'Big Brother' Watching Loan Applications

by Broderick Perkins DeadlineNews.Com Notice your mortgage lender paying closer attention to your personal identification when you apply for a mortgage or home equity line of credit? It's a terror check. A provision of the federal USA Patriot Act of 2001 took effect last year and it requires banks and trust companies, savings associations, credit unions, securities brokers and dealers, mutual funds, futures commission merchants, and futures introducing brokers to be certain to verify your identity when you open a new account. Spawned by the terrorist attacks of Sept. 11, 2001, the Patriot Act authorizes the federal government to scrutinize your personal identification in many ways. It's the same law that gives federal agents the right to search your library records, monitor which Web sites you visit and make you remove your shoes before boarding a commercial plane. Under Section 326, the law is also triggered when you apply for money secured by your home -- unless you use a pawn shop, casino or money-by-wire office to finance the deal. Those establishments could be included in the next round of rules, but are not now included. Covered financial institutions must request proof of your name, address, date of birth and Social Security number when you apply for a mortgage or home equity line of credit -- even if you are long time customer, but are opening a new account. Financial institutions must also compare your name against a government list of known or suspected terrorists. You may not even notice the stepped up surveillance, because lenders have been eying your information more closely in recent years looking for signs of identity theft and fraud. Lenders have always had a vested interest in knowing who you really are. Now, the financial institution must have in place certain procedures to verify your identity within a reasonable period of time. That could mean an unexpected request to see your driver's license, passport, even certified birth certificate and your Social Security card. Financial institutions do have some flexibility to implement procedures to verify identity in ways other than that may be appropriate to their individual circumstances. Copyright © 2004 DeadlineNews.Com -- Broderick Perkins, is executive editor of San Jose, CA-based DeadlineNews.Com, an editorial content and consulting firm. Perkins has been a consumer and real estate journalist for more than 25 years.