Over Fifteen Years of Professional Service!

(From Summer, 2001 Newsletter)

Privacy has become a major issue in modern life, especially with the advent of the Internet and the rise in corporate mergers. On November 22, 1999, President Clinton signed the Gramm-Leach-Bliley Act (GLB) into law with its provisions taking effect on July 1, 2001. This Act places new restrictions on how those in the mortgage industry may collect and share client information. It applies to Mortgage Brokers as well as Lenders.

The Act permits information to be shared among affiliates but prohibits information from being shared with unrelated third parties unless customers are given an opportunity to opt out. It requires that you develop a Privacy Policy, a Privacy Disclosure Statement, and a procedure to deliver a Privacy Notice to your customers.

The first step is to develop a Privacy Policy. Each institution must assess its practices regarding client privacy and disclosure of nonpublic customer information. Steps must be taken to guarantee the physical safety of client records, including computer records. Employees must be made aware of privacy requirements and steps must be taken to insure they are respecting customers’ privacy rights. Those with a web page must insure they are secure.

The second step is to develop a Privacy Notice to be given to every new customer. Each institution must provide a clear and conspicuous notice of its privacy policy to all customers. As with many federal regulations, the key component is disclosure. The GLB Act has specific requirements that must be contained in the Notice, including information about the types of information collected, who shares that information, and an explanation of the customer’s right to opt out.

The final step is to develop a system to deliver the Notice to the customer. The Notice must be provided to a customer when the customer relationship is first established. If there is an ongoing relationship with the customer, this Notice must be provided annually until the client relationship is terminated.

If you are a member of the National Association of Mortgage Brokers, a template for the Privacy Notice will soon be available on their website.

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