Financial institutions have a responsibility to protect their customers' private information. The Gramm-Leach-Bliley Act restricts third-party access to bank account information, according to the Federal Trade Commission. The Department of Housing and Urban Development, or HUD, requires certain financial information for renters and homebuyers participating in their programs. The information needed is specific and can only be requested as part of the application process to verify certain statements made during the application process.
In order to verify your eligibility for HUD assistance, administrators from the Department have the authority to review your bank account information. This review is used to ensure that you have fully met the guidelines established by the Department for entrance into their aid programs. You must give HUD permission to review your accounts during the application process.
Types of Financial Requests
HUD requires bank account information for prospective and continuing recipients of their rental assistance programs, such as Section 8 housing vouchers (subsidized rent for low-income families) and HUD-financed public housing for the elderly and disabled. Borrowers obtaining Federal Housing Administration, or FHA, mortgage insurance must also provide bank information. HUD verifies tenants do not have excess reserves and that borrowers have minimum reserves for loan qualifying. For example, HUD wants to assure that its applicants aren't sitting on a healthy bank account while applying for rental payment assistance, while the FHA wants to know if all available liquid assets are being used to help secure a mortgage.
Permission Must Be Granted
HUD or the FHA-approved lender must obtain a borrower's written authorization signed by the customer in order to access their bank account information. The Right to Privacy Act of 1978 requires government agencies give customers notice and the opportunity to object to the disclosure of their financial information. Because HUD applicants and potential FHA borrowers give authorization to these agencies to review their account information, they can decide whether or not to move forward with the application process since they'll know whether they meet the requirements for either agency.
According to the FHA Handbook, a general authorization form may be used, which grants the lender blanket authority to verify the borrower's bank information needed to process the loan. This means all of a potential borrower's banking information about all accounts, checking, savings and retirement accounts included, cand be reviewed by the FHA before a decision is made. Information requested by HUD may include full account numbers, account balances over a specified amount of time and the length of time the customer has held the account. Agencies are interested in the history or bank accounts and want to see if the income level has been consistent or if it tends to drastically fluctuate. The FHA is looking to see if the borrower consistently has enough income to carry long-term debt such as a mortgage, while HUD wants to verify that income was accurately reported.