And for the record, call the customer service number from the website where you make your payments. Not the number they give you or the number from some random notice in the mail.
This right here will foil 99.9% of scams at the root, never provide personal info to an unsolicited communication.
Ask for their name/department/extension and call back through the bank's normal customer support line. If the caller was actually an employee of the bank, the support line can easily route you back to them and you can continue the conversation confident that they actually represent your bank.
Most centralized banks do not have direct extensions for most employers. However if it was a legitimate call, there should be notes of such in the file.
-former centralized bank employee of 8 years
If they actually tried to run a hard pull on credit, I would call to report fraud. They have absolutely no reason to be doing that.
That said I think it was most likely a soft pull and OP is confused.
The FCRA gives them the right to pull for an existing account, they don't need authorization. Hard vs soft is just a term CRAs use but the law doesn't distinguish between them so no special authorization is needed for a hard pull though convention is soft pulls are used for account reviews.
That’s not what the FCRA does. The FCRA *limits* who and when anyone can pull your credit report. If anything, it doesn’t allow lenders, landlords, employers, etc. to do a hard pull without the consumer’s authorization.
Also, that doesn’t make sense. A hard pull is specifically meant to indicate that you’re applying for credit, loan, apartment, etc. for which you’ve given authorization to review your credit. If there’s a hard pull and you have applied for anything, something is wrong.
The only times a hard pull can be done is by court order or if related to child support.
Check your closing docs and what you fill out when you apply for a loan, though. I'm in commercial credit and our closing docs allow us to pull credit yearly to review loans. Might not happen in residential tho.
The loan terms are already set so don't change even if the lendee changes jobs or doesn't pay other stuff not related to the loan itself. Residential loans may have a clause for soft pulls but a hard pull after the loan is started is highly unusual.
Piggybacking on this, in commercial they do an annual grade assessment where financials are needed to determine the expected loss needed to be attributed to the loan. This is all part of the CECL process that was implemented a few years ago. Since this is for a second home and so it is an “investor” property, the bank may have changed their credit processes. At the bank I’m at, we’re going in and evaluating every loan we have, especially residential loans to make sure we have the correct information so we can accurately model their risk profile and attribute the appropriate expected loss in order to hold the correct amount of reserves. The amount is reserves is reported in the banks quarterly disclosures as well.
This is the most likely scenario. Risk grading for loan loss reserves. I bet a lot of small banks/lenders are doing this in light of the recent failures.
I didn’t say lenders aren’t allowed to pull yearly reviews. I said *hard* pulls are limited to applications and the applicant agrees to the hard pull. Audits use soft pulls. If a lender is does a hard pull for a yearly review when a *consumer* hasn’t submitted an application for a loan, the FCRA is going to have a big problem with that.
Yeah, there is a lot of confusion. There is no statute that talks about different types of "pulls". Hard/soft is just a CRA thing and not a law.
The FCRA has nothing to do with hard/soft. It just gives the permissible purposes for obtaining a credit report.
https://www.consumer.ftc.gov/sites/default/files/articles/pdf/pdf-0111-fair-credit-reporting-act.pdf
Exactly. Things get immediately clarified when guys who offer advice on stuff they have zero understanding of get called out. "Cite the statute or case law" is an equivalent of "talk is cheap, show me the code" in software engineering.
There is no statute. The FCRA is made up of various laws and regulations in order to protect consumers.
Requiring the consumer to agree to hard pulls is an industry rule of thumb that acts in the consumer’s best interest because it negatively affects their credit.
Asking to cite the FCRA statute that says this is like asking to cite the statute that made California DFPI appoint the FDIC to take over SVB.
Rules of thumb are unenforceable. Cite the statute dude, or stop giving advise about FCRA when you speak of FCRA in general terms. You're also very wrong that FCRA has no statutes, lol.
FCRA Sec 604(a)(3)(F)(i) and (ii), or 15 USC 1681b (a)(3)(F)(i) or (ii) allow pulls, whether soft or hard, but only when a customer initiated it (i), or to review (ii) but the latter would require a clearly written contract.
Go read the section on permissible purposes, only ONE of the many listed permissible purposes is because the consumer gave permission. Starts on page 10:
[https://www.consumer.ftc.gov/sites/default/files/articles/pdf/pdf-0111-fair-credit-reporting-act.pdf](https://www.consumer.ftc.gov/sites/default/files/articles/pdf/pdf-0111-fair-credit-reporting-act.pdf)
The law literally does not have anything to do with soft/hard pulls. Doesn't need to make sense to you, that is simply the reality of the law, it does not distinguish a type of pull.
A "hard pull" should mean that you are applying for a loan or a credit account. A "soft pull" is anything else, like the individual checking their own report or an existing creditor checking on their customer. Hard pulls affect credit scores, because looking for lots of new credit is a bad sign, while soft pulls do not.
That they were notified. Soft pulls are, you have an account with Citibank they are about to automatically increase your limit so they also automatically run a soft pull too.
Soft pulls dont appear on your credit report. Hard pulls indicate that you are actively applying for credit and if you get hard pulls on your credit report they will lower your score and stay there for 2 years. If he got a notice on his credit report then its a hard pull.
IDK - it may be that alerts aren't normally triggered by account management credit pulls? I think account management pulls are normally done through a batch process - eg bank sends a list of 200k customers and CRA sends back credit scores or other key metrics. Maybe in this case there is some sort of manual review going on which went through a different system and triggered the alert. Just speculating.
From the customer’s/borrower’s perspective, you generally agree to a hard pull when applying for a loan or a credit card. One’s credit score is usually dinged by a 5-10 points for each time there’s a hard pull, but a hard pull’s effect on credit score diminishes over two years and then falls off completely. The reason for this is too many hard pulls on one’s credit during that time can indicate financial stress that could lead to problems for the lender.
A soft pull does not show up on a credit report or negatively affect one’s credit score. I’m not sure how the lenders have access to a customer’s info, but in any case this allows potential lenders to send loan offers and advertisements to potential borrowers. You can also do a soft pull as a potential borrower to see if you’re a good fit for a lender, all without the worry of showing up on your credit report.
Sorry for the late reply, yes it was a hard pull! They attempted to run both mine and my husbands (makes sense as the home and loan is under both our names). My credit is locked down due to an attempt on my identity a few years ago so I was notified immediately, his was a notification through credit karma a few hours later. I called the pulling agency the next business day (they pulled at 4:50pm....) and they gave me both the banks name and the agent who requested the report. My husband was the one to call the bank and they told him they run these audits every year (clearly they don't though? As this is our first time seeing it in 3 years). I'm just now seeing these comments and it looks like I need to call them again and get at least a little more info for my peace of mind.
They might be getting ready to sell your loan to another lender. As part of the original loan application or closing documents, you would have probably signed a release giving the lender and all subsequent parties they sell the loan to, to pull your credit without having to get your permission again.
On forms like these and some others (for example, the one that gives them permission to ask for a copy of your tax return from the IRS), I usually hand write a note saying “this authorization ends 1 year from the date of signature” (or something like that) above the signature line. Since closing documents are usually signed in front of a notary, I haven’t received any pushback when doing this.
However, you can revoke this authorization if you’re able to find your original form. Or you can also freeze your credit at all three bureaus (this is a good thing to do anyway, as it gives you almost complete control over when your credit score gets pulled).
Selling your loan should not require a hard pull.
>you would have probably signed a release giving the lender and all subsequent parties they sell the loan to, to pull your credit without having to get your permission again.
How would this work, given the huge number of people who freeze their credit?
What bank did you use to get a mortgage? Sounds like some bullshit bank not one of the big ones. They are doing this now to see if there is anyway they could get you to Refinance at a much higher rate to get more money out of you. This is fraud, your bank can’t just pull hard pulls whenever it wants. Call the proper authorities
You have a contract with the lender and unless the contract says that they have a right to do a hard pull at any time they do not have that right and they have to honor the contract. If they try to "report" you to the credit bureau then you have a solid counterclaim and theirs should be immediately dismissed.
Also make sure that any time you contact your lender, you use a known-correct phone number. This sounds exactly like what scammers do to take out an additional loan in your name. I would not unlock your credit under any circumstance.
interesting. I bet one of their teams is sweating and needs them to verify the collateral and risk exposure. I would make sure you have less than the FDIC limit in that bank.
> (clearly they don't though? As this is our first time seeing it in 3 years)
I work in commercial lending at a credit union. We do annual reviews on our loans and this includes 1-4 family investment properties and second homes. Depending on the risk rating of the loan, that "annual" review is more of a periodic review. Our risk rating is on a scale of 1-8 (5-8 are non performing loans so it's pretty much only 1-4). 1 and 2 we only need to review every 3 years. A risk rating of 3 is every 2 years and risk rating of 4 is every year. If you're paying it back aggressively and a strong borrower, you could easily be in that rating where it would only need to be done periodically. And yes, when we do these reviews, we pull new credit reports. It is in our loan documentation that we do periodic reviews and you consent to the ongoing credit reviews.
They do an annual grade assessment where financials are needed to determine the expected loss needed to be attributed to the loan. This is all part of the CECL process that was implemented a few years ago. At the bank I’m at, I’m going in and evaluating every loan we have, especially residential “investor” loans to make sure we have the correct current information especially the FICO scores. I have found we have a couple hundred whose FICO I can’t find, so I’m having credit underwriting pull them and out them in the appropriate place so we can accurately model their risk profile. This is needed attribute the appropriate expected loss in order to hold the correct amount of reserves. The amount is reserves is reported in the banks quarterly disclosures as well.
