May 7, 2014
In order to get the FHA loan application approval process moving, the lender may need authorization from the borrower to check credit reports, individual creditors, employers, even current or former landlords.
In order to do this, your loan officer may need you to sign paperwork showing the financial institution has the authorization needed to request personal data.
There are strict rules that govern this process. They are found in HUD 4155.1 Chapter One, Section B, which starts off by stating:
“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.”
The “blanket authorization” mentioned above would be a form that acts as a one-size-fits-all authorization from the borrower for the lender to request information about the information listed above.
In addition to these guidelines, there are some rules about what the lender cannot ask or require of the borrower. For example, Chapter One, Section B states:
“Lenders may not have borrowers sign
• documents in blank
• incomplete documents, or
• blank sheets of paper.”
Furthermore, “Lenders may not accept or use documents relating to the credit, employment, or income of borrowers that have been handled by, or transmitted from or through the equipment of interested third parties, such as
• real estate agents
• builders, or
• sellers.”
As you can see, the source of this documentation can be every bit as important as the borrower’s authorization for the lender to gather it.
Do you have questions about FHA home loans? Ask us in the comments section. You can get information about applying or getting pre-approved for an FHA loan at FHA.com, a private company and not a government website.
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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