A home equity line of credit (HELOC) is essentially a loan where the lender agrees to provide a specified amount to a borrower to be paid off within an agreed period where the borrower’s equity in their home is used as the collateral. This is a useful though often dangerous tool for homeowners who feel cash strapped and are forced to put the roof over their head at risk of being compromised should they be unable to keep up with the agreements of a HELOC. And following the recent Great Recession and now the rebound of housing prices across the country, many homeowners are taking advantage of these conditions to get the msaximum leverage on a HELOC because of their home’s increased value.
However, the current economic climate is not only beneficial for homeowners, but also is creating a new market for identity theft, as criminals are targeting homeowners who may not be doing a great job at credit report monitoring. In the FBI’s annual mortgage fraud report, the government body identified HELOC fraud as an “emerging scheme” that is looking to threaten the already vulnerable mortage and housing market.
According to FBI data, individuals with large home equity and the most lax financial monitoring are the most at risk.
“In the recent mortgage bust by the FBI, these are all people who actually work in the industry; this is what I could classify as an inside job. An outsider would have to find a less-than-scrupulous Realtor, a less-than-scrupulous mortgage broker, and probably have to come up with somebody to do the inspections and all the other things,” Jay Foley, an identity theft expert from San Diego, told BankRate.com.
You need to be vigilant about credit monitoring if you have a lot to lose, especially when it involves the roof over your head.