Verification of Employment for Mortgage Template

This Article Is On Verification Of Employment During The Mortgage Process By Lenders

Verification Of Employment is one of the most important steps in the mortgage process. Employment Verification is often referred to as VOE. It is when a lender will require employment and salary verification by the employer of the mortgage loan applicant. Borrowers who are using overtime income and/or other sources of income besides their regular full time wage will need verification of employment. There is a written employment verification and a verbal employment verification. A written VOE is done during the mortgage process. A verbal VOE is normally done prior to the mortgage underwriter issuing a clear to close. Lenders want to make sure the borrower has the ability to repay their new housing payment. Calculating qualified income is one of the most important factors that is important when qualifying for a home mortgage. The history and past of the borrower’s income history is a good indication of the future earnings potential. One of the questions that is asked when lenders request for employment verification is if the employee’s likelihood to remain employed for the next three years is likely. Lenders want to see the likelihood of future employment for the next three years remain strong. Borrowers should not change jobs and/or resign from their jobs during the mortgage process. This holds true even if they get a much higher paying job in the same field during the mortgage process. Most mortgage borrowers rely on employment-based income to pay for a home loan. Mortgage lenders usually verify the amount and stability of income used to qualify for a purchase or refinance loan. The requirement for a last-minute employment verification before closing generally depends on the lender, the loan program and your employment type. Lenders also verify your employment status via recent income documentation.

Employment Verification Process

How the employment verification process looks like

At most mortgage companies, the mortgage processor will verify the borrower’s employment and income as part of the mortgage approval process. It is best recommended to do the written verification of employment in the beginning of the mortgage process. The mortgage processor contacts the borrower’s employer to confirm the information provided on the mortgage loan application. If the overtime income and/or other income is confusing, it is best the written verification of employment gets done before anything else. A verbal verification of employment is done prior to a clear to close to make sure the borrower is still employed and there are no changes of the borrower’s income and/or employment status.

How Long Does Employment Verification Process Take

Mortgage processors are experts in getting VOE from employers. Every employer may have its own protocol on employment verification. The HR division of companies take care of their employees and realize the importance of VOEs. There are times when VOEs take longer than normal due to staff shortages at the employer. If there are delays of getting employment verification, it is normally due to the employers not providing it in a timely manner. The employee can normally get involved in trying to get the VOE expedited. Some mortgage companies have highly technologically advanced computerized software systems to streamline the employment verification process. The software has the borrower’s mortgage loan application data with the employers contact information and the information needed to request a computerized verification of employment. The information of the borrower’s employment and income should match the numbers and figures confirmed by the employer on the VOE. If there is a discrepancy, the loan officer will go over the discrepancy with the borrower and come to a resolution.

Cases Where Employment Verifications Can Go Wrong

What can be the cases where employment verification may fail

The mortgage business is very regulated. You do not want to try to pull a fast one during the mortgage process. Whatever people try to pull and outsmart the lender, it will backfire. For example, if you were to put in a resignation letter that this will be your final year and retire at the end of the year and you are in the middle of the mortgage process, your loan will get denied.

Why is that so?

Lenders will ask Human Resources if the likelihood for continued employment for the next three years is likely. If the HR representative says NO because the employee turned in the resignation request of the employee retiring at the end of the year, this loan will be denied using the current salary of the employee. The likelihood for the borrower’s employment to continue for the next three years need to be very likely.

Quitting Job After Written Verification Of Employment

We had many instances where the borrower quit their job and got another job after the lender did a verification of employment. The borrower did not tell anyone. He did not even tell the loan officer. When the lender did a verbal employment verification during the mortgage process, the employer told the mortgage processor that the employee is no longer employed. This loan is now alerted and suspended by the mortgage underwriter. The lender could have denied the loan and issued a loan denial letter. However, the lender normally wants to work with borrowers in cases of mistakes and not fraud. The good news was the borrower found another job in the same field with a higher annual salary. Therefore, the lender needed to modify the mortgage loan application with the new employer and income information. The mortgage underwriter will need the offer letter of employment. The mortgage processor needs to order a brand new employment verification with the new employer. The lender will need to get 30 days of paycheck stubs from the new employer in order for the mortgage underwriter to issue a clear to close. The bottom line is that changes in employment during the mortgage process can be done but borrowers should expect delays.  If it is at all possible, it is best recommended borrowers look for a new job after they close on their home loan and not before and/or during the mortgage process.

If you have any questions about the content in this article and/or other mortgage-related topics, please contact us at Capital Lending Network, Inc. at 800-900-8569 or text us for a faster response. Or email us at contact@capitallendingnetwork.com. Capital Lending Network, Inc. has a national reputation for not having any lender overlays on government and conventional loans. We also offer dozens of non-QM and alternative financing mortgage programs. The team at Capital Lending Network, Inc. is available 7 days a week, evenings, weekends, and holidays.


Gustan Cho is a senior mortgage expert and National Managing Director, providing direct-to-consumer advice at NEXA Mortgage LLC. We are a mortgage brokers licensed in multiple states. We are experts in FHA Loans, VA Loans, USDA Loans, Conventional Loans, FHA 203k Loans, Reverse Mortgages Jumbo Mortgages, Non-QM mortgages, Bank Statement Mortgage Loans for self employed borrowers, and alternative financing.

4 Comments

My husband and I are currently in the rigorous underwriting process with a major lender and are becoming uneasy with the unorganized, intrusive and impersonal way in which we’ve been brought through the process. We don’t really trust that our Loan Specialist is doing all that he can to help us through the process. Documentation has been asked for over and over again, and we have uploaded many documents to their loan navigator several times. It “feels” like they don’t really want us to have the loan. We live in Texas and are moving back to Montana and that seems to be a concern for them. We feel like we will be denied based on silly underwriting conditions, not that we have 800 credit scores or that we have plenty of money in the bank to support a 50% cash closing. I watched your video on switching to a different lender and you make it sound so easy. Is it really that easy? Thank you.
Deborah

I’m hoping to purchase a home within the next couple of months. I read information from your site and would like to confirm before applying. ***I have a FHA foreclosure within the last 3 years; however it was included in a chapter 7 bankruptcy in 2014. My credit score is 716 and I have 10% to put down, 20% if it helps to qualify. If the mortgage was included in the bankruptcy and the four year waiting period is up; can I qualify for a conventional loan?
*** I am not on the caivrs list.

I have read hundreds of blogs from Gustan Cho Associates. If any lender can help me is Mr. Gustan Cho and the Gustan Cho Team at Gustan Cho Associates. I had a 60 day late payment February 4 2020 credit is good other than that can you help

I would like to get a certificate of eligibility for a 20-30 year fixed rate VA loan with no money down, with low or no closing costs.

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