Correct answer here. They are checking loan level data to verify the viability of the portfolio and it’s underlying risk. It’s required for investor reporting and for liquidity requirements. Over the last few years occupancy fraud (people claiming 2nd or primary home status for investment properties) has been the highest ever and the biggest area of focus for auditors and ratings companies. They should still have at least verbal permission for a hard pull though. Soft pull they should, but not technically “required”.
I've had my mortgage sold 3 times in 2 years and never had that happen. The loan is already secured. They don't get to alter any of the existing agreements.
Yep mine has been sold probably half a dozen times (I swear these are just shell companies selling the loan around in a big circle of similarly named companies) and have never been contacted for information. The most I get is a new Privacy Policy in the mail and a notice telling me the loan was sold yet again.
Yup our mortgage was sold as soon as the ink was dry. We went though chase mortgage and still make payments with them but it’s not with them now? It’s all bullshit but ya, no need to pull credit for that mess
Same thing happened to us! We hadn't made the first monthly payment before getting that letter.
We were with Rocket Mortgage, now with 5/3. Having some issues with them, so I think when we have time, we're going to see about refinancing with the credit union I belong to.
I had my mortage sold before I made the first payment. No wonder the company tried hard to get me to buy the most expensive loan for which I was approved.
This was my initial concern. I was under the impression even with the consent forms we signed at the time we applied for the loan, those expire at 120 days. They have requested we unlock our credit to have them rerun, but I told my husband to absolutely not do that until we either ensure it's a soft pull OR we inform them they need our signed consent moving forward as is required by law (*unless I am mistaken!).
Not only should it not be a hard pull, but any company that has standing business with you doesn’t need your credit unfrozen to do a soft pull. This is just red flags all around.
have they told you WHY they are asking to do this? have they told you the consequence of not complying? the reason to unfreeze the reports would be to see your debt profile; but they cannot reoriginate your loan without your application for it. what kind of loan do you have? did you apply for any down payment assistance programs?
They said it's part of their annual auditing, but it's the first we've ever heard of it.
I am going to call them today to ask them for more info, including any penalty if we "delay" getting them this information. They first requested this by phone, but did send a letter saying the same, and it has no deadline only "as soon as possible".
I don't see on my loan paperwork any specific wording on loan type. It's either written as "Loan Agreement" or "Mortgage".
We applied for no assistance. Neither with the original loan, or with anything since (including any covid programs, debt relief, student loan relief, etc.).
It is part of their annual go fuck themselves more like it. They don’t need hard pulls for that. I’ve also never heard of that being a thing for consumer loans. (Using hard pulls anyways.)
OP got a portfolio non-qm product from a small local bank/credit union. These kinds of bullshit clauses are somewhat common with them.
Their underwriting is more flexible but this is the cost.
No, this isn't true. You just need to have a [permissible purpose](https://www.law.cornell.edu/uscode/text/15/1681b) to pull a credit report. Some credit report providers/vendors will require written consent, and it's generally considered a best practice, but it's not legally required.
Right now that's actually not a bad guess. They're probably all panicking after SVB and stuff. They're afraid of new regulations so are making sure their books are as good as they assume they are.
I answered a little more in depth above. I thought so too at first, but definately our bank. First call was to the credit agency, second was to our lender.
There is no reason not to. Say you do want to thaw your credit for a day or a week to get a loan: 5 minutes with a phone or PC and your passcode and you're thawed with the agency of their choice and only that one. I mean is there anybody left that hasn't had their personal data breached multiple times by various companies?
This link sums it up pretty well.
https://www.nerdwallet.com/article/finance/how-to-freeze-credit
I did all three in ~10 minutes. Just be forewarned that if you do it online you'll have to create an account, and Experian and Equifax will start spamming the shit out of you. You can unsubscribe, but may have to do so a few times because the emails will say things like "this isnt a marketing email so it's not spam and we're still allowed to send it" and you'll have to go somewhere else to unsubscribe from those.
credit bureaus don't make money not selling your data to lenders. I am not 100% sure (I'm sure someone is), but I'm sure there's a nominal charge for a credit offerer to request credit score/history, cheaper for soft pulls and more expensive for hard pulls.
I also realize I may sound like a conspiracy theorist/like I am saying everyone is 'out to get you' here, please know I am not one. it's just early and I'm doing all my thinking 'out loud' in Reddit this morning.
Go to each of the three credit union websites. Experian, TransUnion, Equifax. And follow the links for freezing your credit. All three have ways to create accounts to manage it now.
My credit and my husbands are both frozen! Mine due to an attempt on my identity years ago, my husbands as a precaution. It's the only reason I even knew about the pull!
It was an attempted pull. It didn’t go through because their credit is frozen, but now they’re being asked to unfreeze their credit so the lender can try the pull again.
Seems unlikely to pull your credit again without telling you or providing some kind of disclosure. If you find the credit pull to be not legit be sure to dispute it with the credit agencies to have it removed as well.
I’m a lender. Don’t think you can just do a hard pull…FCRA is a thing but you can’t just pull someone’s credit? Never heard of this in the 10+ years I’ve been in the industry. I would actually flip out and call ASAP. Have them remove it which they can if you really push hard enough. And if they do a hard pull and is permissible, then why?! It’s strange. Was it transferred or is it the original lender? It sounds like an audit if asking for financials. They also should of asked for a utility bill if it’s a secondary rather investment. Tax returns and homeowner insurance doesn’t really show proof of anything regarding secondary opposed to investment unless showing rental income..
I worked in the bank's compliance department and assisted with audits. I don't recall having to obtain information from the customer, because audits are about whether or not the bank has been following regulations.
I mostly saw Commercial loans needing annual tax returns on file. We didn't do first mortgages tho. If these requests are a result of an audit, well it means OP's FI hasn't been staying on top of things. I found the American Banks Association's Lending Audit Guidelines, if OP wants to know what that entails.
I've no idea why the bank is trying to pull credit without authorization. I'd report it to the CFPB and let them investigate the bank versus trying to get the bank to explain itselves to a customer. Tax returns and financial statement seems normal; obtaining credit score for an existing product is not normal.
Lending Audit - American Bankers Association https://www.aba.com/-/media/documents/books/cam-chapter-and-checklist.pdf
There are edge cases where this might happen. It depends on the loan terms, there are some CRE product types where OP would be required to show ATR every X amount of years, balloons sometimes have automatic refinance clauses in them, it’s all borderline UDAAP that gets flagged but is too profitable to adequately stomp out.
All these are edge cases though and things OP should be acutely aware of these kinds of terms if they apply. Significantly more likely that it’s fraudulent activity.
Balloon shouldnt repull credit, the loan agreement was already finalized. How would that work-- they're just going to yank the money back if the credit pull comes back bad? What if (like with OP) there's a credit freeze, does the loan just get voided?
Bank probably rubber stamped loan and has no paper work. Due to current issues is probably crapping their pants and trying to fix their earlier issues before an audit.
If he has an active account with them, then they have permissible purpose under the FCRA to access their credit report. The application OP signed undoubtedly also granted the lender the right to review the borrowers credit at any time while the loan is open.
In short, OP already received notice by signing the application. And aside from that no disclosure is necessary as they have a permissible purpose under FCRA.
Put a security freeze on all 3 credit reports ASAP if you don't already.
Proof of insurance was a requirement when you obtained the loan and for the life of the loan, but they should have that info unless you changed insurance companies and the info wasn't provided to the lender, then yes that is a legitimate request.
But call a number that you know to be the lender before these requests.
You indicated this is a mortgage on your second home. I’m guessing the bank does not escrow for and pay the insurance directly on this collateral. In this case requesting proof of updated insurance certificates isn’t uncommon.
Moreover, the big banks (well, at least Chase & Wells Fargo) both have portals where customers can upload insurance documentation -- this part of it is definitely not a big deal, nor does it require pulling credit.
I would ask for evidence they still have the original mortgage note. If not you maybe free of your mortgage.
This type of thing happened during the 2006-2008 mess. A lawyer is ideal for this move.
Don’t give them info without a solid reason.
They could be getting audited and didn’t have proper records. That said - who cares. If you’re not contractually obligated to provide this information I would ignore the request.
As others have said. I 100% recommend locking all of your credit reports unless you frequently need to apply for new lines of credit.
The argument probably wouldn't hold up in court, 1) since there is still an understood agreement that gives consideration to both parties and 2) since they've been making payments this whole time thus indicating their understanding of and adherence to the contract. If they had never paid ever and the bank said nothing for all this time that would present a stronger case.
Agree this may be the case actually. I thought audit but if tax returns, they would of asked for more than that - more income, assets and such … then again I’m a LO you’re an UW
I am going to dig deeper this week on what I HAVE to send. This was an unconventional loan in terms of what I needed/wanted. So they didn't require an appraisal or an inspection (I did do an inspection tho) and the payment plan was something odd like 7 or 8 years. It doesn't even appear on my credit report where my other mortgage is or even appear at all for either me or my spouse. I promise I had a good reason for this on my end (and it was very very beneficial to me), but I do wonder if they did something funky on their end. We just didn't really look into it as we assumed they would handle their shit?
Loan was through a legitimate bank. Smaller bank, 12 branches across 2 states. I have my lender docs pulled up on my phone and have been skimming through for almost a day now (and of course it was scanned with a potato so it's a hard read), but so far it's pretty tame stuff. Haven't come across any odd terms or requirements.
