December 19, 2012
In today’s world, protecting your identity, personal information, credit card numbers and Social Security data is crucial. There are plenty of warnings of identity fraud scams across all types of business, but lending and credit are especially vulnerable areas. Borrowers should always take steps to protect themselves against scammers; beware of third parties who contact you requesting your personal data by phone, e-mail, or even in person.
All that said, there are some standard operating procedures borrowers should be prepared for that are NOT attempts to harvest your personal data. The key to knowing which is which–a scam versus a legitimate business transaction–is often how and when these procedures occur.
For example, FHA loan rules state that a lender may need or require something called a “blanket authorization” in order to do a proper credit check or employment verification as part of the FHA loan process. From the FHA official site:
“The lender may ask the borrower to sign a general authorization form that gives the lender blanket authority to verify information needed to process the mortgage loan application, such as
• past and present employment records
• bank accounts, and
• stock holdings.
If using a blanket authorization form, the lender
• must attach a copy of the authorization to each verification sent, and
• may use self-adhesive signature labels for laser printed verifications.”
That information is found in the FHA loan rulebook HUD 4155.1, Chapter One, Section B. This blanket authorization gives the lender permission to follow up on all application data without constantly referring back to the borrower for approval. Otherwise the loan process could slow down to a crawl. But the context of this blanket authorization is key–the borrower has reached out to the lender, ideally after having looked at two or three financial institutions to see which one has offered the most competitive rates and terms. The borrower will have a name, contact information and address for the lender.
The lender has not, in most cases, come TO the borrower. There is advertising, marketing e-mail, and other forms of contact from a legitimate company, but at the end of the day, the borrower has selected the financial institution after researching it (ideally).
The borrower who is pressured into a transaction should not give his or her personal data. The borrower who freely chooses to commit to an FHA loan should feel assured that such blanket authorization is safe–and if there is any doubt, a call to the FHA at 1-800 CALL FHA can clear up questions or address concerns.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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