HUD 4000.1, also known as the FHA Single-Family Lender’s Handbook, guides the lender through the entire FHA loan process including how your application data must be processed.
In the same way FHA loan rules have a lot to say about where a borrower’s down payment money comes from and verifying the sources of those funds, FHA loan rules also govern how the lender can gather your financial data.
For example, did you know your credit scores and other data must be given to the lender from approved sources and that the information cannot come from you even if it’s sealed and hand-delivered?
Did you know that HUD 4000.1 does not permit the borrower to handle or transmit other kinds of information to the lender, too? Sourcing counts in both down payment money AND the data your lender uses to approve your mortgage whether it’s a condo loan, mobile home loan, an FHA One-Time Close construction loan or any other FHA mortgage.
According to HUD 4000.1, your loan officer, “…must not accept or use documents relating to the employment, income, assets, or credit of Borrowers that have been handled by, or transmitted from or through the equipment of unknown parties, or Interested Parties.”
In this case, “interested parties” means anyone with a financial stake in the outcome of the mortgage.
Your lender is also required to follow certain procedures for using electronically submitted documents as well as paper copies:
“The Mortgagee must authenticate all documents received electronically by examining the source identifiers (e.g., the fax banner header or the senders email address) or contacting the source of the document by telephone to verify the documents validity.”
“The Mortgagee must document the name and telephone number of the individual with whom the Mortgagee verified the validity of the document.”
Your lender is permitted by HUD 4000.1 to get certain information over the internet instead of e-mail, and in such cases, the loan officer must authenticate the documents and note their addresses on line.
The lender is also required to insure that any documentation that comes via the Internet contains, “the same information as would be found in an original hard copy of the document”.
Some kinds of documents may need to be notarized, others may not. One thing that’s important to keep in mind here is that our article does not address state law, only FHA requirements.
State law, lender standards, and local ordinances may have more to add to these procedures depending on the laws. FHA loan rules never override state/local regulations, so you will need to discuss your concerns with the lender if you aren’t sure how to proceed.