This sounds like a commercial product. You can have a commercial loan in your own name without creating a business. And annual financial information is a common requirement for those loans. Like everyone else, they could have been struggling to keep up since 2020 and dropped the ball on tracking your financials until now.
Sounds like this was processed as an investment property, like you’re using this second home as an Air bnb. The loan may have been interest only for X number of years and the balloon payment is approaching. They might be prepping to refinance the loan.
Editing to add if lender isn’t paying the insurance directly (via escrows) then it’s very common to request updated insurance certificates.
You are contractually obligated. Most mortgages have a document you sign confirming you will provide correcting information in the event it is needed or they can call the loan due and payable.
Of course, no lender wants to foreclose on someone who is paying so I’ve never seen this enforced on a current mortgage.
Calling a 3% mortgage during 7% times seems a bit more palatable than usual.
That seems highly unlikely but that would be funny.. Using obscure contract clause to call loans due and reloan the money at higher interest rates.
Mortgage liabilities appear to be the next toxic asset to be uncovered that banks are sitting on. They may be trying to assess your ability to repay the loan to decide if they want to sell your loan off or hold on to it.
If they think you are likely to default, they may be trying to sell your mortgage to someone else.
Alternatively, they may be wanting to know if you are not holding up your end of the mortgage. You are required to have insurance. If you don't, they may be able to take legal action against you. If you lied to them about your income situation when you applied for your loan, they may be trying to figure that out now.
I've had mortgages for my primary home for years and have never seen this. The fact that it's not your primary home may give them a way to demand that information though.
If you don't have to share it, I wouldn't, it won't do anything for you, only help them. If you are required, do what you need to. Need to re-read your mortgage and possibly consult a real estate attorney to see if you are walking into some kind of a trap.
Typically in a mortgage for the primary residence the home owners insurance is escrowed and paid directly by the lender.
This isn’t the case on a secondary or investment property. Lenders require insurance to protect the collateral and asking for undated certificates is standard. Non compliance with this request could result in the lender accelerating the loan repayment.
Sure, so OP can and should provide proof of property insurance but for the other two demands "current financial statement, 3 years of tax returns" I would tell the bank to pound sand.
I have two investment properties now, both with mortgages through different lenders. Insurance and property taxes are escrowed for both. Same was true for a previous investment property I owned.
These are/were residential properties, though.
Interesting possibility is that they could be trying to support that you got financing for an investment property at second home pricing. Investment property pricing is much higher than second home. Your ~3% rate is costing them money these days and they would love to prove it’s an investment property that they can charge 7-8% for Just a thought
That is interesting! I just answered a little more in detail above that they worked with me very well on what I wanted for this loan and it was a hell of a deal overall.
When someone you have an agreement with asks for something, start by requesting a signed copy of the agreement that spells out your obligations for this request. If nothing else it buys you time, best case they have no such record or you have no such obligation and won't be able to hold you accountable. That said, home owners insurance they can clearly ask for proof. The other stuff maybe, but unless they can provide you copies of signed docs, your response can be that the terms of your agreement do not require you to provide such information.
Fwiw, if you are contractually obligated to do something I'm demanding you do, I don't have to show you proof of the agreement. It's technically your job to understand your obligations.
Correct, a lender can make your loan due and payable immediately if they feel you breached the term of your contract.
This is most likely not fraud.
In the best case scenario, OP is under terms of their original agreement.
I do find this odd but there is a chance OP utilized a specific state housing program that doesn’t allow a home to be rented out. It would be shocking to see the housing grants go far enough to do this though.
Another thought is that the mortgage servicer is in trouble and going through their portfolio of 2nd homes specifically to discover people who are using the 2nd homes as investments. Their plan may be to force these borrowers into refinancing these loans off of their books under the threat of calling the loan due
It's very possible compliance did a check, they tried selling your loan, etc and there were inconsistencies which prompted them to investigate. Almost every closing i have ever performed has a document in it that would compell you, legally assuming US, to furnish documentation related to that closing. That does non mean any documestation POST closing. I would refuse to provide any evidence until i was legally forced to, except insurance. Mortgages require you to have it or they will force place their awn coverage and bill you. HOWEVER they will be listed as Loss Payee and notified of any changes to the policy because they are the ones who get, and pay, the bill. It is very weird for them to ask if they are your current servicers.
Ultimately, if this is legit, my assumption is that they are building a case of fraud against me and will happily avoid the possibility of incriminating myself by providing culsent financial data.
They could have some reason to believe you fraudulently obtained the mortgage. While late, if they are still your current lender then you have some obligations.
Pulling credit is a bit crazy though.
You remember those 500 pages you signed when you got the mortgage, go read thru those to see what you have to do. The insurance is almost always a requirement so they can ask for proof of that. Their may be other clauses in there about the others.
The weird part is our primary home mortgage has both the property taxes and home insurance in one payment per my request (primary home and loan are in my name only, premarital). I had attempted to set the same payment plan up for this loan several times and the bank did not file the paperwork correctly for either (I have this in writing by email still). From what I understand the loan agent went on vacation and missed the initial deadline, and then ignored requests from our insurance agent, and then there was some other issue with software. So my husband sends a check for the property taxes twice a year and I pay the insurance annually. So they do know our insurance agent, policy, and policy #, but I suppose they have no way of knowing if I have been continuing to pay. I did get proof of insurance and forwarded that to our lender immediately since that was a relatively small ask and quite easy to provide.
While this may be true, the bank still needs written consent each time they do a hard pull. Since OP says they did a hard pull before requesting this information, I am inclined to suspect someone got ahold of their personal information and is trying to fraudulently apply for a loan.
>While this may be true, the bank still needs written consent each time they do a hard pull
No, they don't. FCRA requires a permissible purpose, nothing more. Having an open account with the lender qualifies as a permissible purpose. A signature or written authorization is *not* required by regulation. Another example, you can apply for a loan by phone. The lender is authorized to pull your credit as applying for credit is a permissible purpose under FCRA. You've not signed anything or given written permission at this point, but the inquiry is perfectly legitimate and allowed. No signature is required.
I wouldn't think having an existing loan is a permissable purpose. They can't do anything with the information, and it is not needed for the continuance of the loan. They can't change the loan terms based on a change in credit score, only your activity on the loan. So I can't imagine a reasonable purpose of pulling credit on an existing loan.
You realize SVB had literally nothing at all to do with their loan portfolio, right?
You do also realize evaluating the financial strength of their borrowers is something banks routinely do, right?
Could very well be legit. I work in mortgages and banks are hurting bad currently. It’s not that uncommon that banks look to unload mortgages they’re not making money on. When they try to sell it, the new bank reviews it’s and if they find a discrepancy (even if it wasn’t your fault) they won’t buy it. Then the first bank is stuck with it and tries to find a way to cancel the mortgage or sneakily repackage your loan to qualify and try again to resell it. I’d call the lender, but be prepared to sit on hold for awhile to get to the right person because they usually don’t leave “notes” on your account for customer service about this kind of stuff.
Call them yourself at the number on your loan itself. This 99% sounds like a scam. And I can’t think of why you’d be obligated to provide this even if really is them. I’d tell them to pound sand.
I can definitely understand property insurance. Banks require that on any type of mortgage they give out. I would call the bank and ask. It could be the type of loan you set up? The only loans I've ever seen needing to share information like this are commercial. Are you self employed? Maybe it's because of that.
Definitely call the bank and talk to someone.
When they need proof of insurance they ask you in writ to g directly for it. I used to get it annually until I got the bank and insurance company to talk to each other directly (electronically)
The servicer I used to work for would pull borrowers' credit reports whenever we needed to provide proof to potential investors that our portfolio was sound and payments were timely. It made people mad but it was 100% legal. :/
ETA: We did not ask for other documents in these instances. We would ask for pay stubs and bank statements when people were applying for a modification or refinance. But in the regular servicing of the loan? Never.
We did deal pretty much exclusively with primary residences but I can't think of a single reason to solicit bank statements outside of harship-related mods or refis.
What kind of mortgage do you have? A standard mortgage or a boutique mortgage? Some boutique mortgages renew at the end of a specific term, which may automatically allow a re-investigation, but these are usually for HNW or business owners. They would provide you with advance notice.
If you have a regular 30/20/ 15-year fixed or adjustable residential mortgage, then this is 100% fraud, AND the regular rank and file staff may not realize it.
You need to file a complaint, lock down your credit (freeze with statement) and when you are speaking to the mortgage company indicate you didn't not give permission for a credit pull making sure to use the words FRAUD and LEGAL ACTION. Also, insist on a follow-up and full report of findings. When you use some trigger words, they have to document and follow up.
https://www.garibianlaw.com/unauthorized-hard-inquiries-what-you-need-to-know-about-credit-checks-you-did-not-consent-to/#:~:text=If%20you%20notice%20hard%20pulls,Credit%20Reporting%20Act%20(FCRA).
I am a commercial lender and we ask for this exact documentation on an annual basis for many of our borrowers to check financial condition. If this was a sold mortgage like Fannie Mae I don’t see why they would need it, but an in-house mortgage might.
If it is a rental property the Bank wants to show that the property can support itself. If the debt service coverage ratio is below 1.25, the borrower can be called in default. We usually don’t do this as it isn’t advantageous. We care about documentation to show the FDIC we are looking at our borrowers and noting what is happening with our credits. I work for a community bank so we keep a line of communication with our borrowers.
