Victim Of ID Theft? How To Fight Back

Having your identity stolen can bring financial devastation quickly and may have long-term effects that can make your life miserable. So let's first address how to avoid ID theft in the first place:

According to the Federal Trade Commission skilled thieves use several methods to obtain your personal data:



"How identity thieves get your personal information:
-They get information from businesses or other institutions by:
-stealing records or information while they're on the job
-bribing an employee who has access to these records
-hacking these records
-conning information out of employees
-They may steal your mail, including bank and credit card statements, credit card offers, new checks, and tax information.
-They may rummage through your trash, the trash of businesses, or public trash dumps in a practice known as "dumpster diving."
-They may get your credit reports by abusing their employer's authorized access to them, or by posing as a landlord, employer, or someone else who may have a legal right to access your report.
-They may steal your credit or debit card numbers by capturing the information in a data storage device in a practice known as "skimming." They may swipe your card for an actual purchase, or attach the device to an ATM machine where you may enter or swipe your card.
-They may steal your wallet or purse.
-They may complete a "change of address form" to divert your mail to another location.
-They may steal personal information they find in your home.
-They may steal personal information from you through email or phone by posing as legitimate companies and claiming that you have a problem with your account. This practice is known as "phishing" online, or pretexting by phone.

How identity thieves use your personal information:
-They may call your credit card issuer to change the billing address on your credit card account. The imposter then runs up charges on your account. Because your bills are being sent to a different address, it may be some time before you realize there's a problem.
-They may open new credit card accounts in your name. When they use the credit cards and don't pay the bills, the delinquent accounts are reported on your credit report.
-They may establish phone or wireless service in your name.
-They may open a bank account in your name and write bad checks on that account.
-They may counterfeit checks or credit or debit cards, or authorize electronic transfers in your name, and drain your bank account.
-They may file for bankruptcy under your name to avoid paying debts they've incurred under your name, or to avoid eviction.
-They may buy a car by taking out an auto loan in your name.
-They may get identification such as a driver's license issued with their picture, in your name.
-They may get a job or file fraudulent tax returns in your name.
-They may give your name to the police during an arrest. If they don't show up for their court date, a warrant for arrest is issued in your name."

Steps You Need To Take Immediately:

"1. Place a fraud alert on your credit reports, and review your credit reports.
Fraud alerts can help prevent an identity thief from opening any more accounts in your name. Contact the toll-free fraud number of any of the three consumer reporting companies below to place a fraud alert on your credit report. You only need to contact one of the three companies to place an alert. The company you call is required to contact the other two, which will place an alert on their versions of your report, too.
Equifax: 1-800-525-6285; www.equifax.com; P.O. Box 740241, Atlanta, GA 30374- 0241
Experian: 1-888-EXPERIAN (397-3742); http://www.experian.com/; P.O. Box 9532, Allen, TX 75013
TransUnion: 1-800-680-7289; http://www.transunion.com/; Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92834-6790"

"2. Close the accounts that you know, or believe, have been tampered with or opened fraudulently.
Call and speak with someone in the security or fraud department of each company. Follow up in writing, and include copies (NOT originals) of supporting documents. It's important to notify credit card companies and banks in writing. Send your letters by certified mail, return receipt requested, so you can document what the company received and when. Keep a file of your correspondence and enclosures."

"3. File a report with your local police or the police in the community where the identity theft took place.
Then, get a copy of the police report or at the very least, the number of the report. It can help you deal with creditors who need proof of the crime. If the police are reluctant to take your report, ask to file a "Miscellaneous Incidents" report, or try another jurisdiction, like your state police. You also can check with your state Attorney General's office to find out if state law requires the police to take reports for identity theft. Check the Blue Pages of your telephone directory for the phone number or check http://www.naag.org/ for a list of state Attorneys General.

4. File a complaint with the Federal Trade Commission.
By sharing your identity theft complaint with the FTC, you will provide important information that can help law enforcement officials across the nation track down identity thieves and stop them. The FTC can refer victims' complaints to other government agencies and companies for further action, as well as investigate companies for violations of laws the agency enforces.
You can file a complaint online at www.consumer.gov/idtheft. If you don't have Internet access, call the FTC's Identity Theft Hotline, toll-free: 1-877-IDTHEFT (438-4338); TTY: 1-866-653- 4261; or write: Identity Theft Clearinghouse, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580.

Be sure to call the Hotline to update your complaint if you have any additional information or problems."

For further details click on the link for the Federal Trade Commission near the top of this story.

-Bill Burniece

Another Day Another Foreclosure

The Denver Post reported today that Colorado is leading the country in the ratio of foreclosures.

"One out of every 339 homes in the state was in some stage of foreclosure during March, according to RealtyTrac, an online provider of foreclosure listings."

If Colorado homeowners are at less risk for a 'negative equity' situation here, as we discussed yesterday, then what is going on here?

"We look at foreclosures as a lagging indicator. It usually says something else bad has happened," said Rick Sharga, a vice president at RealtyTrac in Irvine, Calif. Some of those bad things are evident in Colorado - large job losses, home construction that has outstripped demand and the heavy use of mortgages where payments move higher as interest rates rise.

