As the industry is adjusting to COVID-19, below are some changes that are taking place for a smoother transaction.

One of the issues the industry is experiencing is verifying the employment of employees prior to closing, as is required by all lenders prior to funding the loan.

Verbal Verification Of Employment ( VVOE) and flexibilities that are being allowed:

A Verbal Verification of Employment MUST be completed for each salaried borrower within 3 business days prior to the note date. Loans that DO NOT fund within five business days of the completed Verbal Verification will require an additional Re-Verification of Employment before funding.

Alternatives to the 3-day Verbal VOE requirements for employed borrowers;

All efforts to obtain a Verbal VOE (verification of employment) and meet standard requirements must be exhausted. If a Verbal VOE cannot be obtained through traditional channels, any one of the following methods may be used to meet Verbal VOE requirements:

1. A Written VOE which has been completed within 3 business days of the date of the note may also be used to meet the 3-day Verbal VOE requirement. *Whenever possible utilize Veri-tax for the Written VOE.
**Borrowers who are employed by Family Members may not utilize this option and must exercise either the paystub or bank statement option to validate current employment.

2. An email directly from the employer’s work email address (URL) that identifies the name and title of the verifier and the borrower’s name and current employment status may be used in lieu of a Verbal VOE. The email must be received within 3 business days of the note date.

All the following information must be included:
a. Email must be from the borrower’s direct supervisor/manager or employer’s HR dept.
b. Email must be from the employer’s email address
c. Must contain all of the standard information required on a VVOE including name, title and phone number of the person providing the information.
**Borrowers who are employed by Family Members may not utilize this option and must exercise either the paystub or bank statement option to validate current employment.

3. Paystub: A year-to-date paystub from the pay period that immediately precedes the note date. The YTD paystub(s) must enable the Seller to determine and support the stable monthly income used for qualification. At a minimum, the paystub must:

  • Clearly identify the employer’s name, the Borrower as the employee and the date issued
  • Show the time period covered, the current pay period dates and earnings, and the complete YTD earnings

4. Bank Statements evidencing the payroll deposit from the pay period that immediately precedes the note date.

  • Should the deposit reflect the borrower’s pay is reduced, the file may not continue until the borrower is back to the standard of earnings used to qualify. This Bank Statement option would only be permitted on files in which a paystub has been provided to compare net deposited income. This option is not valid when only a Written VOE reflecting gross earnings in present within the file.
  • All requirements of the selling guide as it pertains to asset documentation must be met. (i.e. Minimum covering one full month; Identifying Financial Institution, Account Owner, etc.)

Verification of a self-employed business

Currently, when a Borrower is using self-employed income for qualifying purposes, the existence of the Borrower’s business must be validated no more than 120 days prior to the Note Date. Additional steps must now be taken to confirm that the Borrower’s business is open and operating within 10 business days prior to the note.

Some examples of acceptable documentation that the business is currently operating would be:

  • Evidence of current business receipts dated within 10 days of the Note. (i.e. current business bank statements showing income deposits, electronic payments to business owners, etc.)
  • Business website supports current business operations (i.e. services can be scheduled, online ordering, etc).
  • Signed invoices or contracts that indicate the business is operating on the day self-employment was verified.

If a borrower’s business is not currently open/operating the income may not be used to qualify.

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