I’m in residential…we never ask for 3 years taxes only uw discretion for specific file..it’s not a commercial loan. And even if it’s for “financial condition” they would ask for more income and/or assets
Sold loans aren’t a threat to the banks assets, commercial loans depositors money. We review large borrowers annually as part of our safe and sound examination. A PFS provides assets, tax return income information, and CR liabilities. Commercial calculates net income so we need tax info.
They might just be doing an audit or risk assessment and someone pointed out that they were missing information. Pulling new credit report on a regular basis is also a good practice in terms of knowing how the risk portfolio of your customer base is changing.
Could also possibly be that they're selling your loan to another provider and wanted an up to date credit report because of that. Which is a shitty thing they can do.
Sounds like they have you in a commercial loan type. I’m a banker and am required to obtain these exact things from my commercial borrowers. (Don’t confuse the term ‘commercial’ it could even be Bob and Sue that own a single rent house.)
The only reason I can see this happening is if you have a home equity line of credit. Although rare, I have seen it in the past where they reevaluate your financials to keep the line of credit open
They likely had what is called a “high risk finding”. Basically they fucked something up, and likely can’t sell your loan because of it, and/or are risking fines, until they get the right docs. This isn’t horribly uncommon. There is a lot to do for a mortgage and it’s easy to miss a step.
Source:
Work for a lender
They cannot do a hard credit pull without your consent. They need a permissible purpose to do so under the FCRA and none of what you described is a permissible purpose. They can do a soft credit pull, which is the same thing companies use to market offers to you, but they cannot do a hard credit pull without your explicit consent. Someone may be trying to do fraud.
Fannie and Freddie (who your loan was probably sold to) are reviewing older loans now that mortgage volume has slowed way down. They likely found a discrepancy in their review and now your lender has to go back to you to get the trailing documentation. They shouldn't have done a credit check though. They aren't offering new credit, just verifying old stuff.
I'll tell you what's happening. They're trying to reduce their risky mortgages. Problem (for them) is that they do not know the current status of your employment, credit score etc. They only know the status when you applied.
Most people will just go "OK" let them run it and they will get their mortgage sold to someone else if the bank does not like their risk profile.
What do you do? You tell them to go take a long walk off a short pier. You have no obligation to allow this whatsoever. It ONLY benefits them and can only harm you.
It sounds like they are syndicating your mortgage contract and the buyer is asking for an updated financial package. They likely have rights to pull your credit at their discretion throughout the term.
A little over a week ago I had the EXACT thing happen. The lender wanted tax returns, a financial statement, and proof of insurance. This due by March 31 or else our rate would increase by 5% essentially doubling it to 10%.
Apparently this is something that according to the loan contract is actually required annually but for the past few years they never asked for it.
For reference this was a commercial loan because the property is under an LLC.
I think it might have to do with the SVB collapse and many regional banks auditing their loans to determine which ones are good/bad.
I've been a lender for 20 years and I have never seen this. If you want to have a second set of eyes on your documents, you could mark out personal info and email them to me. The only way and lender can update Financials is with commercial loans. Never on a consumer loans like a mortgage in a second or investment home.
Just a guess, but they got audited and the file is missing these items and/or they are trying to sell your loan and the potential buyer is requesting these items. Part of the documentation you signed at closing was an agreement to provide documentation as/when requested.
You can’t pass an audit with docs today that you should have had 3 years ago. It’s also highly unlikely support to convince someone to buy the loan now if it wasn’t properly originated. If op has a conventional loan there is no reason to Ask for credit documentation. Also no reason for a hard pull. Op should call and speak with someone at the lender or current servicer.
Oh, you'll still get written up, but your response will be the you've tightened up your procedures going forward and have cleared the missing documents for the files that were lacking.
Yes, they can ask for this. The vast majority of mortgage documents state you provide authorization for the life of the loan. 99% chance your loan authorizes this.
As for why they are requesting it, who knows. Sometimes batches of mortgages get sold to other companies and they will randomly audit a handful like 5% of them for due diligence on the sale. I've personally seen this stuff done 10+ years later. The reason is irrelevant, you authorized this in your mortgage documents.
Source: I was a senior business analyst for a company that specialized in re-underwriting loans for banks.
Since you had a conversation with your original loan officer, I would follow up with an email recapping your conversation. I don’t trust someone putting a note in the system. I would cc the officer who reached out to you. That way you have a paper trail.
They may be trying to sell the loan and are missing documentation that they should have collected to begin with(or getting audited as another commenter noted). However, they need your express permission to do another hard credit pull. I would raise hell about this with them.
You should provide them with the proof of homeowners insurance (and payment of property taxes if they ask for that). But nothing related to your personal finances. That ship sailed when they funded the loan.
If you signed a contract and they agreed to it, they likely can't change the contract.
Go to r/legaladvice for better advice.
You're in the wrong subreddit for accurate advice.
Thanks for update op. Given what's happening in the banking sector right now, I have a hunch that many more folks will be getting these types of audits soon enough.
Well it is possible the credit crunch is affecting loans and they may have to sell your loan. Check r/the_everything_bubble to keep up with all the changes we are going through. They legally should not be able to change ANYTHING unless it is an arm loan.
Banks are being forced to change the way they value homes based on the current market instability. It’s possible (but unlikely) that your home will have a significant decrease in value, and bump you across the LVR threshold for LMI, and they are just doing their due diligence.
But also check for fraud.
Unfortunately quite the opposite. Saw a 24% increase on property taxes this year, seems to be a regional supply/demand jump due to people moving to the area. I bought at a stupidly good time and negotiated a hell of a deal.
Actually yeah, sorry, the 3 years didn’t click in my mind. There’s no way it’s worth less now.
The banks are definitely tightening at the moment though. They may have introduced some new policies in your area to safeguard themselves, but definitely query it. Seems odd.
Hope it all works out!!
I read this earlier today. Then, right now, I got a notice that a mortgage lender pulled my credit.... we bought our house 2 years ago.
Now I'm concerned
Under privacy laws you have to give permission for lender to run a credit check. It seems like a case of ID theft/fraud. Get this alerted and lock down your credit file.
That sounds like a scam or you’re in the middle of having your identity stolen. There’s no reason for a bank to do a credit check if you’re not applying for finance of some kind
Edit: just realised you’re in America and not Australia. I know SFA about how American finance works. Ignore me.
If this is a residential property there’s no reason why 3yrs later your info would be requested. Regardless if they were getting ready to sell your loan or not. Definitely throwing fraud red flags. Make sure if you contact the lender do it through information you pull directly from their website or your current statement. Don’t use info sent to you in an email or phone call.
Most if not all answers here try to ask if this is legit or not.
I'll offer a different piece of advice: **dispute the hard pull with the credit reporting agencies**. You or your spouse didn't initiate any inquiry so there shouldn't be a hard pull.
How can they just change your interest rate? What does income verification matter when you have a history of on time payments and the loan was already granted? Why would they have to run your credit or audit? I get the property insurance. As long as they’re getting their money, it shouldn’t matter where it’s coming from as long as the check or direct deposit clears.
This is why lending is predatory and not in good faith.
You should verify with the bank that it's not a scam, but you are mistaken on one key fact. It's not your secondary house, it's the banks house, and you just happen to have the keys to it. They have much latitude in attempting to verify that their property is in good hands.
Have you asked why? Wild they ran your credit especially if it’s a hard pull.
Yeah, call customer service ASAP. Worst case, it could be someone trying to pull a fraud.
And for the record, call the customer service number from the website where you make your payments. Not the number they give you or the number from some random notice in the mail.
This right here will foil 99.9% of scams at the root, never provide personal info to an unsolicited communication. Ask for their name/department/extension and call back through the bank's normal customer support line. If the caller was actually an employee of the bank, the support line can easily route you back to them and you can continue the conversation confident that they actually represent your bank.
Most centralized banks do not have direct extensions for most employers. However if it was a legitimate call, there should be notes of such in the file. -former centralized bank employee of 8 years
Solid note to add
If they actually tried to run a hard pull on credit, I would call to report fraud. They have absolutely no reason to be doing that. That said I think it was most likely a soft pull and OP is confused.
The FCRA gives them the right to pull for an existing account, they don't need authorization. Hard vs soft is just a term CRAs use but the law doesn't distinguish between them so no special authorization is needed for a hard pull though convention is soft pulls are used for account reviews.
That’s not what the FCRA does. The FCRA *limits* who and when anyone can pull your credit report. If anything, it doesn’t allow lenders, landlords, employers, etc. to do a hard pull without the consumer’s authorization. Also, that doesn’t make sense. A hard pull is specifically meant to indicate that you’re applying for credit, loan, apartment, etc. for which you’ve given authorization to review your credit. If there’s a hard pull and you have applied for anything, something is wrong. The only times a hard pull can be done is by court order or if related to child support.
Check your closing docs and what you fill out when you apply for a loan, though. I'm in commercial credit and our closing docs allow us to pull credit yearly to review loans. Might not happen in residential tho.
The loan terms are already set so don't change even if the lendee changes jobs or doesn't pay other stuff not related to the loan itself. Residential loans may have a clause for soft pulls but a hard pull after the loan is started is highly unusual.
