What are Lenders Allowed to Ask You When Applying for a Mortgage?

What are Lenders Allowed to Ask You When Applying for a Mortgage?

When you are applying for a loan, a mortgage lender can ask you about almost anything related to your finances. But there are a few questions they may try to ask that you simply don't need to answer.

Due to the collapse of the housing industry in 2008, lenders have been more careful about who they loan money to for mortgages. As a result, that means more guidelines for underwriting and more information from borrowers on applications. But regardless of the more stringent guidelines, there are still some things that lenders are not allowed to ask you. Here are some of the questions that lenders are not allowed to ask you when applying for a mortgage.

Family Status

Asking about your marital status is a little tricky. A mortgage lender is allowed to ask about your marital status, but only in a certain way. For instance, they can ask if you are married, separated or unmarried. However, they are not allowed to ask if you are single, divorced or widowed.

Similarly, mortgage lenders are not allowed to ask you if you are currently pregnant or if you are planning a family. Of course, the answer to this question could work against you if the answer is “yes” because it could affect your financial future. Lenders can only ask about your current dependents and their ages because that is information that is already available on your tax returns.

Child Support and Alimony

While a mortgage lender can ask if you are paying child support or alimony, they cannot require you to report any income that you receive from an ex-spouse. However, it is often beneficial to you if you are receiving these payments because it will put you in a better position to qualify for the mortgage loan.

Disabilities

A potential mortgage lender is not allowed to ask if you have any illnesses or disabilities when you are applying for a mortgage. This information is protected under the Americans with Disabilities Act and the Fair Housing Act.

What To Do if Asked an Illegal Question

Even though potential lenders are not allowed to ask these questions, that does not mean they are not going to pop up during an interview or application process. If this happens to you, the first thing you should do is tell the lender that you are not required to provide an answer to that question. Next, you should take the issue to the company’s manager. If the manager does not want to do anything about your complaint, you may need to take your complaint to the state’s banking commission. You can do this by filing formal complaints with the Federal Trade Commission or the Consumer Federal Protection Bureau. You should also look for a different mortgage lender that you are more comfortable with. If the lender is breaking the law during the interview process, there is a chance that they will be less than ethical when handling your mortgage.

Despite these questions that mortgage lenders cannot ask you, there are many questions left that they are allowed to ask. For instance, anything related to your income, your assets and your job is fair game. They can also ask about your current debt and your available credit. Be prepared to answer those questions and bring along any documentation and bank statements that will prove you can repay the mortgage loan if you get approved.

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Image: Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Reviews

  • Bob

    December 04, 2013

    Are they allowed to ask for paystubs of your ex spouse?

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