Copyright 1999 Chicago Sun-Times, Inc.
Chicago
Sun-Times
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June 18, 1999, FRIDAY, Late Sports
Final Edition
SECTION: HOMELIFE; Pg. 6; NP
LENGTH: 776 words
HEADLINE:
Loan information not always protected
BYLINE: BY
KENNETH R. HARNEY
DATELINE: WASHINGTON
BODY:
Have you ever wondered what happens to the
highly personal information you're required to submit when you apply for a home
mortgage?
What happens to your income disclosures, tax return data, bank
account numbers and balances, employment history, credit-card payment histories
and other confidential information once the loan goes to settlement?
Who
has access to it, and for how long? Can it be passed along or sold to
telemarketers and database compilers?
Questions like these are at the
core of an important debate under way this month in Congress over your financial
privacy rights. Though the issue on Capitol Hill is focused on what banks can or
cannot do with your account information, the subject of mortgage application and
payment data held by nonbank lenders or brokers is lurking just below the
surface. That's because of all the disclosures most Americans ever render
voluntarily, nothing is more intrusive and comprehensive than a mortgage
application. It's the financial equivalent of a strip search.
From your
application, loan brokers or lenders know you intimately: How much you've made
for the past couple of years, where you work, how frequently you've changed
jobs, how much tax you've paid, your Social Security number, banking and
credit-card numbers and balances.
For self-employed applicants, the
disclosure is even more probing. Loan officers typically demand not only actual
tax returns for the last couple of years, but the tax filings of your business
and details about your major assets -- stocks, real estate,
partnerships.
What happens to this extremely personal information that
marketing experts consider the richest, most concentrated lode they can obtain
on most consumers? You might be disturbed to learn that no federal statutes
prevent mortgage brokers or independent mortgage companies from storing your
income, employment or personal assets data electronically and selling it to
anyone who wants it.
This is true even for applications withdrawn or
rejected.
As a practical matter, small- to medium-sized mortgage brokers
or local lenders traditionally haven't harvested application data for sale to
third-party marketers. But with more applications submitted electronically or
via the Internet, the door is opening fast to cost-efficient harvesting, even by
small-scale companies.
Large mortgage companies, on the other hand,
often have sophisticated systems to store and use every relevant bit of data
about you from the mortgage application and subsequent monthly payment
histories. The very largest in the field, such as Countrywide Home Loans and
Norwest Mortgage Corp., not only use their computer databases to target-market
other products they sell, but have strict privacy policies to control who gains
access to your data.
California-based Countrywide, which originated $ 88
billion in new home mortgages last year, maintains a state-of-the-art,
electronic data warehousing operation on its 2.2 million active customers. It
also has adopted key internal policies on customer privacy, according to Andy
Bielanski, the company's managing director for marketing.
First,
Countrywide does not provide its data to commercial interests outside the
corporation. Second, it retains no application data from applicants who've been
rejected or whose loans didn't go to closing. And finally, the company offers
every new loan customer the right to "opt out" -- that is, to keep
their personal data out of the reach of Countrywide affiliates.
The
sales approach to customers can be "tightly controlled and
customized" -- typically through the monthly mortgage statement
mailing rather than telemarketing, he said.
Iowa-based Norwest Mortgage,
the highest-volume home loan originator last year with $ 109 billion, also keeps
its huge customer database under tight controls, and never sells information to
third-party marketers, according to spokesman Dan Frahm.
In a bellwether
suit earlier this month, the Minnesota attorney general's office charged U.S.
Bancorp with sharing customer credit-card-account data with third-party
telemarketers for commissions. U.S. Bancorp denied any wrongdoing. But the
red-hot financial privacy controversy pushed giant Bank of America last week to
announce new policies prohibiting sharing of customer account information with
virtually anyone outside the bank.
Ask prospective lenders about their
privacy policies before submitting an application. Look for clear privacy
statements on Web sites. And ask about "opt-out": If you don't like being
pitched, yank your name out of the game.
Kenneth R. Harney writes for
the Washington Post Writers Group.
LOAD-DATE: June 18,
1999 
