HUD's FAQs - May the Originator Require the Borrower to Sign Consents to Verify Employment, Income or Deposits Prior to Issuing a GFE Without Violating 3500.7(a)(5)'s Prohibition on Requiring the Applicant to Submit Supplemental Documentation?

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Q: May the originator require the borrower to sign consents to verify employment, income or deposits prior to issuing a GFE without violating 3500.7(a)(5)‘s prohibition on requiring the applicant to submit supplemental documentation to verify information provided on the application?

A: No, a loan originator may not require a borrower to sign consents to verify employment, income or deposits as a condition of issuing a GFE as such a requirement may inhibit borrowers from shopping for the best loan by leading borrowers to believe that they are committed to obtaining a loan from that loan originator (see 24 CFR § 3500.7(a) (5) and (b) (5)). However, the borrower may voluntarily sign consents prior to the issuance of the GFE to facilitate the loan process.

This can be found in GFE-General – FAQ #31 of HUD’s FAQs.  HUD’s FAQs can be found at http://www.hud.gov/offices/hsg/rmra/res/respa_hm.cfm.

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