Loan Officer Privacy Laws

Having an experienced mortgage loan officer in your database can be a lifesaver. If you haven’t yet had an experience where an experienced loan officer seemed to pull a rabbit out of a hat and saved a deal that was dead, you will one day. Good loan officers know at the outset whether someone can qualify for a home or whether a loan needs to be underwritten to Fannie Mae or FHA guidelines.

A professional loan officer in your database is someone you can trust when they tell you your clients are qualified for a mortgage. But what can they tell you, exactly?

Loan officers are required to follow no shortage of federal and state regulations. And with the introduction of the Consumer Financial Protection Bureau, or CFPB three years ago, there are still more rules to come. Yet one of the most established and understood laws are written in the borrower’s Right to Financial Privacy Act, originally introduced back in 1978.

For example, you can ask if the buyers can afford a mortgage but you can’t ask how much money the buyers make. Well, you can certainly ask but the loan officer can’t tell you.

You may ask if the buyers have good credit or not but the loan officer can’t tell you that either. Are the buyers first timers or have they purchased a home before? Again, such information is private information about a third party and can’t be disclosed.

If you do ask a loan officer about someone’s credit score and they sheepishly give it to you they’ve violated a host of consumer laws. In fact, a loan officer can’t tell you in person why a person can’t qualify for a mortgage.

For example, if you ask a loan officer why the loan was declined the answer can’t be, “because of their credit scores” or “they don’t make enough money” or some such personal information. Loan officers can provide you with a preapproval letter and tell you what was reviewed but they can’t divulge their findings. It’s private.

 

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