- Purpose. This Circular conveys Loan Guaranty Service’s Red Flag Rules Policy to aid in the detection, prevention, and mitigation of identity theft in connection with the Department of Veteran Affairs (VA) portfolio loans.
- Background. In order to implement Sections 114 and 315 of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act); Federal financial institution regulatory agencies, National Credit Union Association (NCUA, and Federal Trade Commission (FTC) jointly issued final rules in 2007 requiring financial institutions and creditors to establish written identity theft “red flags” policies and procedures. The FTC rule regarding the detection, prevention, and mitigation of identify theft applies to creditors that are subject to administrative enforcement of the Fair Credit Reporting Act by the FTC, which includes governmental credit grantors such as VA. The rule requires the development and implementation of a written Identity Theft Prevention Program. The mandatory compliance date for the rule was June 1, 2010.
- Identity Theft Prevention Program. Exhibit A, “Red Flag Rules Policy,” contains VA’s written identity theft policy and procedures. It governs all instances in which VA is a creditor, including Native American Direct Loans (NADL), refunded VA-guaranteed loans, and vendee loans from the sale of VA-acquired properties.
- Action. Regional Loan Centers may disseminate VA’s Red Flag Policy to all personnel involved in the origination of NADLs and the refunding of VA-guaranteed loans. VA Central Office provides the Red Flag Policy to contractors originating vendee loans and servicing all VA portfolio loans, and ensures that the contractors have established internal policies at least as comprehensive as those developed by VA.
- Questions. Questions may be directed to Rhonda Armitage at Rhonda.Armitage@va.gov.
- Rescission: This Circular is rescinded January 1, 2020
[See Circular for Exhibit A, “Red Flag Rules Policy”]