February 28, 2013
We sometimes get questions about certain practices required to verify and approve the information given on a borrowers FHA home loan application. Borrowers are rightly concerned about protecting their privacy and personal data; what do FHA loan rules say about lenders who ask for account numbers, Social Security information and other private information?
FHA loan applicants should know that the FHA does require these types of personal data in order to properly verify and approve the loan. According to FHA loan rules as described in HUD4155.1:
“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.”
FHA loan rules also require the lender to take certain additional steps if the borrower has provided a single approval form for “all of the above” information. HUD4155.1 states, “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.”
So the basic answer to many reader questions in this area is that yes, the lender will and should ask you for this type of information in order to process your loan. Account numbers must be verified, the lender is responsible for making sure the sources of down payment funds and other cash provided is from approved sources.
It’s also necessary to verify claims of “substantial cash reserves” or other things that may be considered compensating factors on an FHA loan or refinance loan application.
Borrowers who have additional concerns should contact the FHA directly by calling 1-800 CALL FHA.
Do you have questions about FHA loans or FHA refinance loans? Ask us in the comments section.
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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