You’ve gone to your lender and been approved for a home mortgage. You’ve found the home of your dreams. But just when you are about to close, the lender says you are no longer approved. What happened?
Since the infamous “mortgage meltdown” a few years back, lenders as well as industry regulations have gotten much stricter. The latest tightening of the screws comes from Fannie Mae. The mortgage titan’s Loan Quality Initiative, which went into effect June 1, requires lenders to track “changes in borrower circumstances” between application and closing. While these rules aren’t new, Fannie is enforcing them more vigorously.
The new rules simply want to ensure the new home loans are deemed “low risk” for default or buyback. Basically, lenders want to be assured that this is the type of borrower that has the ability to repay this loan in full. With the increase in regulation and scrutiny over any changes, even seemingly small changes can implode your pending mortgage.
Following are three things borrowers can do to mess up their next mortgage closing.
Get a new credit card or auto loan
Get a new credit card or auto loan, and you could find yourself no longer approved for that mortgage loan.
Lenders have long admonished mortgage applicants to avoid getting new credit cards and auto loans while home loans are in underwriting. Fannie’s Loan Quality Initiative adds urgency to this request.
For example, picture a borrower who gets a car loan a week before closing on the mortgage. The mortgage lender doesn’t know about it. Later, the borrower misses a couple of mortgage payments.
Fannie Mae can look back, discover the undisclosed auto loan and make the lender buy back the bad mortgage. That’s a money loser for the lender.
So at the eleventh hour, most lenders check credit for new accounts.
Even merely opening an account — without charging anything to it — can be a mistake.
Charge up credit cards
Charging up credit cards with thousands of dollars’ worth of appliances, tools and yard equipment is another surefire way to muck up a closing. It’s best to leave those cards alone.
Don’t increase your credit card balances at all. Mortgage approval is based partly on debt-to-income ratio. The lender looks at the borrower’s minimum monthly debt payments and compares them to income. If the ratio of debt payments to income is too high, the borrower could be turned down for a mortgage.
Fannie encourages mortgage lenders to recalculate debt-to-income ratios just before closing. If a spending spree sends the debt-to-income ratio too high, the mortgage could be doomed. For this reason, borrowers should wait until after closing the mortgage before buying furniture, a refrigerator or a lawn mower on credit.
Changing jobs is another good way to derail a mortgage before closing. Other potential deal-breakers include staying with a current employer, but switching from a salaried position to one where primary income comes from commissions or bonuses.
Any slight change in income could cause you to not qualify.
The main thing to remember is, keep everything exactly the same as the day you got approved. No new car. Don’t apply for a credit card so you can get brand new furniture. And definitely don’t change your job.
Today, February 14th is the most romantic day of the year. In fact over 2.2 million people will get married today and millions more will become engaged. Getting married is a wonderful moment in life, but it can affect many things, including your credit. So in the spirit of the holiday that love built, we’ve decided to debunk some credit myths associated with marriage, and its effect on credit.
Our Credit Reports MERGE TOGETHER When We Get Married
Many people mistakenly believe that getting married means that your credit also gets hitched. That’s not true because you never share, inherit, or merge credit histories. Marriage has no affect on your credit score even if you take your spouse’s last name or live in a community property state. Everyone has their own credit report and credit scores.
If you have joint account—such as a credit card, car loan, or mortgage—with a spouse (or anyone else) the account history appears on both of your credit reports. But if you have a credit account in your name only, it never appears on your spouse’s credit file.
If My Spouse Has BAD Credit So Do I
Marrying someone with bad credit doesn’t affect your credit (unless your name is added as a co-owner on a delinquent credit account), but it can hinder your ability to get credit as a couple.
For instance, if you apply for a mortgage or car loan that requires both of your incomes to qualify, the lender will review both of your credit histories. Having a spouse with poor credit could cause your joint application to be declined or require you to pay a relatively high interest rate on a loan.