Colorado suffered heavy job losses in 2002 and 2003, and although job growth has returned, many households still may be struggling to stay current. Home construction has outrun population growth in some counties, keeping a cap on price gains.

Borrowers here also lead the nation in their reliance on adjustable-rate and interest-only mortgages. Payments on those loans have risen as interest rates have ticked higher. "

As we've discussed before, many factors play into foreclosure scenarios. In my opinion, the biggest factor in the Colorado market is the use of these adjustable rate (ARM) loans - especially what we call 'sub-prime' ARM loans or loans with higher interest rates given to those with bumpy credit. The problem is that most sub-prime borrowers are never taught how to improve their credit situation while they are in their present loan - leading to another high-interest loan with an even higher payment. It is a never-ending cycle that puts borrowers at risk to default and lose their home.

"Foreclosures, like a funnel cloud, tend to create their own downward spiral once they get started, said Lori Strange, director of planning and resource development at the Adams County Housing Authority in Commerce City."

"Peter Cross, housing administrator with the Arapahoe County Housing Authority, points a finger at mortgage brokers, who are unlicensed in Colorado.

'People are not getting the best information and the best deal for their families,' he said.

Cross said he recently counseled a couple who refinanced out of a reasonable fixed-rate traditional mortgage and into a one-year adjustable rate mortgage that they couldn't keep up with."

Peter makes such a good point here. Since Colorado mortgage brokers are still unlicensed, it is so important to find a qualified, reputable loan professional to avoid being given bad advice that leads to financial disaster.

-Bill Burniece

Don't Let Your High-Interest ARM Cost You A Leg Too...
Or Your Home

There is a growing problem in our country's housing market and that is the problem of 'negative equity'. That is when you owe more than your home is worth.

According to Liz Pulliam Weston this week with MSN Money:

"Many of these homeowners may soon face a "can't pay, can't sell, can't refi" situation that could lead them to lose their homes.

Consider:

-Nearly one in 10 households with a mortgage had zero or negative equity in their homes as of September 2005, according to First American Real Estate Solutions, an arm of title-insurance company First American Corp. The study of 26 million homes in 36 states and the District of Columbia found that one in 20 home borrowers was upside-down by 10% or more.

-The situation is even grimmer for recent borrowers. Of those who bought or refinanced homes in 2005, 29% had zero or negative equity, and 15.2% were underwater by 10% or more.

-Interest rates on about a quarter of all mortgage loans outstanding, or $2 trillion, are scheduled to reset this year and next, according to Economy.com. Homeowners who opted for extremely low teaser rates in recent years could see their payments eventually double, said Christopher Cagan, First American's director of research and analytics.

-Defaults and foreclosures are already on the rise, thanks in part to higher interest rates, cooling real-estate markets and overextended borrowers. Nationally, 117,259 properties entered some stage of foreclosure in February, according to foreclosure-monitoring firm RealtyTrac, a figure that's up 68% from February 2005."

Now don't freak too badly. Here in Colorado our housing market has appreciated at single-digit levels not double-digits like in other areas of the country. People living in areas of California, Florida, and Arizona may face home depreciation which could lead to a negative equity situation.

"Submerged

Any homeowner with negative equity is at risk of foreclosure if hit with a job loss, divorce, death or other catastrophic event. But homeowners with no equity and adjustable-rate mortgages face additional risks from the loans themselves, since their payments could rise 50% or more in coming years as interest rates reset to higher levels.

In addition, borrowers with adjustable-rate mortgages are more than twice as likely to be underwater on their loans as those with fixed-rate mortgages, Cagan found.

Borrowers who chose ultra-low teaser rates of 1% to 2% in the last couple of years could be among those most at risk, Cagan said. One in five such borrowers who took out loans in 2004 and 2005 was underwater as of September. These borrowers face the sharpest payment increases as their loans reset to market rates.

A 1% teaser rate on a $300,000 mortgage that rose to a market rate of 6%, for example, would increase a family's monthly payment by 86%, from $965 to $1,799 a month. If the old payment represented 30% of a family's gross income, the new payment would represent over 55% -- a squeeze that few families could endure for long, Cagan said.

But even borrowers who opted for more-conventional loans could face unaffordable increases. The pressure on borrowers' finances will be so intense, Cagan said, that many will lose their homes. Cagan predicted that one in eight homeowners with adjustable-rate mortgages that originated in 2004 or 2005 eventually could default."

If you feel you are at risk for a negative equity scenario there are some things you can do:

"Avoid risky loans. Low teaser rates may sound appealing, but you may not be able to survive the sticker shock when the rates eventually adjust upward. If you're considering an adjustable-rate loan, check to see how far your payments could rise in the future. Don't rely on the assurances of a lender or broker that a loan won't hit its caps --nobody has a crystal ball.

Consider locking in. Fixed-rate loans have moved up from their generational lows, but they're still low in historical terms.

Protect your equity. Now is not the time to be draining your home's value through reckless home-equity borrowing. Aim to keep an equity cushion of at least 20%.

Control your debt and protect your credit. The borrowers who will have the most flexibility to refinance are the ones who keep their overall debt loads down and who maintain sterling credit. "

If you are presently stuck in a high-rate ARM loan please read my FREE REPORT by clicking on the drop down green box above -

Bill Burniece