Over the last few years several Secretaries of State, such as Colorado, Massachusetts and Nevada, have issued warnings concerning fraudulent solicitations for annual report filing and meeting minute preparation services. The solicitations are disguised with official looking seals and language to make it appear that the notices come from a state agency. Now the Secretaries of State are starting to issue warnings about a potentially more costly fraud - business identity theft. Examples of these warnings can be found on the websites of invu en san jose the Secretaries of State of Colorado and Ohio.
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Fraudulent Changes to Business Entity Records
While the term "business identity theft" (also referred to as corporate or commercial identity theft) includes a wide variety of crimes involving the misuse of entity names, the Secretaries of State are principally concerned with schemes involving a criminal making unauthorized changes to the state's business entity records of a target company to make it appear that the fraudster is authorized to act on behalf of the company. The fraudster will then use the altered records to make a fraudulent application for credit. The perpetrator may take other steps, such as establishing virtual offices and fake websites to support the fraud. The fraudster will then use the credit to purchase computers, gift cards and other expensive supplies easily convertible into cash. After taking delivery, the criminal moves on leaving the supplier and target company to resolve who will take the loss.
For example, Colorado has reported that a fraudster changed the address of the principal place of business of a company on file with its office to a virtual office in another city. Mail sent to the virtual office was then forwarded to a second virtual office. In all, Colorado has had over 300 similar instances of business identity theft. North Carolina has reported that unauthorized individuals were reinstating recently dissolved corporations.
The schemes tend to target small and midsize companies with strong credit ratings because they are not as well known by the lenders and do not have the resources to continually monitor their records. As mentioned previously another favorite target is recently dissolved or revoked entities. Colorado reported that 80% of the reported victims were dissolved or delinquent companies.
Steps States Are Taking to Prevent Fraud
Due to the heightened awareness of an increase in business identity theft, Secretaries of State are taking steps to minimize the problem. For example, some states are prohibiting the online filing of reinstatements and are carefully scrutinizing documentation and information presented when an entity is reinstated. Georgia and Colorado send e-mail notifications to a registered contact at a company whenever a change is made to the public record of the company. For further protection of companies, some states are assigning passwords that must be entered before annual reports can be filed. The National Association of Secretaries of State has established a Business Identity Theft Task Force to further develop business identity theft prevention strategies.
How Businesses Can Protect Their Identities and Credit
A business should take many of the same steps that an individual would take to protect his/her identity and credit, including monitoring of invoices and credit card statements for any unauthorized transactions. Additional steps include:
Unfortunately, the technology that supports the desire for states to streamline the process of business formation and online annual compliance lends itself to an increased risk of business identity theft. As mentioned above, Secretaries of State are taking steps to identify and prevent this type of fraudulent activity. Successfully reducing the vulnerability of businesses to this threat will also require that the businesses most likely to be targeted start taking a more active role in prevention.
Here are some of the details from the new housing bill:
The President has signed into law legislation that will allow HUD's Federal Housing Administration (FHA) to continue providing targeted mortgage assistance to homeowners. The Hope for Homeowners program will continue FHA's existing and successful efforts to provide aid to struggling families trapped in mortgages they currently cannot afford. Under the program, certain borrowers facing difficulty with their mortgage will be eligible to refinance into FHA-insured mortgages they can afford. The program will be implemented on October 1, 2008.
Sustainable, Affordability Homeownership
Hope for Homeowners maintains FHA's long-standing requirement that new loans be based on a family's long-term ability to repay the mortgage. FHA only allows owner-occupants to be eligible for FHA-insured mortgages. Borrowers must also meet the following eligibility criteria:
* Their mortgage must have originated on or before January 1, 2008;
* Their mortgage debt-to-income must be at least 31 percent;
* They cannot afford their current loan;
* They did not intentionally miss mortgage payments; and
* They do not own second homes.
Features of FHA-insured loans under the new program include:
* 30-year, fixed rate mortgage;
* Maximum 90 percent loan-to-value ratio;
* No prepayment penalties;
* $550,440 maximum mortgage amount;
* Extinguishment of any subordinate liens; and
* New home appraisals from FHA-approved appraisers.
HUD, Treasury, FDIC and the Federal Reserve will form the Congressionally-mandated Board of Directors and work together to establish additional program standards.
Voluntary Lender Participation
FHA will continue to offer lenders an alternative to foreclosing on borrowers. Similar to FHASecure's recent expansion, lenders will be encouraged to write-down the outstanding mortgage principal balances to 90 percent of the new value of the property. In many cases, reductions in principle will cost lenders less than the losses associated with foreclosure.
Market Stability and Liquidity
By continuing to slow the rate of foreclosures, this program will support FHA's existing effort to stabilize local housing markets. From September 2007 to June 2008, FHA has guaranteed more than $93 billion of mortgage capital.
Funding
FHA will insure up to $300 billion in new loans. Borrowers will pay an upfront premium of 3 percent of the original mortgage amount and an annual premium of 1.5 percent of the outstanding mortgage amount. Any additional costs incurred by FHA will be reimbursed by Fannie Mae and Freddie Mac.
Program Timeline
The program will last from October 1, 2008 through September 30, 2011. Since September 2007, FHASecure has helped more than 290,000 families obtain safer, more affordable mortgages. FHASecure is on pace to help 500,000 families by the end of the year.