My Credit History Is ERASED When I Change My Last Name
If you change your name after you are married and report this change to your creditors, you will see some updates to your existing credit reports. Along with your old name, your new name will be listed as an alias. You will not have to start from scratch with a new credit history. There may be a few inaccuracies on your report as this transition takes place, so it’s important to check your credit report frequently during this period.
I Will AUTOMATICALLY Become A Joint User On My Spouse’s Accounts
Marriage doesn’t automatically make you an authorized user or co-signer on your spouse’s accounts. If you wish to be added to your spouse’s credit cards, you will need to call the creditors with this request. Please note that being added as an authorized user will not result in the account being factored into your credit score. As for loan accounts, becoming a co-signer for a loan usually requires refinancing.
Before getting married, make sure there is complete financial transparency. Understand your partner’s debt situation and credit history so you address any negative issues and increase your chances of living happily ever after.
Establishing a good credit history has never been as important as it is today. It’s not just that you’ll need good credit to get decent rates when you’re ready to buy a home or a car. Your credit history can determine whether you get a good job, a decent apartment or reasonable rates on insurance. One seemingly minor misstep — a late payment, maxing out your credit cards, applying for too much credit at once — can haunt you for years. If you’re just starting out, you have a once-in-a-lifetime opportunity to build a credit history the right way. Here’s what to do, and what to avoid.
Check your credit report
You’ll first want to see what, if anything, lenders are saying about you. That kind of information is contained in your credit report at each of the three major bureaus: Equifax, Experian and Trans Union. Credit reports are used to create your credit score, the three-digit number lenders typically use to gauge your creditworthiness. Lenders also may look at the report itself, as may the landlords, employers and insurance companies who use credit to evaluate applicants.
Establish checking and savings accounts
Lenders see these accounts as signs of stability. Opening checking and savings account is also one of the few things you can do as a minor to start building a financial history. While you can’t get a credit card in your own name until you’re 18 and can be legally held to a contract, many banks have no problem letting you open an account. Many, but not all. If your bank balks, you need to either look around for another bank or consider opening a joint account with an adult.
Understand the basics of credit scoring
You need to know that the two most important factors in your score are:
- Whether you pay your bills on time.
- How much of your available credit you actually use.
It’s essential that you pay all your bills on time, all the time. Set up automatic payments or reminder systems so that you’re never, ever late. All it takes is a single missed payment to trash your credit score — and it can take seven years for the effects to completely disappear. You also don’t want to max out any of your credit cards, or even get close. Keeping your credit use to less than 30% of your credit limits will help you get the best possible credit score. Finally, you don’t need to carry a balance on a credit card to have a good credit score. Paying your bill off in full is the best way to keep your finances in shape and build your credit at the same time.
Apply for credit while you’re a college student
It turns out that there’s no easier time to get a card than while you’re a college student, but you must proceed with caution. Look for a card with a low or nonexistent annual fee and low interest rates. For now, just get one: Opening a slew of credit accounts in a short period of time can make you look like a risky customer.
Apply for a secured credit card
If you can’t get a regular credit card, apply for the secured version. These require you to deposit money with a lender; your credit limit is usually equal to the deposit. You’ll want to screen your card issuer carefully. Some charge outrageous application or annual fees and punitively high interest rates. Your credit union, if you have one, is a good place to start looking for a secured card.
Ideally, the card you pick would:
- Have no application fee and a low annual fee
- Convert to a regular, unsecured credit card after 12 to 18 months of on-time payments
- Be reported to all three credit bureaus – If it doesn’t, the card won’t help build your credit history.
Get a finance company card
Gas companies and department stores that issue charge cards typically use finance companies, rather than major banks, to handle the transactions. These cards don’t do as much for your credit score as a bank card (Visa, MasterCard, Discover, etc.), but they’re usually easier to get.
Get an installment loan
To get the best credit score, you need a mix of different credit types including revolving accounts (credit cards, lines of credit) and installment accounts (auto loans, personal loans, mortgages). Once you’ve had and used plastic responsibly for a year or so, consider applying for a small installment loan from your credit union or bank. Keeping the duration short — no more than a year or two — will help you build credit while limiting the amount of interest you pay.
