By Sheryl Rowling
SAN DIEGO –In the wake of the Equifax breach, many of you are now hearing ads about the danger of home equity fraud. The ads claim that cyber thieves can search public records to determine how much equity is in your home, forge a couple of papers, tap into your home equity and then leave you with nothing – as a result of foreclosure on debt you didn’t even know you had! And, since regular homeowners insurance doesn’t cover this type of theft, according to the ad, you must buy their insurance.
As a result of questions from clients on this, I embarked on research and consulted with my network of insurance people. The home equity scam is actually a scam on the bank – even though it would involve using an individual’s identity. The homeowner would not be the lender, so the homeowner would not be out the money. The bank would be the primary victim and would presumably have insurance against this type of loss.
While it is possible that a specific insurance targeted at these scams could offer protection to homeowners, the real value of insurance would be in helping with some of the ancillary costs of cleaning up credit reports. Many identity theft policies provide this coverage and would save victims time spent on dealing with the credit bureaus.
The bottom line is that although there is insurance to protect against home equity fraud, the liability would not be the homeowner’s anyway. The homeowners would still be responsible for credit clean-up costs and issues.
You can certainly get insurance; however, taking steps to decrease chances of cybercrime is even more critical. This means being wary of public wifi, using strong passwords, not clicking on “phishing” emails, etc. Finally, the most effective strategy is to put a freeze on your credit at all three credit bureaus. In this case, care must be taken with your passwords, which will be needed to unlock credit should you ever want to obtain a new loan. At the very least, you should place fraud alerts at the three credit bureaus.
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Rowling is a certified public accountant, personal finance specialist, and principal of Rowling & Associates. She may be contacted via sheryl.rowling@sdjewishworld.com