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 account numbers and balances.
For self-employed applicants, the disclosure is even more probing. Loan officers typically demand not only actual tax returns for the past couple of years, but the tax filings of your business and details about your major assets -- stocks, real estate, partnerships.
But 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 This is true even for applications withdrawn or rejected.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-size mortgage brokers or local lenders traditionally haven't harvested application data for sale to third-party marketers, according to mortgage industry experts, because of the costs and hassles of electronic imaging and storage that are necessary to do so. But with more applications submitted electronically or via the Internet, the door is opening fast to cost-efficient harvesting, even by small-scale firms.
