HELOC fraudsters have a scam that allows them to withdraw money from a homeowners HELOC without any notification going to the borrower. If you don’t stay on top of your account, months could go by without any indication of foul play.

The Tri-State Defender reports:

“Stolen customer identification information is being used to compromise Home Equity Lines of Credit (HELOC) accounts. To facilitate this scheme, perpetrators pose as customers to establish HELOC Internet account services and manipulate customer account verification processes, including rerouting telephone calls, forging signatures, using passwords, and reciting recent account history. For example, a perpetrator uses the account holder identification information to contact a financial institution and request an advance of funds on a HELOC account.”

If you believe that your HELOC has been compromised, call your bank immediately.

See Also:

Feds Crack HELOC Fraud Ring

Home Equity Line Thieves

CNBC reports:

“The FBI says HELOC thieves typically use stolen identification to apply online for a line of credit in your name. Then they instruct the bank to wire the funds to their accounts, providing their own contact information in place of yours. That way, the bank unwittingly contacts the thief to verify the electronic funds transfer.

Although the FBI does not track the dollar amount lost each year to mortgage fraud, incidents reported by financial institutions jumped a whopping 31 percent (from 35,617 to 46,717) in fiscal 2007, over the previous year. The sudden spike in HELOC fraud prompted the Mortgage Asset Research Institute, a Virginia-based organization that tracks mortgage fraud, to add identity theft as a category to track.”

According to the article, many experts believe that the shift to home equity fraud has happened because it is now more difficult for identity thieves to take out subprime loans in the name of less credit-worthy borrowers.

Protect yourself from home equity fraud by checking your credit report regularly. Everyone is entitled to see a copy of their report annually at no cost.

See Also:

New Program Detects HELOC Application Fraud

HELOC Identity Theft Scams

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.

See Also:

Answers to Common HELOC Questions