Mortgage and the Patriot Act

Money Laundering

International terrorists sometimes finance their operations by laundering money using real estate transactions. The Patriot Act stops some of this activity as well as helps lenders detect mortgage fraud. The organization buys a house and then sells it several times to other known associates, each time raising the price of the home. Eventually, they sell the home for well more than it is worth, then send the money to their terrorist leaders and associates. Because the money comes from a title company, the wire usually isn't questioned. The wire sends the funds to an overseas account where it is transferred several times and eventually winds up into the terrorists' hands.

Disclosure

Mortgage companies must provide the borrowers with the Patriot Act disclosure as part of the normal loan process. This document requires the borrowers fill out the form with their names, addresses, dates of birth and Social Security number or tax ID number. The borrowers do not sign and date the document. The loan officer who takes the application signs it once she verifies the borrowers' identity using two of the required forms of identification.

Primary Verification

The borrowers provide the loan officer with at least two forms of identification. The primary form of identification required must be one of six different documents. The borrower must provide a state issued drivers license, state issued ID card, military ID card, passport, alien registration card or a Canadian driver's license. A second form of ID may either be a second document in the list of primary forms of ID or one of the items listed as a secondary form of identification.

Secondary Verification

The homeowner's secondary form of identification must display the borrower's name. Acceptable items include Social Security cards, birth certificates, government issued visas, a drivers license from another country other than the U.S. or Canada, signed tax returns, property tax bill, voter registration card, bank statements, pay checks, W-2s, insurance bills or paperwork or utility bills. Many of these secondary times are documents required to approve the loan. Most loans require the homeowner provide pay stubs, bank statements, W-2s or tax returns. The homeowner only provides the item once; she does not have to provide it two separate times.