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• Oct 18, 2006 1:20 am US/Pacific
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  Feds' Terror Watch List Can Ruin Credit Report

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Feds' Terror Watch List Can Ruin Credit Report

(CBS 5) A little known federal terrorist watch list can prevent Americans from getting home loans and stain their credit reports, a CBS 5 investigation reveals.

The U.S. Treasury Department's "List of Specially Designated Nationals and Blocked Persons" is similar to the federal government's "No-Fly List," which adds additional screening for people attempting to board a plane. But the Treasury Department's list contains the names of several thousand people who the government says may not conduct financial transactions with American businesses.

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And people in Northern California and around the country are discovering that the Treasury Department's list may have kept them from buying a car or a home because their names were linked somehow to terrorism.

For Tom and Nancy Kubbany, living with two small children in a rental house, the dream is the same as for many families.

"It would be the American dream," Tom Kubbany said, to own their own home. So he works two jobs.

And this spring, the Kubbanys were thrilled to qualify for a new first-time homebuyer program.

"We've been working 7 years toward this," Nancy Kubbany said. "It was a chance to get into a home that we probably could not afford otherwise."

But all of a sudden, their mortgage broker stopped returning their calls.

"Her secretary said, 'After reviewing your credit report,' the woman had said verbally she told the lenders, 'We are not going to go with this,' " Nancy Kubbany said.

And when Nancy's husband finally went to get their records, he got an even bigger surprise.

"It was surreal," Tom Kubbany said. "It's like everything stopped. Everything was in slow motion for a few seconds. Like, wait a minute, this is silly, this is a joke, you know."

Nancy Kubbany said her husband came home and said she wouldn't believe what was on his credit report.

The report suggested that Nancy's husband, Tom Hassan Kubbany of Arcata, Calif., might be someone else: The son of Saddam Hussein. Yes, that Saddam Hussein, the Iraqi dictator.

"I'm not his son," said Tom Kubbany. "I'm not related to him. There are no ties. There are not ties whatsoever."

Tom Kubbany, who was born and raised in Michigan, was confused with Saddam Hussein's son because it seems that when he applied for credit, his name was checked against the Treasury Department's watch list.

Attorney Shirin Sinnar worked on the Kubbanys' case with the Lawyers' Committee for Civil Rights.

"People discover this list when they go into a business and they are told, much to their surprise and fear, that their name is on a terrorist list," said Sinnar. "Just part of their name happens to match someone who's on that list, and as a result, they have to endure the stigma of being told, 'You are on the terrorist list.' "

Tom Kubbany's middle name, Hassan, is on the list, but only his middle name is there. His first and last names are nowhere to be found.

And the Kubbanys are not alone.

Heather and Alfonso Perez of Phoenix, Ariz., were also trying to buy a house this summer when their mortgage loan officer called and told them Alfonso's name was on the list.

"I laughed at first, and I thought, oh my god, this is hilarious, until it hit me we are not getting our house because he's on this list," Heather Perez said.

But Sinnar says it is again a case of mistaken identity.

"The individuals who are getting snagged in the process and whose civil rights are being put at stake are people who happen to have a name similar to someone on the list," Sinnar said.

For the Kubbanys, there was even more at stake: they lost the loan and a chance at a new home.

"Who can prove the government wrong? Who will believe us over the government?" said Nancy Kubbany.

Her husband added, "What's happening to us is a shame. Crying shame. This is not the America that I know. Not the America I grew up in."

The Treasury Department said the list is designed to prevent terrorists from funding their activities in the U.S.

If the alert pops up on your credit report, you have right to ask for it to be removed, according to the Treasury Department.

In practice, some experts say that resolving these problems can be difficult.

(© MMVI, CBS Broadcasting Inc. All Rights Reserved.)