Use revolving accounts lightly but regularly
For a credit score to be generated, you have to have had credit for at least six months, with at least one of your accounts updated in the past six months. Using your cards regularly should ensure that your report is updated regularly. It also will keep the lender interested in you as a customer. If you get a credit card and never use it, the issuer could cancel the account.
Just remember the credit tips mentioned earlier:
- Don’t charge more than 30% of the card’s limit.
- Don’t charge more than you can pay off in a month. As mentioned earlier, you don’t have to pay interest on a credit card to get a good credit score, and it’s a smart financial habit to pay off your credit cards in full each month.
- Make sure you pay the bill, and all your other bills, on time.
By Lesley Fair
Today is Data Privacy Day. You’ve educated your staff about limiting access to sensitive information, locking up confidential paperwork, and securing the network. But Latanya Sweeney, the FTC’s new Chief Technologist, just clued us in about a potential security vulnerability you, your HR team, and your web master can do something right now to correct.
It can happen on any site, but it’s common for universities, research institutions, non-profit organizations, and even tech companies to include links to the CVs of professors, scientists, executives, and other staff. For the most part, those resumes list scholarly publications and academic interests. But scroll through all that high-minded content and you may get to the down-and-dirty stuff identity thieves live for: dates of birth, home addresses, and even Social Security numbers.
On this topic – and a whole lot of others – when Latanya Sweeney talks, we listen. And here’s why. Yes, Latanya is an Ivy League Big Brain Academic. (And we mean that in the nice way, of course.) But she also has the tech credentials to speak geek with the very best of ‘em. And if that weren’t enough, for years she’s been a leading thinker about how privacy and technology policy affects consumers.
Here are some steps you can take immediately to help plug the potential gap Latanya is warning about:
HR professionals: Survey the faculty or management pages of your site and have your web master take down any CVs or resumes that include the kind of personal information ID thieves could exploit. Explain to your colleagues why it’s a risk they shouldn’t be taking. As new staff members are hired, implement a policy not to upload documents that include sensitive data. Executives and staff will appreciate that you’re looking out for them – and for the reputation of your institution or business.
Academics and professionals: If the CV or resume posted on your employer’s site or your personal homepage includes your Social Security number, date of birth, or other personal information, take the page down. If it’s a link to a .pdf, revise the document to get rid of the data crooks could exploit. Pass the word to your colleagues, mention it in your next staff meeting, or print this page and post it where they’ll see it.
Job applicants, graduate students, and others with an interest in promoting their credentials online: Be savvy about what you include on your CV, resume, or webpage. There’s just no reason for posting your Social Security number or date of birth where it’s accessible to some random web surfer. And your home address? These days, isn’t it more likely legitimate employers would contact you via email?
Those steps can reduce your risk from here on in, but what can you do if your personal information is already out there? Go to annualcreditreport.com and exercise your right to one free copy of your credit report from each of the three major national credit reporting companies. Stagger your requests and monitor your report once every four months.
The H.A.R.P. (Home Affordable Refinance Program) program which enables struggling homeowners to refinance their mortgage, whose home value has declined, has extended its application deadline to December 31st 2015.
H.A.R.P. is a federal-government program designed to help homeowners refinance at today’s low mortgage rates even if they owe as much or more on their mortgage than their home is worth. The goal is to allow borrowers to refinance into a more affordable or stable mortgage. Most homeowners eligible for a HARP refinance are able to reduce their monthly payment by lowering the interest rate on their mortgage. Other homeowners can use HARP to convert their adjustable mortgage into a more predictable, fixed-loan program. You also have the option to do a HARP refinance for a shorter-term loan, which will help you build equity in your home at a faster pace.
To be eligible for a HARP refinance homeowners must meet the following criteria:
- The loan must be owned or guaranteed by Fannie Mae or Freddie Mac.
