Safety comes first when offering and accepting Internet loan applications

Jason MacKinnon, product manager, a la mode

As published in Scotsman Guide's Residential Edition, January 2011.

Secure online loan applications represent a huge step toward ensuring compliance with the Gramm-Leach-Bliley Act and the Truth in Lending Act. Not only do they eliminate concerns about misplaced or misdirected faxes and packages that contain nonpublic information, but they also can help you get good-faith estimates (GFEs) to borrowers within three days.

Brokers must be extremely cautious, however. Many companies offering so-called secure online loan-application services fail to provide the protections they claim, and you can't afford to be anything but certain. Consumer-privacy breaches can be expensive and ugly, and they often lead to a legal mess for everyone involved.

Providers who meet privacy and security requirements can increase your bottom line. Although most borrowers rarely complete an online application without first talking to a mortgage broker or loan originator, you can lock in more business by offering an online application.

When prospects call, for example, you can guide them to your prequalifying application or full application and talk them through it.

Secure online applications provide security and compliance advantages, as well. An online application with the proper configuration will gather borrower data in a secure browser environment and store it in an encrypted database. The best online applications integrate with loan-origination software, eliminating errors introduced when the data is retyped the old-fashioned way. They also notify you right away when an application comes in, allowing you to get GFEs to applicants within three business days as required by law.

Lock it down

Not long ago, Internet security experts said that a closed padlock icon at the bottom of a browser window indicated that a website was secure. But the lock is only the beginning.

If you receive any nonpublic personal information from customers through an unsecured form on your website, you must stop. This practice often starts by collecting contact information. When you begin collecting qualifying information, however, you're skating on the edge of nonpublic information. If you have any doubt, be sure to use a secure form.

If you run a custom website hosted on one of the popular shared hosting services or if your website is from one of the many mortgage website providers, you must take extra care to ensure that your entire site is secure.

Applications commonly installed on these systems need constant updating. Because programmers often use applications in the background for form processing or other website functions, you might not even realize what applications you use. In a shared hosting environment, the server on which your website runs can be compromised even if your website isn't running any applications.

The best way to solve this problem is not to host your online application on a custom website. Even the best programmers forget to update applications or miss the advisory that vulnerability has been discovered.

There are many online loan applications designed specifically for embedding fully secure online loan applications on any website. These applications ensure that even if your website is compromised, borrower data remain secure.

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