Applying for a mortgage is one of the most personally intrusive purchase most people will ever make. You turn over your social security number, bank account information, tax returns, retirement accounts and every other shred of financial evidence to prove you are worth loaning money to.
The mortgage process is also consumed with disclosures and legal requirements to ensure compliance by the lender/loan officer to state and federal regulations and oversight.
It is in this oversight role that the effort to regulate the industry shows a total and blatant disregard for the rights of the applicant.
If you have taken out a mortgage in the state of Texas in the last 15 years you might have had your 4th amendment rights violated without cause, disclosure, knowledge or consent.
After your loan has closed and long after you are comfortably in your new home the licensing and compliance agency known as the Texas Department of Savings and Mortgage Lending (TDSML) quietly begins their regular and random auditing of loan files for compliance with state laws. This audit has nothing to do with the merits of the borrower and is only and solely responsible for making sure the right disclosure documents were signed and dated properly and that the loan officer and mortgage lender were in good standing with the licensing agency at the time the loan was made.
In the course of requesting these documents they contact mortgage bankers/brokers and ask for the loan file. The same loan file that the underwriters used for the purpose of approving your financial ability to pay the loan back including your social security number, bank statements, tax returns, retirement accounts, an appraisal of your home including interior pictures and layout and other private information.
Your personal and confidential information is NOT WITHHELD or REDACTED.
In response to one borrower’s request for their authority to obtain this private and personal information the associate general counsel for TDSML replied that their authority to obtain this information without the individual’s knowledge or consent is “established by state law” under the provisions of Texas Finance Code Chapter 157, specifically under Section 157.021 and further authorization for examining these records is found in Texas Administrative Code, Title 7, Part 4, Chapter 81, Rule 81.300.
Attorney Kyle Shaw has been protecting citizen’s constitutional rights for nearly 20 years and wasn’t shocked or surprised by this behavior. Shaw said that citizens have the right to have their confidential information redacted by the mortgage company before the file is sent to Austin for auditing.
With the state legislature in session, now is the time to lobby your State Representatives and State Senators to amend the language in the statute to prevent TDSML from obtaining this unnecessary private and privileged consumer information. Simply giving them permission to have this information is not enough. It has to be clearly spelled out in the statute that the mortgage company has the responsibility to protect their borrower’s personal and confidential information by redacting any and all information not immediately and directly related to the narrow definition of their responsibilities.
Latest posts by Roy Magno (see all)
- State Agency Violates Homeowner’s Rights (Editorial) - February 19, 2015