- The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
- The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
- The current loan-to-value (LTV) ratio must be greater than 80 percent.
- The borrower must be current on their mortgage payments with no late payments in the last six months and no more than one late payment in the last 12 months.
Borrowers should contact their existing lender or any other mortgage lender offering HARP refinances. For more information, please go to http://harpprogram.org/
The new CFPB New Mortgage Rules recently took effect on January 10th 2014.
You’ve probably heard several things about how this is effecting banking and lending institutions, but you may still not be sure what this means to the consumer.
First let’s take a brief look back in the not so distant past…In 2008, the rise in home foreclosures was viewed by many as the result of sub-standard mortgage lending practices. Subsequently, Congress passed the Dodd-Frank Act in 2010, which created the CFPB and set forth a number of financial industry regulations aimed at protecting consumers, including some pertaining to mortgage lending. In January 2013, the CFPB issued mortgage rules that implement the mortgage provisions set forth by Congress under the act.
The new rules which took effect on January 10th broaden coverage of existing ability-to-repay rules, which require a lender to make a reasonable, good faith determination that a consumer has the ability to repay a loan. The rules extend coverage of the ability-to-repay rules to the majority of closed-end transactions secured by a dwelling (with certain exceptions). In addition, the rules set forth specific procedures a lender must follow when determining a borrower’s ability to repay a loan, including the consideration and verification of certain consumer information (e.g., income, employment status) and the calculation of the borrower’s monthly mortgage payment.
The rules also center on what are referred to as Qualified Mortgages. According to the Dodd-Frank Act, lenders that issue Qualified Mortgages will receive a presumption of compliance with ability-to-repay rules, thereby reducing their risk of challenge from a borrower for failing to satisfy ability-to-repay requirements.
The rules specify various requirements that a loan must meet in order for it to be considered a Qualified Mortgage, including:
- Limits on risky loan features (e.g., negative amortization or interest-only loans)
- Cap on a lender’s points and fees (3% of the loan amount)
- Certain underwriting requirements (e.g., 43% monthly debt-to-income ratio loan limit)
- The new mortgage rules were mainly put into place as a way to end irresponsible mortgage lending and ensure that borrowers will only be able to obtain a mortgage loan that they can afford to pay back.
Proponents view the rules as welcome industry safeguards that simply mirror responsible mortgage lending practices that are already in place. However, some mortgage-industry experts fear that the new rules may end up making obtaining a mortgage loan more difficult than it has been in the past–especially for borrowers who have a high debt-to-income ratio. Borrowers may also find themselves burdened with the task of providing lenders with additional documentation that they may not have had to in the past.
But what does all this mean to you? The new mortgage rules mean you will have more information and more protection when you’re shopping for a loan, and while you own your home.
In the run-up to the housing crisis, some lenders made loans without checking a borrower’s income, assets, or debts. That turned out to be a pretty bad idea. And, when many borrowers couldn’t repay their loans, the economy took a devastating hit.
The CFPB new mortgage rules help protect consumers by requiring lenders to make a “good-faith, reasonable effort” to determine that you are likely to be able to repay your loan. That means the lender will check and verify your income, assets, debts, credit history, and other important financial information. And no more qualifying consumers based only on those initial “teaser” rates that trapped many new homebuyers.
Lenders who meet certain requirements called Qualified Mortgages–or QMs– are presumed to have made that good-faith, reasonable effort to check the applicant’s ability to repay. QMs have several characteristics that protect consumers.
First, QMs can’t have risky features like negative amortization or no-interest periods. Second, QMs are available with some exceptions to borrowers who have a monthly debt-to-income ratio of 43 percent or less, meaning that the total of their monthly mortgage payment, plus other fixed debts like car loans, is not more than 43 percent of their monthly gross income.
Most people taking out a mortgage now have a debt-to-income ratio of around 38%
Consumers will also have less to worry about when hiring someone to find a mortgage. Loan officers and mortgage brokers have to follow rules to protect consumers from certain conflicts of interest. That means anyone you pay to help you find a mortgage generally can’t also be paid by someone else. And the loan officer or mortgage broker can’t get paid more to put you into a loan that has a higher interest rate.
