Anyone who has gone through the process of purchasing a home knows just how stressful it can prove to be. That's because in addition to trying to land the home of your dreams with the best offer, you also have to navigate the mortgage application process, which can seem complex and even a bit invasive.
That's because mortgage lenders will delve into your financial background in an attempt to ensure that you are ready and able to pay off what amounts to a sizeable and lengthy loan.
Unfortunately, the U.S. Department of Housing and Urban Development has recently uncovered instances of lenders discriminating against disabled loan applicants, a practice expressly prohibited by federal law.
While news like this is certainly disheartening, the good news is that another federal agency -- the Consumer Financial Protection Bureau -- is also taking steps to remind lenders to treat those loan applicants who receive disability benefits the same as all other applicants.
Specifically, the CFPB recently issued a bulletin to lenders warning them about asking disabled loan applicants for unnecessary documentation relating to their condition.
In general, lenders are indeed required to verify income as part of the mortgage application process, and part of this process includes examining whether a disabled applicant's benefit verification letter from the Social Security Administration has a defined payment expiration date for payments.
However, the CFPB bulletin reminded lenders that unless the SSA benefit verification letter expressly declares that the disability benefits will expire within three years of the loan origination, they must treat the disability benefits as likely to continue.
This position makes sense, argues the CFPB, given that the documentation provided by the SSA generally does not provide a defined payment expiration date.
"Everyone deserves the opportunity to qualify for a mortgage that they can afford," said the CFPB. "Consumers should not be put at a disadvantage just because they receive Social Security disability income."
The actions of the CFPB are undoubtedly welcome news to the more than 15 million people here in the U.S., including many veterans, who rely on their disability benefits to make ends meet and for whom home ownership may seem like an impossible dream.
Consider speaking with an experienced legal professional if you would like to learn more about SSD benefits, including whether you may qualify based on your condition.
Source: HousingWire, "CFPB: Don't discriminate against borrowers on Social Security disability," Ben Lane, Nov. 19, 2014