August 5, 2016
A reader asks, “Must income verification documents include sensitive information, such as account numbers, full SS# and bank account number(s). Can verification be made with sensitive information being Blacked-Out or omitted, as to not expose ones self to possible criminality?”
FHA loan rules require the lender to verify personal information including Social Security Numbers, bank account numbers, credit reports, etc. So the lender will definitely be required to have that information at the bank’s disposal to verify not only the identity of the borrower, but also the sources of down payment funds and other money as governed by HUD 4000.1.
HUD 4000.1, page 111 instructs the lender, “The Mortgagee must obtain the Borrowers authorization to verify the information needed to process the mortgage application. The Mortgagee must obtain a non-borrowing spouses consent and authorization where necessary to verify specific information required to process the mortgage application, including the non-borrowing spouses consent for the Mortgagee to verify their SSN with the Social Security Administration (SSA).”
The borrower will be asked to sign consent forms authorizing the lender to obtain and use this personal data for the purposes of loan approval. The borrower should NOT be asked to sign blank or partially completed documents. The lender needs the personal information to process the loan, and all financial institutions have guidelines on how that information is to be handled.
FHA loan rules include requirements for the lender to pull credit reports and to analyze the accounts and other data listed in the report:
“The credit report must include:
-the name of the Mortgagee ordering the report;
-the name, address, and telephone number of the consumer-reporting agency;
-the name and SSN of each Borrower; and
-the primary repository from which any particular information was pulled, for each account listed.”
So the lender clearly has access to this sensitive data, there’s simply no getting around the requirements for providing account numbers, SSN, etc. The lender is required to have access to this information as a condition of loan approval. Lender standards, but also state law and federal privacy act laws all have a say in the proper review and use of such data.
Borrowers who have security concerns about how their specific transactions are being handled should take the issue up with the lender first, but can also contact the FHA directly at 1-800 CALL FHA for advice or information about how this information can and should be handled.
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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