The new rules empower all consumers to get important more information about their mortgage. Consumers will now get a new periodic mortgage statement or coupon book that gives important information about monthly payments. If you have questions about your mortgage or you believe your servicer has made a mistake, the servicer is required to respond to your inquiries quickly.
If your financial situation changes and you are having trouble making your mortgage payments, servicers now have to reach-out under certain circumstances and send written information describing how you can apply for the options available to avoid foreclosure. During the housing crisis, mortgage servicers were often ill-prepared to help borrowers in trouble. Important paperwork was often lost and borrowers were frustrated by services who couldn’t give them accurate information about their options for avoiding foreclosure. Now your servicer has to ensure that employees assigned to help you will be able to answer your questions and important documentation won’t go missing.
You can think of all these changes as a “back to basics” moment for the mortgage market: no debt traps, surprises, or runarounds. And a market where if you run into trouble paying your mortgage, you will have a fair shot at all the options available to help you avoid foreclosure.
In light of the recent announcement from TARGET that in-store shoppers between November 27th and December 15th could have been victim to unauthorized access on their credit and debit cards, now is an appropriate time to revisit what consumers need to do after a credit breach.
The TARGET incident involved unauthorized access to consumers name, credit and/or debit number, the card’s expiration date, and the CVV (the 3 digit security code). This is quite a bit of information, that can easily lead to identity thieves duplicating a consumers credit/and or debit card, and start to rack up unauthorized charges.
Below are steps and recommendations that may help to protect you from potential misuse of your credit and debit information. You should remain vigilant for incidents of fraud and identity theft by regularly reviewing your account statements and monitoring free credit reports.
Step 1. Contact your credit/debit card holders of a potential breach
Step 2. Obtain a copy of your credit report to review for any suspicious activity. If you discover any suspicious or unusual activity on your accounts or suspect fraud, be sure to report it immediately to your financial institutions
You may also periodically obtain credit reports from each nationwide credit reporting agency. If you discover information on your credit report arising from a fraudulent transaction, you should request that the credit reporting agency delete that information from your credit report file. In addition, under federal law, you are entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting agencies. You may obtain a free copy of your credit report by going to www.AnnualCreditReport.com or by calling (877) 322-8228. You may contact the nationwide credit reporting agencies at:
P.O. Box 740241
Atlanta, GA 30374-0241
P.O. Box 9532
Allen, TX 75013
Transunion (Fraud Victim Assistance Division)
P.O. Box 6790
Fullerton, CA 92834-6790
Step 3. Add a fraud alert to your credit report file to help protect your credit information. A fraud alert can make it more difficult for someone to get credit in your name because it tells creditors to follow certain procedures to protect you, but it also may delay your ability to obtain credit. You may place a fraud alert in your file by calling just one of the three nationwide credit reporting agencies listed above. As soon as that agency processes your fraud alert, it will notify the other two agencies, which then must also place fraud alerts in your file.
Step 4. Place a Security Freeze on your credit report. This will prohibit a credit reporting agency from releasing information from your credit report without your prior written authorization.
If you have been a victim of identity theft and you provide the credit reporting agency with a valid police report, it cannot charge you to place, lift or remove a security freeze. In all other cases, a credit reporting agency may charge you up to $5.00 each to place, temporarily lift, or permanently remove a security freeze. To place a security freeze on your credit report, you must send a written request to each of the three major consumer reporting agencies listed above.
In order to request a security freeze, you will need to provide the following information:
- Your full name (including middle initial as well as Jr., Sr., II, III, etc.);
- Social Security number;
- Date of birth;
- If you have moved in the past five (5) years, the addresses where you have lived over the prior five years;
- Proof of current address (e.g., a current utility bill or telephone bill);
- A legible photocopy of a government issued identification card (e.g., state driver’s license or ID card or military identification);
- If you are a victim of identity theft, a copy of either the police report, investigative report, or complaint to a law enforcement agency concerning identity theft;
- If you are not a victim of identity theft, payment by check, money order, or credit card (Visa, MasterCard, American Express or Discover only). Do not send cash through the mail.
