When the Identity Thief is Mom or Dad ... What Do You Do?

I've seen the topic written about often.  Real estate agents and mortgage lenders expressing that they are called upon to perform duties outside and beyond those typically associated with their professions.

Real estate agents helping clients out in emergencies.  Walking dogs.  House sitting for repair appointments.  Mortgage Lenders performing counseling of all types.  Helping with financial planning, budgeting, and cleaning credit mishaps.  Both real estate agents and mortgage lender hand-holding and providing a sympathetic ear on family issues, jobs, money, repairs, more. 

Most real estate agents and mortgage lenders don't even blink when faced with performing these tasks. For most real estate professionals ... it's just considered "part of the job" and what you do to assist a client through their home buying and mortgage transactions.

But every once-in-awhile as a real estate professional, you run across something that stops you dead in your tracks.  And according to statistics, one such issue that has that potential is cropping up more and more often.

That game stopper? 

Financial abuse  and  identity theft  committed by parents against their children.

But when it's Mom or Dad perpetrating the identity theft and fraud ... as a real estate professional, what can you do?  What should you do?

The temptation to utilize a child's Social Security number or identity for credit purposes has grown in tandem with the pressures of the current recession's un-employment and financial challenges.  Evidently, many parents that have committed these crimes have reported that they thought they would establish credit in their child's name and no one would be the wiser.  They thought they would, of course, see a turn-around in their fortunes and then re-pay the credit off prior to anyone knowing that they had manipulated their child's credit and finances.  But so many times, this did not happen.  Debts were not repaid.  The credit of their child was irrepairably or severely damaged.

These parents typically had not confessed regarding their financial setbacks or sins of identity theft, so their children were often unaware of the crimes committed until the child themself hoped to establish credit, rent an apartment, buy a car.  Imagine the child's surprise when they are turned down for credit and then come to find they are thousands of dollars in debt ... as a result of their own mother or father.

While this crime is typically uncovered well prior to an adult child applying for a home loan, I have seen remnants of it existing on a mortgage applicant's credit report. The fallout of the parent's actions still visible ... still needing to be addressed ... prior to successful mortgage application.

Charles E. Nelson, a San Diego psychologist and Board Member of the  Identity Theft Resource Center, relates that children whose credit is ruined or compromised by parents "suffer some of the same emotional fallout as those physically molested by a parent".  He goes on to say that victims of both crimes feel a similar sense of betrayal that can make it hard for them to trust others or form relationships.

The Identity Theft Resource Center is presently working on a proposal that will provide a "minors list" ... that would include all Social Security numbers belonging to those under the age of 18 to police departments and credit bureaus.  This list WOULD NOT include corresponding names to these Social Security numbers.

It has been very hard to get a true accounting of the numbers of these crimes being committed, as many children do not report the crimes ... not wanting to press criminal charges against a parent or family member.  The emotional toll exacted on the victimized child is very high and many decide not to press the issue for those very reasons.  But the Federal Trade Commission has found that 6% of victims of identity theft identified family members or other relatives as the perpetrators of their misery.

What are the warning signs that a child's identity has been stolen?

• Pre-Approved credit card offers in the child's name (Please note: These may also stem from a child's legitimate bank account or college savings account).
• An Internal Revenue Service notice that the child's name or Social Security number is listed on another tax return.
• An addict or someone with a history of fraud -- who knows the child's Social Security number -- has a sudden infusion of cash or an improvement in their lifestyle.
• Calls from collection agencies, bills, or credit cards sent in the child's name.

After finding out that identitify theft or financial fraud has been committed by a parent, family relative, or family friend ... what recourse does a child have?  And should this crime be found out while in the act of buying a home and applying for mortgage financing ... what can the real estate professionals involved in the transaction suggest or assist with?

The most obvious answer is the law must be brought into the matter.  But should a minor or adult child not wish to take that road or navigate those emotional waters, it is best that professionals that are licensed in counseling, both emotional and financial be sought out.

I have had someone recently question me as to the soundness of the action of securing a new Social Security number.  Although this may be done under specific guidelines  (click here for a link to ITRC Fact Sheet 113, Changing a Social Security Number)  or contact the Identity Theft Resource Center or  Federal Trade Commission  for additional information and assistance), I caution those considering this action.

Obtaining a new Social Security number does not guarantee your problems are behind you regarding the old Social Security number.  Banks, credit bureaus, and governmental agencies will probably retain your old number.  And should you be able to start fresh with a new Social Security number, it means you have no established credit history ... and these days, that causes its' own set of problems when applying for new credit, employment, and more.

Finding that a home buying client has been the victim of a crime, especially a crime perpetrated by a family member, can be very emotionally upsetting for the real estate professionals involved with the victimized client on many levels.  Knowing how to guide and support a client while going through their trauma is an important portion of the professional's services.  Being educated and prepared to face the resulting upheaval on a personal basis for the real estate professional is important as well.  Having the knowledge and information needed to address this crisis correctly before something of this nature occurs will most certainly help the real estate professionals involved cope far better.

*  For sound mortgage and financial advice, please contact me .. Gene Mundt, Chicago Bancorp .. at Direct:  815.277.4036, email: gene@chicagobancorp.com,  or website:  www.genemundt.com.  With over 35 years of mortgage experience and expertise, I can guide you through a successful home mortgage experience.