Third-party verification services give lenders another way to verify borrowers' assets
The Federal Housing Administration (FHA) has released updated guidelines that approve the use of third-party verification (TVP) to collect financial information from a borrower.
In the recent mortgagee letter, the FHA said TPV services give lenders an alternative means to verify a borrower’s assets, employment and income. This saves them from the tedious task of collecting paystubs, W-2s and bank statements.
The previous FHA guidelines allowed for the digital verification of financial documents. There’s still no specific guidance released yet, however, for the TPV vendors who specialize in this type of information-gathering.
The FHA has reportedly permitted lenders to hire TPV vendors and have detailed specific requirements such as the lender’s responsibility to ensure their compliance.
Since its previous guideline release for underwriting reverse mortgage loans in 2014, the FHA has been working towards reducing the probability of default by assessing a borrower’s financial status and history, which helps determine their “ability and willingness” to meet the obligations of the loan.