The CFPB released a bulletin to help lenders avoid discrimination against consumers receiving disability income. The bulletin is meant to remind lenders that requiring unnecessary documentation from consumers who receive Social Security disability income may raise fair lending risk.
The bulletin discusses standards and guidelines on verification of Social Security disability income, including under the CFPB’s Ability-to-Repay rule, the HUD standards for FHA-insured loans, the Department of Veterans Affairs (VA) standards for VA-guaranteed loans and guidelines from Fannie Mae and Freddie Mac.
To verify income for Qualified Mortgage debt-to-income ratios under the Ability-to-Repay rule, lenders are required to look at whether the Social Security Administration benefit verification letter includes a defined expiration date. Unless the Social Security Administration letter specifically states that benefits will expire within three years of loan origination, lenders should treat the benefits as likely to continue.
Read the press release.
Read the bulletin.