The credit reporting agencies have three (3) business days after receiving your request to place a security freeze on your credit report. The credit reporting agencies must also send written confirmation to you within five (5) business days and provide you with a unique personal identification number (PIN) or password, or both that can be used by you to authorize the removal or lifting of the security freeze.
To lift the security freeze in order to allow a specific entity or individual access to your credit report, you must call or send a written request to the credit reporting agencies by mail and include proper identification (name, address, and Social Security number) and the PIN number or password provided to you when you placed the security freeze, as well as the identities of those entities or individuals you would like to receive your credit report or the specific period of time you want the credit report available. The credit reporting agencies have three (3) business days after receiving your request to lift the security freeze for those identified entities or for the specified period of time
To remove the security freeze, you must send a written request to each of the three credit reporting agencies by mail and include proper identification (name, address, and Social Security number) and the PIN number or password provided to you when you placed the security freeze. The credit reporting agencies have three (3) business days after receiving your request to remove the security freeze.
Identity theft is the fastest growing white collar crime. The best defense against it is Knowledge. Educate yourself on protective practices to help ensure your credit and identity is kept safe and secure.
The prevalence of mortgage fraud is still a scary fact.
According to the FBI, 13 billion dollars were lost in fraudulent mortgage loans in 2012. Over 60% of mortgage fraud includes ID discrepancies and in most cases the fraudster uses a mixture of accurate and “borrowed” information. These crooks operate this way hoping that lenders will not check every bit of information and the loan will be approved.
Luckily, there are reports available to mortgage lending companies to combat this issue, and offer some protection. This can help preserve the bottom line.
Fannie Mae, Freddie Mac and the CFPB are continuously working to stay a step ahead of these people. In order for them to stay ahead of the game, they are constantly changing regulations. That makes it difficult for lenders to keep track of these constantly changing regulations. They are requiring that lenders have a rather robust process for assessing the quality during the loan origination.
A member of the board of directors for the National Consumer Reporting Association (NCRA) and Executive Vice President of Data Facts Inc, Julie Wink, explains it. “Fraud is a big issue in the lending world, and it isn’t going away anytime soon. Data Facts strives to offer our customers the solutions they need to close their mortgage loans. Our fraud products are an easy, cost effective way to minimize the risk of processing a fraudulent loan.
Tools from a third party vendor can help catch errors and/or identify intentionally fraudulent information. Lenders can utilize these reports to verify identity and other commonly misrepresented piece of information that lead to fraud. Lenders are able to compare loan application data to their origination, servicing, or other customer databases to identify issues such as multiple applications, occupancy concerns, or erroneous or fraudulent social security numbers. Data Facts offers “build your own” packages for customized reporting that flags suspicious reports and helps lenders stay in compliance.
Julie Wink sums it up: “Everyone in the mortgage industry must do their part to combat fraud. We are offering these products to assist our customers in reaching their goal of no fraudulent loans.
About Data Facts Inc
Since 1989, Data Facts has provided information you trust and rely on to make sound lending, hiring, and other business decisions. They have a reputation for providing premier lending solutions that include an Appraisal Platform, multiple Verifications Services, Flood Certifications, Fraud Solutions and Credit Reporting. These solutions ensure that lenders close more loans faster and easier than ever.
Data Facts has offices located throughout the United States and serves a wide variety of customers within the United States and Internationally. They are a 100% woman owned, diversified supplier and offer solutions that minimize risk and keep you in compliance.
As more and more people sign on to Facebook, Twitter, Pinterest, and the many other social media sites available, hiring professionals are becoming more tempted to take a peek at the information before hiring an applicant. Who can blame them? There is virtually a goldmine of potentially valuable information to be gleaned from a person’s profile, blog, photograph, or collection of tweets. Lending institutions could benefit greatly by knowing about a mortgage professional’s online presence up front.
