HELOC borrowers may soon have a new line of protection against identity theft. A law coming into effect later this year requires banks to add security measures fighting against identity thieves. Soon all banks offering home equity line of credit loans will need to have an identity protection program.

The Chicago Tribune reports:

“One of the schemes noted in a recent FBI report has the perpetrator establishing a line of credit in his name based on the equity in your property and then draining it…

According to the Secret Service, which prosecutes federal cases, business records generally are what yield the private information. That’s why Congress last fall passed the so-called “red flag” rider to the Fair and Accurate Credit Transaction Act of 2003.

The provision, which takes effect Nov. 1, requires financial institutions, creditors and anyone else who handles your personal documents to develop a program to prevent ID theft.”

Although the new law looks promising, HELOC borrowers should continue to stay alert. HELOC identity theft can become a huge issue resulting in the loss of money and a declining credit score. It may take a lot of time and effort to resolve. Your best bet: monitor your credit report for irregularities and notify your lender immediately when you notice anything suspicious.

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Answers to Common HELOC Questions

Tags | Heloc, home equity line of credit, identity theft