After the Equifax Breach: Can the Housing Boom Last?

Abby Shemesh
October 31, 2017

Last month, we took a look at the Equifax hack.

143 million Americans had their information stolen because of an egregious lack of judgment on the part of Equifax and its CEO. The company itself looks as though it will somehow weather this particular storm, though whether they deserve to do so or not is another matter entirely. Regardless, Equifax seems to be here to stay.

The same cannot be said, however, for the housing market.

While the market is in the midst of a substantial boom, the Equifax hack may have some dire implications for the market in the future.

This effect is two-fold, so let’s take a look.

Frozen Credit

residential note buyer

The primary piece of advice following the breach was to freeze credit reporting.

This process prevents anyone from applying for credit in your name, or opening credit cards or purchasing property using your information.

Unfortunately, it’s also a timely process, and one that has to undone if one wishes to purchase a home or other property. Since credit can’t be pulled while a freeze is in place, potential buyers would have to reverse the freeze prior to being approved for a mortgage.

With the breach so fresh in the minds of potential consumers, home buyers may be wary of unfreezing their scores, even temporarily, at least until the threat is passed, which is potentially never. After all, once the information is stolen, it can’t exactly be put back.

Stolen Credit

Here is the real kicker.

For consumers who have their data stolen, buying a home may go from potential dream to far-off possibility.

With so much data leaked and potentially being sold and used for nefarious purposes, millions of Americans could potentially see their credit wrecked by cyber-criminals.

And while safety nets are in place to ensure that that damage can be repaired, it’s a long, arduous process, and the damage isn’t always easy to fix. Consumers must go through rigorous processes to prove the claims on their scores are fraudulent, and there are some cases where credit may be damaged irreparably.

The process to fix damaged credit can take years, and during that time, affected consumers won’t be making larger purchases like cars or homes. In fact, if the damage to their credit is bad enough, consumers may put off home purchases indefinitely.

Credit isn’t the only worry here, either. Even with frozen credit, consumers can have their tax returns stolen by thieves who file fraudulently using stolen information. And if potential home buyers were planning on using refund money toward a home purchase…you see the issue.

Silver Lining?

Residential note buyers should take note during this time. We may (MAY) see an uptick in owner-financed mortgages, which may or may not require a credit pull when people get the selling real estate notes ideas swirling around, especially if the arrangement is between a property seller and buyer. This is a trend to keep an eye on in the near future.

We also may see more investors paying cash for properties, with fewer consumers going for mortgages altogether. Especially in small markets, other than the major and medium-size cities.

Check Your Exposure to Fraud

There is a way to check if you have been affected by the hack. Check your exposure in order to gauge whether the Equifax breach will affect you. Simply go to:

The Bottom Line

The Equifax hack has the potential to cripple the home market as well as many others (auto, credit card, banking, etc.). It may not, if people are smart and freeze their credit, minimizing any damage done, but there are still too many variables to know for sure.

Consumers should still be wary, freeze their scores and keep an eye on their reports.

Note buyers should watch for potential owner-financed mortgages and prepare for the possibility of cash purchases rather than mortgages becoming a majority of the market.

Any thoughts on the Equifax breach? Let us know in the comments!