However, this type of investigation is not without its risks. There is a sea of controversy swirling around about utilizing social media to screen job candidates, and whether or not a company should do it.
According to a survey recently by Careerbuilder, 37% of companies use social media to screen their applicants, and 11% of companies plan to use it in the near future. Social media allows hiring managers to gain unprecedented access to information about the applicant. They can discover negative aspects (vulgar language, bad grammar, illegal activities) and also positive information (charity work, good communication skills, awards received) with just a few clicks of a mouse. Banks and mortgage companies in particular could benefit from this type of information. Someone who will not represent the lending institution in a professional manner online could be detrimental to the business’s reputation and public persona. Just one faux pas by an employee can sometimes take a company years to recover!
However, there are drawbacks. A profile also may show information about a person’s race, age, religion, or disability; all of which are illegal to use in the hiring process. Once an employer sees this information, they cannot ‘unring the bell.’ Once you have it, there is no way to prove it had no bearing on the hiring process. Employers that use social media sites to make employment-related decisions without taking the time to implement them into their current hiring policy processes could be violating employment and privacy laws.
While it’s not illegal to look at a candidate’s social media footprint, it’s advisable to consider several matters before you hop on the internet to check out a potential employee.
Here are 7 steps to follow if your company decides to utilize social media in its pre-employment screening process:
1. Develop a clear policy. When planning to utilize social media in your hiring process, one of the most important steps is to have a policy. Set in place the sites that will be screened, and the information you will be trying to find. While positive and negative information may be uncovered about the candidate, the best practice is to look for relevant information related to their work. While you don’t really need to be privy to someone’s partying habits or the fact that they kissed a boy in the streets of New Orleans, you would need to know about unsavory behaviors like racial slurs, threats of violence, or misleading information about their work history or education background.
2. Get the applicant’s consent. It’s considered best practice to follow the same notice and disclosure policies as you normally would with any pre-employment screen. Advise the applicant that part of your company’s screening process entails checking their social media footprint, and gain their consent to do so.
3. Remember that consistency is the key. One of an employer’s most important defenses in a lawsuit is consistency within company policies. Social media screening policies should be written in black and white, and should specifically outline the sites screened and the information being sought. This policy needs to be applied to EVERY candidate. You can get yourself into trouble by using a ‘go with your gut’ strategy and screening only those people you feel may be hiding something. If the policy states you do not screen Twitter tweets because you feel they have no relevant information about job performance, don’t suddenly look at it if the candidate looks sneaky or has too many piercings.
4. Use a third party to perform the search. If the person conducting the hiring performs the social media search themselves, it is a given that they will eventually see information they should not use in the hiring process. Examples of this are a person’s age, race, religion, health condition, etc. Using a third party, independent researcher to perform the search will greatly reduce this risk. The researcher (which can be someone from outside the hiring department but still within the company OR a third party background screening company) should work from a list the hiring manager has pre-defined that they want to discover about the candidate. Upon completion, the researcher can return his findings, while omitting any information that is illegal to use in a hiring decision. This practice will ensure that the person or people making the hiring decision do not have access to protected information.
5. Do not friend the applicant or ask them for their passwords! Both actions are big No No’s and can bring on all kinds of trouble. When utilizing social media for screening purposes, view only public information. Do not ‘friend’ or ‘connect’ with the applicant so you can see additional, private information. And never ask the applicant for the passwords to their social media accounts. Most social media sites have privacy sections in their agreements for service that ban a user from sharing his login information. Additionally, several states have even gone so far as to already pass legislation banning companies from asking for individual’s passwords. This needs to be viewed as a big invasion of privacy and avoided at all costs.
6. Have a clear, understandable reason if you reject the applicant. If a social media search returns information that causes you to reject an applicant, an employer needs to be able to point to legitimate hiring requirements as a reason to not hire a person (such as evidence the person has badmouthed their current employer, participated in illegal activities, used bad judgment, lied about their background, etc).
