HUD Current Position regarding Borrower’s Authorization

Question:

I heard that HUD recently cited some FHA Approved Mortgagees for the use of a Borrower’s Authorization form with an expiration date.  Is this true?

 

Answer: 

Yes. HUD has cited many lenders recently for the Borrower Certification expiring ninety (90) days after its execution.  HUD requires a Borrower’s Authorization for Use of Information Protected under the Privacy Act with the required FHA consent language, signed and dated as indicated in Chapter II A D 1 (a) of the HUD Handbook 4000.1.  The HUD Handbook 4000.1 indicates the following:

Borrower’s Authorization for Use of Information Protected under the Privacy Act

  • Standard. The Mortgagee must obtain the Borrower’s consent for use of the Borrower’s information for any purpose relating to the origination, servicing, loss mitigation, and disposition of the Mortgage or Property securing the Mortgage, and relating to any insurance claim and ultimate resolution of such claims by the Mortgagee and FHA.
  • Required Documentation. The Mortgagee must obtain a signed statement from the Borrower that clearly expresses the Borrower’s consent for the use of the Borrower’s information as required above.

It appears to be HUD’s position that a Borrower’s Authorization form with a specific expiration date (i.e. 90 days) is not aligned with the intended use of the document, which should not have an expiration date.  Rather, the required consent language must survive past the origination and closing of the loan.