The Red Flags Rule is essentially an identity theft prevention program required by the Federal Trade Commission, for financial institutions and creditors (including mortgage brokers and lenders). The FTC moved the deadline from June 1, 2010 to December 31, 2010 “while Congress considers legislation that would affect the scope of entities covered by the Rule… [However, the announcement does] not affect other federal agencies’ enforcement of the original November 1, 2008 deadline for institutions subject to their oversight to be in compliance.”* All financial institutions and creditors, including mortgage brokers and mortgage lenders, must have a Red Flag Policy in place by December 31.
*(See http://www.ftc.gov/opa/2010/05/redflags.shtm.)
Is Your Company Prepared for the Red Flags Rule?
Implement a Red Flags Rule Compliance Program quickly and easily through Mortgage Compliance Advisors. Click an icon under “Contact Us” to the right to get started.
Red Flags Rule
Your Red Flag Policy should include reasonable policies and procedures for detecting, preventing, and mitigating identity theft and enable a financial institution or creditor to:
- Identify relevant patterns, practices, and specific forms of activity that are “red flags” signaling possible identity theft and incorporate those red flags into the Program
- Detect red flags that have been incorporated into the Program
- Respond appropriately to any red flags that are detected to prevent and mitigate identity theft
- Ensure the Program is updated periodically to reflect changes in risks from identity theft
Mortgage Compliance Advisors can customize your Red Flag Policy
Mortgage Compliance Advisors can customize the Red Flag Policy templates for your organization. One of MCA’s advisors will contact you to obtain the few pieces of information we need about your company in order to customize your policy. Once the policy is completely customized, we will send it to you in Microsoft Word format so that it can be easily modified moving forward. Topics in this policy will include:
- Identifying Red Flags within your organization
- Detecting and evaluate Red Flags at the client level
- Responding appropriately to the Red Flags detected
- Updating the Identity Theft Prevention Program
- Conducting Required Annual Board of Director Reporting
(The work done by Mortgage Compliance Advisors on your Red Flag Policy does not constitute legal advice. Our intention is provide you with a platform to build a policy specific to your organization. It is a good idea to have your legal counsel review the policy once it has been prepared. Only your attorney can tell you if your red flag policy meets the legal requirements set forth by the Federal Trade Commission.)
*For more information about implementing your Red Flags Rule Compliance Program, click an icon under “Contact Us” to the right or call 877-250-5243.
