Identity Theft During FHA Loan Process

This ARTICLE On Identity Theft During FHA Loan Process Was Updated On April 13, 2017

Home buyers can still qualify for a mortgage loan if they are victims of identity theft. Since the credit report is not accurate, the only way borrowers can get approved for a home loan is with a manual underwriting. FHA and VA are the two loan programs that offer manual underwriting and not Fannie Mae and Freddie Mac. On this article, we will cover qualifying for mortgage and identity theft during FHA Loan Process and how borrowers can still close on their home loan while being victims of identity theft.

Identity Theft

Identity theft is one of the fastest growing crimes in the United States. Recent statistics prove that over 45,000 consumers become victims of identity theft in the U.S. and that number is expected to escalate.  Identity theft is classified as a felony and is categorized as fraud.

Here are ways of falling victim to identity theft

  • Losing wallet 
  • Losing credit cards
  • Getting their computer hacked
  • Getting mail stolen

Predators of identity theft get their victims personal information such as the following:

  • Full name and address
  • Social security number and date of birth
  • drivers license number

Predators of identity theft will use their victim’s private information to apply for new credit such as credit cards, installment loans, utility accounts, cell phone accounts, and loans of all types. Many victims of identity theft do not realize that they are victims until months later and after serious damage has been done to their credit.

Avoiding Becoming Victim

Below are tips in avoiding in becoming a victim of identity theft:

  • Shred all documents and paperwork that contain personal information
  • Review credit report and make sure that information on credit report is correct 
  • Shred credit and loan applications, monthly billing statements, and other documents containing personal information
  • Make sure that mailbox is secure with lock and if a determination letter of credit is not received timely, contact the creditor
  • Make sure that important documents like tax returns and W2s are received timely. If it is not received in a timely manner, contact the sender
  • Make sure that all monthly bills arrive every month. If any statements are missing, contact issuer or sender
  • Be cautious giving out personal information like social security card and date of birth
  • Make sure that bank statements, tax returns, ATM and credit card receipts are stored in a secured place or shredded
  • If purse or wallet is missing and/or stolen, contact issuers of credit and file police report. Contact credit bureaus as well and request to place fraud alert on file

Victims Of Identity Theft During FHA Loan Process

Unfortunately, victims of identity theft during FHA Loan process will encounter delays in their home closing. Once a borrower becomes a victim, it will automatically halt the mortgage process until the issue has been resolved. Victims of identity theft need to get their mortgage loans downgraded to a manual underwrite .

Once the borrower has been classified as an identity theft victim and the file has been downgraded to a manual underwrite, the underwriter will need letters of explanations and documentation for every credit tradelines.

The underwriter will review the following:

  • Overall payment history prior to the borrower becoming a crime victim
  • Manually evaluate borrower’s income, debt, and asset
  • Review non-traditional credit tradelines and payment history
The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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