly protected paper records for their theft, there can be significant security problems with computer systems. You should know what client data is being stored on a machine or transmitted via the Internet, and you should also know how secure (or otherwise) that process is.

By following these guidelines, your clients’ financial security and your own reputation can be protected.

Robert Siciliano is CEO of IDTheftSecurity.com and a personal security and identity theft expert.