CFPB Provides Guidance on Using Social Security Disability Income in Mortgage Lending

On November 18, 2014, the CFPB issued a compliance bulletin regarding Social Security Disability Income Verification. The Bulletin was issued to remind creditors of their obligations under the Equal Credit Opportunity Act (ECOA) and Regulation B, with respect to consideration of public assistance income, and to highlight standards and guidelines regarding verification of Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) income received by mortgage applicants.

First, ECOA and Regulation B prohibit creditors from discriminating in any aspect of a credit transaction against an applicant because all or part of the applicant’s income derives from a public assistance program. This includes social security disability income. However, a creditor may take into account the length of time an applicant will likely remain eligible to receive public assistance income. Fair lending concerns may arise when a creditor requires additional documentation to demonstrate social security disability income is likely to continue or has an income verification standard that has a disproportionately negative impact on a prohibited basis.

  • CFPB, in Regulation Z, has stated that when determining whether a loan is a Qualified Mortgage, social security income used in the debt-to-income ratio can be verified by means of a Social Security Administration benefit verification letter. Appendix Q of Regulation Z explains that if the verification letter does not indicate a defined expiration date within three years of loan origination, the creditor shall consider the income effective and likely to continue. The Appendix further notes that pending or current re-evaluation of medical eligibility is not considered an indication that benefits are not likely to continue.
  • The Department of Housing and Urban Development (HUD), and the Department of Veterans Affairs (VA) have similar guidelines. HUD further notes that under no circumstance may lenders inquire into or request documentation concerning the nature of the disability of the borrower.
  • For Fannie Mae, creditors must verify disability income by obtaining the verification letter or proof of current receipt of SSDI, and for SSI, by obtaining both forms of documentation.
  • Freddie Mac’s guide states that social security disability benefits may be considered qualifying income likely to continue unless there is a pre-determined insurance and/or benefit expiration date that is less than three years.

Following these standards and guidelines may help creditors avoid policies and practices that may violate ECOA and Regulation B.

If you have any further questions, please email Amanda Smith ( or Jennifer Winston (

Originally posted January 7, 2015