Written By: Stacey Sprain
Heads up-The agencies and lenders are tightening up on verbal employment verification requirements as a result of the nation’s climbing unemployment rate and increasing number of job losses. Desperate situations tend to lead to an increase of fraud so timing requirements are changing and data requirements are also being clarified by some lenders.
Fannie Mae’s recent Announcement 09-19 stated that Fannie now requires verbal employment verification dated within 10 calendar days of the note date for salaried borrowers and within 30 days for self-employed borrowers.
The following documentation standards apply for verbal employment verifications obtained for salaried borrowers:
• The lender must independently obtain a phone number and, if possible, an address for the borrower’s employer. This can be accomplished by using a telephone book, the internet, or directory assistance, or by contacting the applicable licensing bureau.
• The lender must contact the employer, verbally or in writing, and confirm the borrower’s current employment status within 10 days prior to the closing date.
• If the contact is made verbally, the conversation must be documented. It should include the name and title of the person who confirmed the employment, the date of the call, and the source of the phone number. The written documentation should also include the name and title of the person who performed the verification for the lender.
Note: If a borrower is in the military, a military Leave and Earnings Statement (LES) dated within 30 days of closing is acceptable in lieu of a verbal or written VOE.
The following documentation standards apply for verbal employment verifications obtained for self-employed borrowers:
• The lender must verify the existence of the borrower’s business within 30 days prior to the note date
from a third party, such as a CPA, regulatory agency, or the applicable licensing bureau, if possible; and
by verifying a phone listing and address for the borrower’s business using a telephone book, the internet, or directory assistance.
• If the contact is made verbally, the lender must document the source of the information obtained and the name and title of the lender’s employee who obtained the information.
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Freddie Mac also came out with Bulletin 2009-18 on July 10th that stated the following regarding their verbal employment verification requirements:
• Streamlined Accept documentation requirements for salaried Borrowers to include either a written verification of employment (VOE) for one year and a verbal VOE not more than 10 calendar days prior to the Note Date or one year’s W-2, a year-to-date paystub for at least 30 calendar days and a verbal VOE not more than 10 calendar days prior to the Note Date
• Obtain a verbal verification of employment for employed Borrowers not more than 10 calendar days prior to the Note Date for Standard Accept documentation requirements
• Seller must verify the existence of the business through a third party source not more than 30 days prior to closing for a Borrower that is self-employed
• Verbal VOE must include the phone number for the individual contacted, the dates of employment and whether the Borrower is currently employed. The phone number for the contact must be obtained from an independent third party source.
• There is no longer an option to provide an additional paystub in lieu of a verbal verification of employment for Streamlined Accept and Standard Accept documentation requirements (except for military income)
• Verbal re-verifications are now accepted in cases where updated documentation is required.
Some lenders are requiring that a printout of the third party resource be attached with the verbal verification as evidence that the existence of the employer was indeed validated. I am also seeing significant variables in the timing requirements- all across the board. Some are following Fannie’s or Freddie’s requirements but many are creating their own more conservative timing overlays. I’ve seen a few lenders who want verbal re-verifications dated within 48 hours, three days, five days or within 10 days of the note date or the settlement date.
Make sure you are clear on what your lender requires because files can be held up in purchasing with post-closing conditions if the proper timing requirements are not met for verbal employment verifications!
Sources- Fannie Mae Announcement 09-19 and Freddie Mac Bulletin 2009-18.
Need FHA Training? CLICK HERE: http://www.FHA-Classes.org
About The Author
Stacey Sprain - As an NAMP® staff writer, Ms. Stacey Sprain is currently a NAMP® member in good standing, and is a NAMP® Certified Ambassador Loan Processor (NAMP®-CALP). With over 15+ years of mortgage banking experience, Stacey is also a Quality Control Manager for a major mortgage lending institution. If you would like to become a volunteer writer for us, please email us at: contact@mortgageprocessor.org.
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