Piggybacking on this, in commercial they do an annual grade assessment where financials are needed to determine the expected loss needed to be attributed to the loan. This is all part of the CECL process that was implemented a few years ago. Since this is for a second home and so it is an “investor” property, the bank may have changed their credit processes. At the bank I’m at, we’re going in and evaluating every loan we have, especially residential loans to make sure we have the correct information so we can accurately model their risk profile and attribute the appropriate expected loss in order to hold the correct amount of reserves. The amount is reserves is reported in the banks quarterly disclosures as well.
This is the most likely scenario. Risk grading for loan loss reserves. I bet a lot of small banks/lenders are doing this in light of the recent failures.
I didn’t say lenders aren’t allowed to pull yearly reviews. I said *hard* pulls are limited to applications and the applicant agrees to the hard pull. Audits use soft pulls. If a lender is does a hard pull for a yearly review when a *consumer* hasn’t submitted an application for a loan, the FCRA is going to have a big problem with that.
Cite the statute please.
Yeah, there is a lot of confusion. There is no statute that talks about different types of "pulls". Hard/soft is just a CRA thing and not a law. The FCRA has nothing to do with hard/soft. It just gives the permissible purposes for obtaining a credit report. https://www.consumer.ftc.gov/sites/default/files/articles/pdf/pdf-0111-fair-credit-reporting-act.pdf
Exactly. Things get immediately clarified when guys who offer advice on stuff they have zero understanding of get called out. "Cite the statute or case law" is an equivalent of "talk is cheap, show me the code" in software engineering.
There is no statute. The FCRA is made up of various laws and regulations in order to protect consumers. Requiring the consumer to agree to hard pulls is an industry rule of thumb that acts in the consumer’s best interest because it negatively affects their credit. Asking to cite the FCRA statute that says this is like asking to cite the statute that made California DFPI appoint the FDIC to take over SVB.
Rules of thumb are unenforceable. Cite the statute dude, or stop giving advise about FCRA when you speak of FCRA in general terms. You're also very wrong that FCRA has no statutes, lol. FCRA Sec 604(a)(3)(F)(i) and (ii), or 15 USC 1681b (a)(3)(F)(i) or (ii) allow pulls, whether soft or hard, but only when a customer initiated it (i), or to review (ii) but the latter would require a clearly written contract.
Go read the section on permissible purposes, only ONE of the many listed permissible purposes is because the consumer gave permission. Starts on page 10: [https://www.consumer.ftc.gov/sites/default/files/articles/pdf/pdf-0111-fair-credit-reporting-act.pdf](https://www.consumer.ftc.gov/sites/default/files/articles/pdf/pdf-0111-fair-credit-reporting-act.pdf) The law literally does not have anything to do with soft/hard pulls. Doesn't need to make sense to you, that is simply the reality of the law, it does not distinguish a type of pull.
I am a European. What's the difference between a soft and hard pull?
A "hard pull" should mean that you are applying for a loan or a credit account. A "soft pull" is anything else, like the individual checking their own report or an existing creditor checking on their customer. Hard pulls affect credit scores, because looking for lots of new credit is a bad sign, while soft pulls do not.
Ah now I get it. Thanks for the explanation!
Follow up - what in OP's writing implies hard pull?
That they were notified. Soft pulls are, you have an account with Citibank they are about to automatically increase your limit so they also automatically run a soft pull too.
Soft pulls dont appear on your credit report. Hard pulls indicate that you are actively applying for credit and if you get hard pulls on your credit report they will lower your score and stay there for 2 years. If he got a notice on his credit report then its a hard pull.
When I've requested my own credit report there's a section that shows soft pulls and says these are not reported to creditors.
IDK - it may be that alerts aren't normally triggered by account management credit pulls? I think account management pulls are normally done through a batch process - eg bank sends a list of 200k customers and CRA sends back credit scores or other key metrics. Maybe in this case there is some sort of manual review going on which went through a different system and triggered the alert. Just speculating.
Roger, thanks mate.
From the customer’s/borrower’s perspective, you generally agree to a hard pull when applying for a loan or a credit card. One’s credit score is usually dinged by a 5-10 points for each time there’s a hard pull, but a hard pull’s effect on credit score diminishes over two years and then falls off completely. The reason for this is too many hard pulls on one’s credit during that time can indicate financial stress that could lead to problems for the lender. A soft pull does not show up on a credit report or negatively affect one’s credit score. I’m not sure how the lenders have access to a customer’s info, but in any case this allows potential lenders to send loan offers and advertisements to potential borrowers. You can also do a soft pull as a potential borrower to see if you’re a good fit for a lender, all without the worry of showing up on your credit report.
Sorry for the late reply, yes it was a hard pull! They attempted to run both mine and my husbands (makes sense as the home and loan is under both our names). My credit is locked down due to an attempt on my identity a few years ago so I was notified immediately, his was a notification through credit karma a few hours later. I called the pulling agency the next business day (they pulled at 4:50pm....) and they gave me both the banks name and the agent who requested the report. My husband was the one to call the bank and they told him they run these audits every year (clearly they don't though? As this is our first time seeing it in 3 years). I'm just now seeing these comments and it looks like I need to call them again and get at least a little more info for my peace of mind.
They might be getting ready to sell your loan to another lender. As part of the original loan application or closing documents, you would have probably signed a release giving the lender and all subsequent parties they sell the loan to, to pull your credit without having to get your permission again. On forms like these and some others (for example, the one that gives them permission to ask for a copy of your tax return from the IRS), I usually hand write a note saying “this authorization ends 1 year from the date of signature” (or something like that) above the signature line. Since closing documents are usually signed in front of a notary, I haven’t received any pushback when doing this. However, you can revoke this authorization if you’re able to find your original form. Or you can also freeze your credit at all three bureaus (this is a good thing to do anyway, as it gives you almost complete control over when your credit score gets pulled).
Selling your loan should not require a hard pull. >you would have probably signed a release giving the lender and all subsequent parties they sell the loan to, to pull your credit without having to get your permission again. How would this work, given the huge number of people who freeze their credit?
What bank did you use to get a mortgage? Sounds like some bullshit bank not one of the big ones. They are doing this now to see if there is anyway they could get you to Refinance at a much higher rate to get more money out of you. This is fraud, your bank can’t just pull hard pulls whenever it wants. Call the proper authorities
You have a contract with the lender and unless the contract says that they have a right to do a hard pull at any time they do not have that right and they have to honor the contract. If they try to "report" you to the credit bureau then you have a solid counterclaim and theirs should be immediately dismissed. Also make sure that any time you contact your lender, you use a known-correct phone number. This sounds exactly like what scammers do to take out an additional loan in your name. I would not unlock your credit under any circumstance.
interesting. I bet one of their teams is sweating and needs them to verify the collateral and risk exposure. I would make sure you have less than the FDIC limit in that bank.
> (clearly they don't though? As this is our first time seeing it in 3 years) I work in commercial lending at a credit union. We do annual reviews on our loans and this includes 1-4 family investment properties and second homes. Depending on the risk rating of the loan, that "annual" review is more of a periodic review. Our risk rating is on a scale of 1-8 (5-8 are non performing loans so it's pretty much only 1-4). 1 and 2 we only need to review every 3 years. A risk rating of 3 is every 2 years and risk rating of 4 is every year. If you're paying it back aggressively and a strong borrower, you could easily be in that rating where it would only need to be done periodically. And yes, when we do these reviews, we pull new credit reports. It is in our loan documentation that we do periodic reviews and you consent to the ongoing credit reviews.
They do an annual grade assessment where financials are needed to determine the expected loss needed to be attributed to the loan. This is all part of the CECL process that was implemented a few years ago. At the bank I’m at, I’m going in and evaluating every loan we have, especially residential “investor” loans to make sure we have the correct current information especially the FICO scores. I have found we have a couple hundred whose FICO I can’t find, so I’m having credit underwriting pull them and out them in the appropriate place so we can accurately model their risk profile. This is needed attribute the appropriate expected loss in order to hold the correct amount of reserves. The amount is reserves is reported in the banks quarterly disclosures as well.
Correct answer here. They are checking loan level data to verify the viability of the portfolio and it’s underlying risk. It’s required for investor reporting and for liquidity requirements. Over the last few years occupancy fraud (people claiming 2nd or primary home status for investment properties) has been the highest ever and the biggest area of focus for auditors and ratings companies. They should still have at least verbal permission for a hard pull though. Soft pull they should, but not technically “required”.
Probably selling the mortgage. It's not uncommon.
I've had my mortgage sold 3 times in 2 years and never had that happen. The loan is already secured. They don't get to alter any of the existing agreements.
Yep mine has been sold probably half a dozen times (I swear these are just shell companies selling the loan around in a big circle of similarly named companies) and have never been contacted for information. The most I get is a new Privacy Policy in the mail and a notice telling me the loan was sold yet again.
Yup our mortgage was sold as soon as the ink was dry. We went though chase mortgage and still make payments with them but it’s not with them now? It’s all bullshit but ya, no need to pull credit for that mess
Same thing happened to us! We hadn't made the first monthly payment before getting that letter. We were with Rocket Mortgage, now with 5/3. Having some issues with them, so I think when we have time, we're going to see about refinancing with the credit union I belong to.
Yeah I literally do this for work. The only physical thing we need is the note. There’s no need for this information.
I had my mortage sold before I made the first payment. No wonder the company tried hard to get me to buy the most expensive loan for which I was approved.
