Limit on What Lenders Can Ask For

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The Consumer Financial Protection Bureau (CFPB) issued a bulletin aimed at clarifying what documentation may be requested from potential borrowers who receive Social Security Disability benefits.  The bulletin notes that “Social Security disability income recipients have faced special challenges in providing proof that their disability payments are likely to continue.”

The bulletin discusses how lenders may consider Social Security disability income for purposes of the ability-to-repay/qualified mortgage rules. It states that income may be verified by means of a Social Security Administration benefit verification letter and states that a lender can consider such income as “effective and likely to continue” if the letter does not give a defined expiration date within three years of loan origination.

So, if you apply for a loan, and your benefit verification letter does not specify an expiration date, then the lender should consider your SSDI income “effective and likely to continue”. The lender should not request additional evidence, such as a letter from your doctor, that your disability is likely to continue.

Read the entire CFPB Bulletin here.

How do you obtain a benefit verification letter?

Two SSA brochures explain the process. One brochure explains how to create a MySSA account if you don’t already have one (SSA – Create MySSA Account brochure). The other brochure explains how to have the benefit verification letter issued instantly – you don’t have to wait for SSA to mail it out to you (SSA – Request Online Benefit Verification Letter through MySSA brochure).

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