Requirements for utilizing third parties to verify information on government-guaranteed residential loans to veterans have been clarified.
Home lenders have been inquiring with the Department of Veterans Affairs about whether or not third-party vendors may complete verifications on VA-guaranteed mortgages.
This includes verification of the borrower’s income, employment and asset information in order to determine if the applicant qualifies for a VA loan.
So the agency clarified its policies Friday in
Circular 26-17-43.
According to VA, it will accept third-party verifications as outlined in
38 C.F.R. § 36.4340(j) – Underwriting Standards, Processing Procedures, Lender Responsibility and Lender Certification.
Those standards say that lenders are fully responsible for developing all credit information.
“Verifications of employment and deposits, and requests for credit reports, and/or credit information must be initiated and received by the lender,” today’s circular states.
When a real estate broker or agent, or any other party, requests any of the information, then the report must be returned directly to the lender. This must be disclosed by
appropriately completing the required certification on the loan application, or report. In addition, the parties must be identified as agents of the lender.
When lenders rely on other parties to obtain any credit or employment information, or lenders accept information obtained by any other party, VA will construe the parties to be authorized agents of the lenders.
“Any negligent or willful misrepresentation by such parties shall be imputed to the lender as if the lender had processed those documents, and the lender shall remain responsible for the quality and accuracy of the information provided to VA,” the circular stated.
Lenders cannot charge borrowers for the cost of obtaining third-party verifications.
The circular will be rescinded on Nov. 1, 2019.