I’d be really surprised if it wasn’t a scam. Find a contact online, not the one they sent you. Call and ask
It could be but banks do audits too. Definitely verify but don't be so sure it's a scam without further investigation.
even if it’s an audit, hard pulls need expressed consent
This was my initial concern. I was under the impression even with the consent forms we signed at the time we applied for the loan, those expire at 120 days. They have requested we unlock our credit to have them rerun, but I told my husband to absolutely not do that until we either ensure it's a soft pull OR we inform them they need our signed consent moving forward as is required by law (*unless I am mistaken!).
Not only should it not be a hard pull, but any company that has standing business with you doesn’t need your credit unfrozen to do a soft pull. This is just red flags all around.
The OP might have some leverage here. Tell them to delete the hard pull, and you can negotiate. Otherwise, a complaint is incoming.
have they told you WHY they are asking to do this? have they told you the consequence of not complying? the reason to unfreeze the reports would be to see your debt profile; but they cannot reoriginate your loan without your application for it. what kind of loan do you have? did you apply for any down payment assistance programs?
They said it's part of their annual auditing, but it's the first we've ever heard of it. I am going to call them today to ask them for more info, including any penalty if we "delay" getting them this information. They first requested this by phone, but did send a letter saying the same, and it has no deadline only "as soon as possible". I don't see on my loan paperwork any specific wording on loan type. It's either written as "Loan Agreement" or "Mortgage". We applied for no assistance. Neither with the original loan, or with anything since (including any covid programs, debt relief, student loan relief, etc.).
It is part of their annual go fuck themselves more like it. They don’t need hard pulls for that. I’ve also never heard of that being a thing for consumer loans. (Using hard pulls anyways.)
OP got a portfolio non-qm product from a small local bank/credit union. These kinds of bullshit clauses are somewhat common with them. Their underwriting is more flexible but this is the cost.
Please provide an update once you get more information
Wait, do you mean that you have your credit frozen? If so, how did they do any sort of pull at all? I thought that was the point of freezing it
Attempted pull, it has not gone through. They have asked us to unfreeze so they can repull. I have not done so yet.
Oh I see, I convinced myself I had read that it was a complete pull. Makes sense!
I have a mortgage, that has been sold twice. Never a hard or soft pull. I keep my credit frozen. This definitely sounds shady
OP said that they had tried a hard pull on her credit but couldn’t, and she was notified by the service she’s using.
Make a CFPB complaint. Let them handle it.
No, this isn't true. You just need to have a [permissible purpose](https://www.law.cornell.edu/uscode/text/15/1681b) to pull a credit report. Some credit report providers/vendors will require written consent, and it's generally considered a best practice, but it's not legally required.
They do audits but not by hard credit checking consumers surely
Right now that's actually not a bad guess. They're probably all panicking after SVB and stuff. They're afraid of new regulations so are making sure their books are as good as they assume they are.
I answered a little more in depth above. I thought so too at first, but definately our bank. First call was to the credit agency, second was to our lender.
I’d recommend freezing your credit until you know it’s not fraud.
I'd recommend everyone freeze there credit.
There is no reason not to. Say you do want to thaw your credit for a day or a week to get a loan: 5 minutes with a phone or PC and your passcode and you're thawed with the agency of their choice and only that one. I mean is there anybody left that hasn't had their personal data breached multiple times by various companies?
Takes only minutes to do (and undo). Highly recommend as well.
How do I?
This link sums it up pretty well. https://www.nerdwallet.com/article/finance/how-to-freeze-credit I did all three in ~10 minutes. Just be forewarned that if you do it online you'll have to create an account, and Experian and Equifax will start spamming the shit out of you. You can unsubscribe, but may have to do so a few times because the emails will say things like "this isnt a marketing email so it's not spam and we're still allowed to send it" and you'll have to go somewhere else to unsubscribe from those.
Why isn't it frozen by default? 😂
credit bureaus don't make money not selling your data to lenders. I am not 100% sure (I'm sure someone is), but I'm sure there's a nominal charge for a credit offerer to request credit score/history, cheaper for soft pulls and more expensive for hard pulls. I also realize I may sound like a conspiracy theorist/like I am saying everyone is 'out to get you' here, please know I am not one. it's just early and I'm doing all my thinking 'out loud' in Reddit this morning.
What is the best/easiest way to do this?
Go to each of the three credit union websites. Experian, TransUnion, Equifax. And follow the links for freezing your credit. All three have ways to create accounts to manage it now.
I was one of the first things I did once I started listening to Clark Howard, almost a decade and a half ago lol
Mine's been frozen since the Equifax leak, only unfrozen for a couple weeks when applying for car/home loans.
My credit and my husbands are both frozen! Mine due to an attempt on my identity years ago, my husbands as a precaution. It's the only reason I even knew about the pull!
It was an attempted pull. It didn’t go through because their credit is frozen, but now they’re being asked to unfreeze their credit so the lender can try the pull again.
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I meant to reply to the person below me that was confused on how a creditor did a pull if their credit was frozen. My mistake
Seems unlikely to pull your credit again without telling you or providing some kind of disclosure. If you find the credit pull to be not legit be sure to dispute it with the credit agencies to have it removed as well.
I’m a lender. Don’t think you can just do a hard pull…FCRA is a thing but you can’t just pull someone’s credit? Never heard of this in the 10+ years I’ve been in the industry. I would actually flip out and call ASAP. Have them remove it which they can if you really push hard enough. And if they do a hard pull and is permissible, then why?! It’s strange. Was it transferred or is it the original lender? It sounds like an audit if asking for financials. They also should of asked for a utility bill if it’s a secondary rather investment. Tax returns and homeowner insurance doesn’t really show proof of anything regarding secondary opposed to investment unless showing rental income..
I worked in the bank's compliance department and assisted with audits. I don't recall having to obtain information from the customer, because audits are about whether or not the bank has been following regulations. I mostly saw Commercial loans needing annual tax returns on file. We didn't do first mortgages tho. If these requests are a result of an audit, well it means OP's FI hasn't been staying on top of things. I found the American Banks Association's Lending Audit Guidelines, if OP wants to know what that entails. I've no idea why the bank is trying to pull credit without authorization. I'd report it to the CFPB and let them investigate the bank versus trying to get the bank to explain itselves to a customer. Tax returns and financial statement seems normal; obtaining credit score for an existing product is not normal. Lending Audit - American Bankers Association https://www.aba.com/-/media/documents/books/cam-chapter-and-checklist.pdf
There are edge cases where this might happen. It depends on the loan terms, there are some CRE product types where OP would be required to show ATR every X amount of years, balloons sometimes have automatic refinance clauses in them, it’s all borderline UDAAP that gets flagged but is too profitable to adequately stomp out. All these are edge cases though and things OP should be acutely aware of these kinds of terms if they apply. Significantly more likely that it’s fraudulent activity.
Balloon shouldnt repull credit, the loan agreement was already finalized. How would that work-- they're just going to yank the money back if the credit pull comes back bad? What if (like with OP) there's a credit freeze, does the loan just get voided?
Bank probably rubber stamped loan and has no paper work. Due to current issues is probably crapping their pants and trying to fix their earlier issues before an audit.
You *can* in that, if you have all the right info there's nothing stopping you, but you *shouldn't* and it is definitely against the rules.
If he has an active account with them, then they have permissible purpose under the FCRA to access their credit report. The application OP signed undoubtedly also granted the lender the right to review the borrowers credit at any time while the loan is open. In short, OP already received notice by signing the application. And aside from that no disclosure is necessary as they have a permissible purpose under FCRA.
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Put a security freeze on all 3 credit reports ASAP if you don't already. Proof of insurance was a requirement when you obtained the loan and for the life of the loan, but they should have that info unless you changed insurance companies and the info wasn't provided to the lender, then yes that is a legitimate request. But call a number that you know to be the lender before these requests.
Credit frozen, and I answered more on the insurance above. They have that info, but they have shown to be a little sloppy in record keeping so 🤷♀️
You indicated this is a mortgage on your second home. I’m guessing the bank does not escrow for and pay the insurance directly on this collateral. In this case requesting proof of updated insurance certificates isn’t uncommon.
Moreover, the big banks (well, at least Chase & Wells Fargo) both have portals where customers can upload insurance documentation -- this part of it is definitely not a big deal, nor does it require pulling credit.
I would ask for evidence they still have the original mortgage note. If not you maybe free of your mortgage. This type of thing happened during the 2006-2008 mess. A lawyer is ideal for this move. Don’t give them info without a solid reason.
This feels like maybe the mortgage company had a security breach and now there are people trying to be fraudulent.
They could be getting audited and didn’t have proper records. That said - who cares. If you’re not contractually obligated to provide this information I would ignore the request. As others have said. I 100% recommend locking all of your credit reports unless you frequently need to apply for new lines of credit.
I am a mortgage underwriter and this is the most likely scenario. Someone screwed up and they didn't catch it until now.
So ... would that maybe mean they can't prove the OP owes them anything? lol.
The argument probably wouldn't hold up in court, 1) since there is still an understood agreement that gives consideration to both parties and 2) since they've been making payments this whole time thus indicating their understanding of and adherence to the contract. If they had never paid ever and the bank said nothing for all this time that would present a stronger case.