7. Give the applicant a chance to explain. If a piece of information is found on social media that would weigh against the applicant’s chances of being hired, do not write them off immediately. Showing the applicant what was found on social media, telling them why it’s a concern, and giving them a chance to explain is an important part of the screening policy. Perhaps the negative information was inaccurate or misleading. There is also a chance it was a different person of the same name. The applicant deserves the chance to refute the information.
It is highly recommended and advisable for any lending institution to implement these steps into their pre-employment screening policy BEFORE they begin utilizing social media to screen applicants.
And remember, while social media sites can offer up lots of valuable information on a potential job candidate and his fit within the company, this should not be the only background screening tool utilized in the hiring decision. In order to make a sound hiring decision, social media screening should be used thoughtfully in conjunctions with the traditional methods of screening.
Using social media sites to screen job candidates is not risk-free, especially since there has yet to be many clear laws or court cases defining this area. When implemented into an employer’s current policy and with guidelines intelligently drawn, social media screening can supply a better, all-round understanding of the job candidate.
Product Development Director
Data Facts, Inc. has been providing you the Information You Trust since 1989. Susan is the Product Development Director for Data Facts, a Memphis-based company. Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services. Susan can be contacted at email@example.com or http://www.datafacts.com.
Data Facts will be introducing a full suite of products that will help streamline the lending process and keep Lenders in compliance. In today’s financial climate, it is becoming more evident by utilizing bundled services from a single provider Lenders will be able to serve clients more effectively, profitably and will emerge as industry leaders.
Data Facts’ President & CEO, Daphne Large, serves as the 2013 NCRA President, and Julie Wink, Data Facts’ Executive Vice President, serves as the Co-Chair of the Education and Compliance Committee. Data Facts has worked closely with the NCRA for many years, and the NCRA is delighted to have both Large and Wink in such influential positions in 2013. This past June, both Daphne and Julie attended the NCRA Lobby Day in Washington DC. While there, they spoke to various government agencies and public officials, lobbying for better regulations that impact our industry.
The Mortgage Bankers Association (MBA) is the national association representing the entire real estate finance industry. The MBA is an influential voice for real estate finance, leading the charge to create a sustainable and vibrant future for all industry participants. The National Mortgage Banker’s Association provides mortgage companies and banks information that is both timely and critical. This year’s conference will celebrate the Association’s 100th year anniversary.
Daphne Large, Data Facts’ CEO, is proud to be a part of the conference. “We have always supported the local MBA’s and are thrilled to be exhibiting at the national level. We believe the MBA serves the industry well, and know we will have a positive experience both in exhibiting at the conference and attending the informative sessions that are planned. Our customers count on us to be well informed, and the conference will expand our knowledge of the hot topics in the industry.”
About Data Facts Inc
Since 1989, Data Facts has provided information you trust and rely on to make sound business decisions. Data Facts has offices across the United States and provides crucial information for a broad variety of business needs, such as background screening for employment, tenant screening for residential firms, and up-to-date financial background data for mortgage companies. Our top of the line technology delivers information quickly, accurately and securely. For more information about Data Facts visit http://www.datafacts.com. Follow us on Twitter @DFlending or @DFscreening. ‘Like’ us on Facebook at “Data Facts Lending Solutions” and “Data Facts Background Screening.”
~~Stacie Shelton is a member of the Marketing Team at Data Facts, Inc. Since 1989, Data Facts has provided information you trust and rely on to make sound business decisions. Our CEO, Daphne Large is the 2013 NCRA President and our EVP, Julie Wink is the Co-Chair NCRA Education and Compliance Committee. We provide information for a broad variety of business needs, such as background screening for employment, tenant screening for residential firms, and up-to-date financial background data for mortgage companies. Our top of the line technology delivers information quickly, accurately and securely. For more information about Data Facts visit www.datafacts.com. Follow us on Twitter @dflending and Facebook at “Data Facts Lending Solutions.”