B3-3.1-07, Verbal Verification of Employment
If you’re borrowing money based on your job or self-employment income, the lender has to check that you’re still working as late as possible in the loan process. This is called a verbal verification of employment (verbal VOE). For job income, this check must be done within 10 business days before the date you sign the note. For self-employment income, it must be done within 120 days before the note date.
Now, consider this scenario: if your job status changes, it might affect your ability to pay back the loan. So if that happens, the lender must reevaluate everything.
Lenders can also get the verbal VOE after closing the loan but before delivering the loan. However, if the lender cannot get the verbal VOE (or an alternative that’s allowed) before delivery, then the loan cannot be sold to Fannie Mae.
Sometimes, an employer might say that a borrower is on temporary leave. In this case, the lender should still consider the borrower as “employed”. For more on this, see “B3-3.1-09, Other Sources of Income”.
Requirements for verbal VOE and alternative methods
If you’re paid by the hour, salary, or commission (and not in the military), here’s what the lender must do for a verbal VOE:
1. The lender will find a phone number and possibly an address for your employer on their own. They might use a phone book, the internet, directory assistance, or the licensing bureau.
2. The lender will call your employer to confirm you’re still working there. This call must be made within 10 business days before the note date.
3. If your employer says you’re on temporary leave, the lender should still consider you as “employed”. For more on this, see “B3-3.1-09, Other Sources of Income”.
4. The lender must record details of the conversation, such as the names and titles of the people involved, date of the call, and the source of the phone number.
If the lender cannot conduct a verbal VOE, there are alternate methods:
1. The lender can get a written verification of your job status within 10 business days before the note date.
2. The lender can exchange emails with your employer’s work email address within 10 business days before the note date.
3. 15 business days before the note date, you can provide your most recent paystub or bank statements that show you’re still getting paid regularly and that there’s no sign you’re not actively employed.
If you’re part of a union and your job involves short-term assignments, the lender can get the verbal VOE from the union. If your employer uses a third-party employment verification vendor, the lender can get written verification from the vendor.
Special cases: DU validation and military personnel
Sometimes, employment is validated by DU (Desktop Underwriter), which assesses the age of the information in the vendor’s database. In that case, you just need to follow the DU message. See “B3-2-02, DU Validation Service” for more information.
If you’re in the military, instead of a verbal or written VOE, the lender must get either a military Leave and Earnings Statement dated within 120 days before the note date, or a verification of employment through the Defense Manpower Data Center. See “E-1-02, List of Contacts” for more information.
Self-Employed Income
If you’re self-employed, the lender must verify that your business exists within 120 calendar days before the note date. They might check with a third party, like a CPA or regulatory agency, or by verifying a phone listing and address for your business. The lender must document where they got the information and who in the lender’s office obtained it.
References
For more details, visit Verbal Verification of Employment of the Fannie Mae Selling Guide.