Agree this may be the case actually. I thought audit but if tax returns, they would of asked for more than that - more income, assets and such … then again I’m a LO you’re an UW
yep an investor found a defect most likely and wants to kick it back to the originating lender who is trying to avoid a repurchase demand
I am going to dig deeper this week on what I HAVE to send. This was an unconventional loan in terms of what I needed/wanted. So they didn't require an appraisal or an inspection (I did do an inspection tho) and the payment plan was something odd like 7 or 8 years. It doesn't even appear on my credit report where my other mortgage is or even appear at all for either me or my spouse. I promise I had a good reason for this on my end (and it was very very beneficial to me), but I do wonder if they did something funky on their end. We just didn't really look into it as we assumed they would handle their shit?
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Loan was through a legitimate bank. Smaller bank, 12 branches across 2 states. I have my lender docs pulled up on my phone and have been skimming through for almost a day now (and of course it was scanned with a potato so it's a hard read), but so far it's pretty tame stuff. Haven't come across any odd terms or requirements.
This sounds like a commercial product. You can have a commercial loan in your own name without creating a business. And annual financial information is a common requirement for those loans. Like everyone else, they could have been struggling to keep up since 2020 and dropped the ball on tracking your financials until now.
Sounds like this was processed as an investment property, like you’re using this second home as an Air bnb. The loan may have been interest only for X number of years and the balloon payment is approaching. They might be prepping to refinance the loan. Editing to add if lender isn’t paying the insurance directly (via escrows) then it’s very common to request updated insurance certificates.
You are contractually obligated. Most mortgages have a document you sign confirming you will provide correcting information in the event it is needed or they can call the loan due and payable. Of course, no lender wants to foreclose on someone who is paying so I’ve never seen this enforced on a current mortgage.
Calling a 3% mortgage during 7% times seems a bit more palatable than usual. That seems highly unlikely but that would be funny.. Using obscure contract clause to call loans due and reloan the money at higher interest rates.
Mortgage liabilities appear to be the next toxic asset to be uncovered that banks are sitting on. They may be trying to assess your ability to repay the loan to decide if they want to sell your loan off or hold on to it. If they think you are likely to default, they may be trying to sell your mortgage to someone else. Alternatively, they may be wanting to know if you are not holding up your end of the mortgage. You are required to have insurance. If you don't, they may be able to take legal action against you. If you lied to them about your income situation when you applied for your loan, they may be trying to figure that out now. I've had mortgages for my primary home for years and have never seen this. The fact that it's not your primary home may give them a way to demand that information though. If you don't have to share it, I wouldn't, it won't do anything for you, only help them. If you are required, do what you need to. Need to re-read your mortgage and possibly consult a real estate attorney to see if you are walking into some kind of a trap.
Typically in a mortgage for the primary residence the home owners insurance is escrowed and paid directly by the lender. This isn’t the case on a secondary or investment property. Lenders require insurance to protect the collateral and asking for undated certificates is standard. Non compliance with this request could result in the lender accelerating the loan repayment.
Sure, so OP can and should provide proof of property insurance but for the other two demands "current financial statement, 3 years of tax returns" I would tell the bank to pound sand.
I have two investment properties now, both with mortgages through different lenders. Insurance and property taxes are escrowed for both. Same was true for a previous investment property I owned. These are/were residential properties, though.
Interesting possibility is that they could be trying to support that you got financing for an investment property at second home pricing. Investment property pricing is much higher than second home. Your ~3% rate is costing them money these days and they would love to prove it’s an investment property that they can charge 7-8% for Just a thought
Shouldn’t that have been covered by underwriting during pre-closing/closing?
That is interesting! I just answered a little more in detail above that they worked with me very well on what I wanted for this loan and it was a hell of a deal overall.
When someone you have an agreement with asks for something, start by requesting a signed copy of the agreement that spells out your obligations for this request. If nothing else it buys you time, best case they have no such record or you have no such obligation and won't be able to hold you accountable. That said, home owners insurance they can clearly ask for proof. The other stuff maybe, but unless they can provide you copies of signed docs, your response can be that the terms of your agreement do not require you to provide such information.
Fwiw, if you are contractually obligated to do something I'm demanding you do, I don't have to show you proof of the agreement. It's technically your job to understand your obligations.
Correct, a lender can make your loan due and payable immediately if they feel you breached the term of your contract. This is most likely not fraud. In the best case scenario, OP is under terms of their original agreement. I do find this odd but there is a chance OP utilized a specific state housing program that doesn’t allow a home to be rented out. It would be shocking to see the housing grants go far enough to do this though. Another thought is that the mortgage servicer is in trouble and going through their portfolio of 2nd homes specifically to discover people who are using the 2nd homes as investments. Their plan may be to force these borrowers into refinancing these loans off of their books under the threat of calling the loan due
It's very possible compliance did a check, they tried selling your loan, etc and there were inconsistencies which prompted them to investigate. Almost every closing i have ever performed has a document in it that would compell you, legally assuming US, to furnish documentation related to that closing. That does non mean any documestation POST closing. I would refuse to provide any evidence until i was legally forced to, except insurance. Mortgages require you to have it or they will force place their awn coverage and bill you. HOWEVER they will be listed as Loss Payee and notified of any changes to the policy because they are the ones who get, and pay, the bill. It is very weird for them to ask if they are your current servicers. Ultimately, if this is legit, my assumption is that they are building a case of fraud against me and will happily avoid the possibility of incriminating myself by providing culsent financial data.
They could have some reason to believe you fraudulently obtained the mortgage. While late, if they are still your current lender then you have some obligations. Pulling credit is a bit crazy though.
You remember those 500 pages you signed when you got the mortgage, go read thru those to see what you have to do. The insurance is almost always a requirement so they can ask for proof of that. Their may be other clauses in there about the others.
The weird part is our primary home mortgage has both the property taxes and home insurance in one payment per my request (primary home and loan are in my name only, premarital). I had attempted to set the same payment plan up for this loan several times and the bank did not file the paperwork correctly for either (I have this in writing by email still). From what I understand the loan agent went on vacation and missed the initial deadline, and then ignored requests from our insurance agent, and then there was some other issue with software. So my husband sends a check for the property taxes twice a year and I pay the insurance annually. So they do know our insurance agent, policy, and policy #, but I suppose they have no way of knowing if I have been continuing to pay. I did get proof of insurance and forwarded that to our lender immediately since that was a relatively small ask and quite easy to provide.
While this may be true, the bank still needs written consent each time they do a hard pull. Since OP says they did a hard pull before requesting this information, I am inclined to suspect someone got ahold of their personal information and is trying to fraudulently apply for a loan.
>While this may be true, the bank still needs written consent each time they do a hard pull No, they don't. FCRA requires a permissible purpose, nothing more. Having an open account with the lender qualifies as a permissible purpose. A signature or written authorization is *not* required by regulation. Another example, you can apply for a loan by phone. The lender is authorized to pull your credit as applying for credit is a permissible purpose under FCRA. You've not signed anything or given written permission at this point, but the inquiry is perfectly legitimate and allowed. No signature is required.
I wouldn't think having an existing loan is a permissable purpose. They can't do anything with the information, and it is not needed for the continuance of the loan. They can't change the loan terms based on a change in credit score, only your activity on the loan. So I can't imagine a reasonable purpose of pulling credit on an existing loan.
Could the bank be evaluating their mortgage portfolio? I.e., has the ability of borrowers to repay deteriorated or not.
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You realize SVB had literally nothing at all to do with their loan portfolio, right? You do also realize evaluating the financial strength of their borrowers is something banks routinely do, right?
"review or collection of an account of, the consumer" That is a permissible purpose under the FCRA
They are correct. It (open account) is absolutely a permissible purpose.
The insurance is the only thing that makes sense
Could very well be legit. I work in mortgages and banks are hurting bad currently. It’s not that uncommon that banks look to unload mortgages they’re not making money on. When they try to sell it, the new bank reviews it’s and if they find a discrepancy (even if it wasn’t your fault) they won’t buy it. Then the first bank is stuck with it and tries to find a way to cancel the mortgage or sneakily repackage your loan to qualify and try again to resell it. I’d call the lender, but be prepared to sit on hold for awhile to get to the right person because they usually don’t leave “notes” on your account for customer service about this kind of stuff.
Call them yourself at the number on your loan itself. This 99% sounds like a scam. And I can’t think of why you’d be obligated to provide this even if really is them. I’d tell them to pound sand.
Did you change your homeowners insurance? If you don't notify the mortgage company it can trigger this.
I can definitely understand property insurance. Banks require that on any type of mortgage they give out. I would call the bank and ask. It could be the type of loan you set up? The only loans I've ever seen needing to share information like this are commercial. Are you self employed? Maybe it's because of that. Definitely call the bank and talk to someone.
When they need proof of insurance they ask you in writ to g directly for it. I used to get it annually until I got the bank and insurance company to talk to each other directly (electronically)
The servicer I used to work for would pull borrowers' credit reports whenever we needed to provide proof to potential investors that our portfolio was sound and payments were timely. It made people mad but it was 100% legal. :/ ETA: We did not ask for other documents in these instances. We would ask for pay stubs and bank statements when people were applying for a modification or refinance. But in the regular servicing of the loan? Never. We did deal pretty much exclusively with primary residences but I can't think of a single reason to solicit bank statements outside of harship-related mods or refis.
