USA PATROIT Act Provision Take Effect
October 1, 2003
Lenders Must Verify Borrower Information
Starting October 1st, lenders must request proof of name, address, date of birth, and Social Security number from people who apply for a mortgage or a home equity line of credit, under a provision of the USA PA TRIOT Act. The new verification is necessary even those borrowers who have been long-time customers.
The Act requires that the regulations must require, at a minimum, for ?financial institutions to implement, and customers (after being given adequate notice) to comply with, reasonable procedures for: (1) verifying the identity of any person seeking to open an account to the extent reasonable and practicable; (2) maintaining records of the information used to verify a person's identity, including name, address, and other identifying information; and (3) consulting lists of known or suspected terrorist organizations provided to the financial institution by any government agency to determine whether a person seeing to open an account appears on any such list.?
Lenders also will have to check mortgage applicants' names against a federal list of terror suspects, report any suspicious individuals or business activities to the feds, and document the steps they take to check out customers.
The new law requires lenders to go to extra lengths to verify identities because the federal government wants to crack down on identity theft and money laundering related to terrorism.