Are Mortgage Brokers Ready For Red Flag? |
| Date Added: May 31, 2009 08:27:13 PM |
| Author: Ryan Andrews |
| Category: Mortgage USA |
| Mortgage brokers need to very quickly take a hard look at the FACTA Red Flag Compliance Rules that will take affect on August 1, 2009. I am amazed at how many mortgage brokers I talk to around the country that are not aware of, or prepared for these new federal regulations that the FTC has mandated. The following is a quick overview that might help address many of the questions that are asked when I talk to owners of mortgage companies as they face down this deadline for compliance. So What is Red Flag? The Red Flag regulations were established by the Federal Trade Commission, along with other regulatory agencies in order to implement the identity theft prevention rules contained in the Fair and Accurate Credit Transactions Act of 2003, better known to us as FACTA. The primary purpose of the Red Flag Rules are to protect against fraud and identity theft by mandating the development and implementation of a written prevention plan by every financial institution as defined in the regulations. Why Mortgage Brokers? So why are mortgage brokers required to comply with these new Red Flag Rules? Well, as a mortgage broker you collect, store and share non-public information from borrowers, such as Social Security numbers, credit reports and private banking information. Even though a mortgage broker is not normally considered a financial institution like a bank or other lender you must still comply with Red Flag because mortgage brokers fall into the category of “other creditor” as defined by this federal law. What Does Red Flag Require? Per the regulations set forth in the Red Flag rules, every mortgage broker is mandated to implement the following, prior to the August 1, 2009 deadline: Perform a risk assessment of company, identifying all covered accounts. Identify relevant red flags that may signal identity theft. Implement appropriate detection and response procedures. Develop a comprehensive written Identity Theft Prevention Program Develop employee education and training to identity theft prevention Obtain ownership / senior management approval for the program. Review program, update as necessary and report to ownership annually. What Are the Consequences of Not Complying? Non-compliance of the Red Flag regulations not only increases the potential risk of fraud or identity theft which can impact your borrowers, your lender relationships and your businesses reputation, but it also exposes your business to significant federal and state fines, penalties and other potential litigation! Mortgage Broker Compliance To help mortgage brokers better understand what compliance to Red Flag will require, Small Business Compliance Solutions has put together a 5 minute video Red Flag Essentials for Mortgage Brokers to give an overview of Red Flag and how you can develop an effective identity theft prevention plan without spending hundreds of hours and thousands of dollars. They also have developed a comprehensive mortgage broker compliance toolkit to guide your company through the compliance process. To learn more and watch this informative video.. Click Here To learn more about Small Business Compliance Solutions, please visit our website at www.bizcompliancesolutions.com |
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