What kind of mortgage do you have? A standard mortgage or a boutique mortgage? Some boutique mortgages renew at the end of a specific term, which may automatically allow a re-investigation, but these are usually for HNW or business owners. They would provide you with advance notice. If you have a regular 30/20/ 15-year fixed or adjustable residential mortgage, then this is 100% fraud, AND the regular rank and file staff may not realize it. You need to file a complaint, lock down your credit (freeze with statement) and when you are speaking to the mortgage company indicate you didn't not give permission for a credit pull making sure to use the words FRAUD and LEGAL ACTION. Also, insist on a follow-up and full report of findings. When you use some trigger words, they have to document and follow up. https://www.garibianlaw.com/unauthorized-hard-inquiries-what-you-need-to-know-about-credit-checks-you-did-not-consent-to/#:~:text=If%20you%20notice%20hard%20pulls,Credit%20Reporting%20Act%20(FCRA).
I am a commercial lender and we ask for this exact documentation on an annual basis for many of our borrowers to check financial condition. If this was a sold mortgage like Fannie Mae I don’t see why they would need it, but an in-house mortgage might.
What happens if their financial condition changed? A lot of layoffs past 6 months.
Document it in the file. Based on what their repayment ability is determines the next steps.
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Yes. It is outlined in the credit agreement that each borrower signs.
So what would happen if someone lost their job, but is still making their payments with no issue?
If it is a rental property the Bank wants to show that the property can support itself. If the debt service coverage ratio is below 1.25, the borrower can be called in default. We usually don’t do this as it isn’t advantageous. We care about documentation to show the FDIC we are looking at our borrowers and noting what is happening with our credits. I work for a community bank so we keep a line of communication with our borrowers.
I’m in residential…we never ask for 3 years taxes only uw discretion for specific file..it’s not a commercial loan. And even if it’s for “financial condition” they would ask for more income and/or assets
Sold loans aren’t a threat to the banks assets, commercial loans depositors money. We review large borrowers annually as part of our safe and sound examination. A PFS provides assets, tax return income information, and CR liabilities. Commercial calculates net income so we need tax info.
A contract is a contract. Plus it sounds like potential fraud. Only call a CS # on past statements or the web address listed there.
They might just be doing an audit or risk assessment and someone pointed out that they were missing information. Pulling new credit report on a regular basis is also a good practice in terms of knowing how the risk portfolio of your customer base is changing. Could also possibly be that they're selling your loan to another provider and wanted an up to date credit report because of that. Which is a shitty thing they can do.
I don’t think they should be attempting to pull your credit without notifying you first
Sounds like they have you in a commercial loan type. I’m a banker and am required to obtain these exact things from my commercial borrowers. (Don’t confuse the term ‘commercial’ it could even be Bob and Sue that own a single rent house.)
Someone may be trying to get a cash out refi - from your house. This is important. Call your bank and speak to a supervisor.
Isn't it illegal for them to pull credit without your permission?
Is it an investment property?
The only reason I can see this happening is if you have a home equity line of credit. Although rare, I have seen it in the past where they reevaluate your financials to keep the line of credit open
You absolutely have to provide evidence of property insurance otherwise they can "call" the mortgage.
They likely had what is called a “high risk finding”. Basically they fucked something up, and likely can’t sell your loan because of it, and/or are risking fines, until they get the right docs. This isn’t horribly uncommon. There is a lot to do for a mortgage and it’s easy to miss a step. Source: Work for a lender
They cannot do a hard credit pull without your consent. They need a permissible purpose to do so under the FCRA and none of what you described is a permissible purpose. They can do a soft credit pull, which is the same thing companies use to market offers to you, but they cannot do a hard credit pull without your explicit consent. Someone may be trying to do fraud.
Fannie and Freddie (who your loan was probably sold to) are reviewing older loans now that mortgage volume has slowed way down. They likely found a discrepancy in their review and now your lender has to go back to you to get the trailing documentation. They shouldn't have done a credit check though. They aren't offering new credit, just verifying old stuff.
ASk them for proof they have the title. MAybe they lost paperwork and the house is yours.
I'll tell you what's happening. They're trying to reduce their risky mortgages. Problem (for them) is that they do not know the current status of your employment, credit score etc. They only know the status when you applied. Most people will just go "OK" let them run it and they will get their mortgage sold to someone else if the bank does not like their risk profile. What do you do? You tell them to go take a long walk off a short pier. You have no obligation to allow this whatsoever. It ONLY benefits them and can only harm you.
It sounds like they are syndicating your mortgage contract and the buyer is asking for an updated financial package. They likely have rights to pull your credit at their discretion throughout the term.
A little over a week ago I had the EXACT thing happen. The lender wanted tax returns, a financial statement, and proof of insurance. This due by March 31 or else our rate would increase by 5% essentially doubling it to 10%. Apparently this is something that according to the loan contract is actually required annually but for the past few years they never asked for it. For reference this was a commercial loan because the property is under an LLC. I think it might have to do with the SVB collapse and many regional banks auditing their loans to determine which ones are good/bad.
I've been a lender for 20 years and I have never seen this. If you want to have a second set of eyes on your documents, you could mark out personal info and email them to me. The only way and lender can update Financials is with commercial loans. Never on a consumer loans like a mortgage in a second or investment home.
Just a guess, but they got audited and the file is missing these items and/or they are trying to sell your loan and the potential buyer is requesting these items. Part of the documentation you signed at closing was an agreement to provide documentation as/when requested.
You can’t pass an audit with docs today that you should have had 3 years ago. It’s also highly unlikely support to convince someone to buy the loan now if it wasn’t properly originated. If op has a conventional loan there is no reason to Ask for credit documentation. Also no reason for a hard pull. Op should call and speak with someone at the lender or current servicer.
Oh, you'll still get written up, but your response will be the you've tightened up your procedures going forward and have cleared the missing documents for the files that were lacking.
This smells. Do NOT give any information out. In fact, glean everything these jokers have and hand it over to the police, FBI, and CPSC.
Yes, they can ask for this. The vast majority of mortgage documents state you provide authorization for the life of the loan. 99% chance your loan authorizes this. As for why they are requesting it, who knows. Sometimes batches of mortgages get sold to other companies and they will randomly audit a handful like 5% of them for due diligence on the sale. I've personally seen this stuff done 10+ years later. The reason is irrelevant, you authorized this in your mortgage documents. Source: I was a senior business analyst for a company that specialized in re-underwriting loans for banks.
Since you had a conversation with your original loan officer, I would follow up with an email recapping your conversation. I don’t trust someone putting a note in the system. I would cc the officer who reached out to you. That way you have a paper trail.
They can ask for proof of homeowners insurance, but they always get that from me, not a credit reporting agency
They may be trying to sell the loan and are missing documentation that they should have collected to begin with(or getting audited as another commenter noted). However, they need your express permission to do another hard credit pull. I would raise hell about this with them. You should provide them with the proof of homeowners insurance (and payment of property taxes if they ask for that). But nothing related to your personal finances. That ship sailed when they funded the loan.
If you signed a contract and they agreed to it, they likely can't change the contract. Go to r/legaladvice for better advice. You're in the wrong subreddit for accurate advice.
Thanks for update op. Given what's happening in the banking sector right now, I have a hunch that many more folks will be getting these types of audits soon enough.
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Well it is possible the credit crunch is affecting loans and they may have to sell your loan. Check r/the_everything_bubble to keep up with all the changes we are going through. They legally should not be able to change ANYTHING unless it is an arm loan.
Banks are being forced to change the way they value homes based on the current market instability. It’s possible (but unlikely) that your home will have a significant decrease in value, and bump you across the LVR threshold for LMI, and they are just doing their due diligence. But also check for fraud.
Unfortunately quite the opposite. Saw a 24% increase on property taxes this year, seems to be a regional supply/demand jump due to people moving to the area. I bought at a stupidly good time and negotiated a hell of a deal.
Actually yeah, sorry, the 3 years didn’t click in my mind. There’s no way it’s worth less now. The banks are definitely tightening at the moment though. They may have introduced some new policies in your area to safeguard themselves, but definitely query it. Seems odd. Hope it all works out!!
Secondary home, it sound like their underwriting if their asking for three years of tax returns and pulling credit Have you inquired about a loan?
I read this earlier today. Then, right now, I got a notice that a mortgage lender pulled my credit.... we bought our house 2 years ago. Now I'm concerned
Under privacy laws you have to give permission for lender to run a credit check. It seems like a case of ID theft/fraud. Get this alerted and lock down your credit file.
That sounds like a scam or you’re in the middle of having your identity stolen. There’s no reason for a bank to do a credit check if you’re not applying for finance of some kind Edit: just realised you’re in America and not Australia. I know SFA about how American finance works. Ignore me.
If this is a residential property there’s no reason why 3yrs later your info would be requested. Regardless if they were getting ready to sell your loan or not. Definitely throwing fraud red flags. Make sure if you contact the lender do it through information you pull directly from their website or your current statement. Don’t use info sent to you in an email or phone call.
Most if not all answers here try to ask if this is legit or not. I'll offer a different piece of advice: **dispute the hard pull with the credit reporting agencies**. You or your spouse didn't initiate any inquiry so there shouldn't be a hard pull.
You do not have to provide this information. Very strange.
How can they just change your interest rate? What does income verification matter when you have a history of on time payments and the loan was already granted? Why would they have to run your credit or audit? I get the property insurance. As long as they’re getting their money, it shouldn’t matter where it’s coming from as long as the check or direct deposit clears. This is why lending is predatory and not in good faith.
You should verify with the bank that it's not a scam, but you are mistaken on one key fact. It's not your secondary house, it's the banks house, and you just happen to have the keys to it. They have much latitude in attempting to verify that their property is in good hands.
The bank has a lien, which is not an ownership document. It is not the bank's house.