How Safe is Your Data When You Get a Mortgage?

Applying for a loan is notoriously full of massive amounts of paperwork. And it’s not just any paperwork, either. You’re providing the lender with your most sensitive personal information, including your social security number, bank account information, and tax documents.

Clearly, this isn’t information you want to be available to anybody—only those who need to see it to process your mortgage.

You may pause and wonder how safe your information is when you apply for a mortgage and the laws that govern what mortgage companies can do with that information. It’s a valid concern, so let’s talk about what you can do to protect your personal information and about what lenders do to protect it, as well.

After all, we live in an age of rampant identity theft. You’re at risk any time you share your personal information with anybody.

Why Lenders Need So Much Information

First, you might wonder why lenders need so darn much of your personal information. With today’s stricter lending standards (some lax lending contributed to the housing market crash a decade ago), lenders must be very meticulous about checking personal information before giving you a loan. Gone are the days of flying through a loan application, and that’s a good thing!

You must prove your financial health before a lender can decide to lend you money. It’s the only way for the lender to be sure that lending you money is a sound decision. They want to make sure you can pay the money back comfortably.

What You Can Do

So, since you have to provide this sensitive information to your lender, what can you do to protect your personal information from cyber criminals?

Don’t Attach Information to Emails

Lenders want to make the process of getting a loan as easy as possible, especially when they’re asking for so many different documents at different times throughout the process. Because of this, sometimes it may be tempting for them to ask you to send documents via email (or you may want to ask if you can do it that way).

But this is an unwise decision because it’s so easy for criminals to exploit email attachments. Instead, insist on uploading your information via a secure online portal, which is much harder to hack. (Most lenders should offer this option from the get-go.)

Of course, if uploading it securely is not an option, you can always drop your documents off in person or put them through the mail or fax machine—though these methods are more of a hassle, they are all preferable to unsecured email.

Don’t Respond to Suspicious Emails

If you receive an email that appears to be from your bank but you don’t recognize the name or something looks off, call your lender and verify that it’s legitimate. No matter what, don’t respond with your personal information until you know that that it is. Even then, personal information should still be submitted via a secure online portal.

Using names and email address similar to ones you’re familiar with is called phishing, and it’s a common way for criminals to get your valuable information.

Lenders should use safeguards to protect people from phishing scams. A reputable lender will have software that helps keep their email system safe from scammers.

What Your Lender Can Do

First, you should always ask your lender what they do to safeguard your personal information. Specific privacy practices vary depending on the lender, but they should publish their privacy policy on their website (check the footer). Additionally, there are a few things all lenders should do to keep their data safe.

Store Information Safely

First, they should have a way to securely store your information once they have it. Servers and databases should be locked down and protected with passwords. Only those working on your loan directly should have access to your information.

There should be multiple safeguards for preventing a data breach and for identifying one quickly if it happens.

Send Information to Third Parties Securely

The lender should use secure online portals to upload your information to third parties that will be helping to complete the transaction—think title companies, lawyers, and others that help facilitate the transaction.

Tell You How They Use Your Information

Another thing people worry about is the risk of their information being sold to third parties like credit card companies, insurance companies, and others who might have an interest in getting your business.

This is where the Gramm-Leach-Bliley Act (GLBA) protects you. When you apply for a mortgage, your lender has to tell you exactly what it does with your personal information and why they share that information with other companies.

Most of the sharing of your information will be because of third parties that are needed to help close the loan. The lender has to share your personal information with the three credit bureaus to get your credit report, for instance. But they may also want to share your information with companies that have products you could be interested in. The lender must let you know if your information is being used for marketing or promotional purposes.

This document will also give you the option to limit the sharing your lender actually does. You should see a phone number or a website (or maybe a mailing address) where you can opt out of your information being shared for marketing purposes.

Properly Store or Shred Information When Mortgage is Complete

Ask what happens to your mortgage documents when your mortgage is complete. Are they stored securely?  For how long? Are they shredded?

If you have any questions about how your information is used, stored, or disposed of, don’t hesitate to ask. The lender should be happy to tell you how your information is used, shared, and stored.

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