Effect of Target Data Breach on Mortgage Lending

Banker Resource
February 6, 2014 — 1,301 views  
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Major retailer, Target, had their data breach become a huge problem for themselves along with their customers, with personal information of a whopping 70 million people compromised between November 27 and December 15. An earlier estimate had put that number at 40 million, but that seems to have shot up now.

Impact on Quarterly Results

Owing to the incident in which personal details of customers’ credit and debit card accounts were stolen, Target lowered its fourth quarter 2013 earnings guidance, and said the fourth quarter earnings are expected to fall in the $1.20 to 1.30 per share range. Target is expected to announce its fourth quarter results towards the end of February. The retailer has also warned that its fourth-quarter numbers may also include charges related to the data breach, and may affect its quarterly and future period results. 

Neiman Marcus also said that data of its 1.1 million customers could have been compromised in a similar breach

The overall numbers of affected consumers are still difficult to estimate, but experts in the field say  uge data breaches at other retailers such as Neiman Marcus, along with Target could have an impact on some real estate deals in the coming months. Credit files that have been damaged could harm loan applications and sales of homes.

Mortgage Scenario

This means that even if a victim of data theft explains his or her situation, funding may be frozen till the bureau looks into the reports. In effect, an individual could miss a deadline or two signed in the contract with the seller of a home, and the victim could eventually end up losing the house.

Also, the other problem in the mortgages scenario is that loan officers can’t be taught to help in identity theft corrections, though credit reporting agencies often help officers on methods to enhance the scores of applicants. The identity theft corrections can only be carried out by consumers by getting in touch with bureaus and freezing accounts.

Time-Consuming Correction

Another impact of the data breach is that the use of your personal information could create more fresh credit cards, which could be difficult to correct. Consumers would be asked for more proof and papers before the damaged or wrong cards can be cleared. There could also be a huge drop in scores because of non-detected use of balances on credit cards. Low credit scores mean that you many not qualify for a mortgage until the time you can prove with documentation that the fresh debts are a consequence of theft.

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