Mortgage Approval Without Employment Verification
by JS from Loveland, Colorado
Ask Kate if mortgage loan approval is possible without verbal verification of past employment: Even with 50% down payment, no debt, perfect credit, and written income documentation, JS is shocked that they seem to be out of luck for getting a home loan! Here's the problem. Their loan originator is insisting the bank needs to verbally verify past employment with a company that was sold! Is this true, JS asks me!
Is Mortgage Approval Possible Without Verbal Verification of Past Employment?
You answered a question for me a few weeks back, and I so appreciate your quick response. It was so helpful!
My husband and I are a week away from closing...
Now my husband and I are a week away from closing on a house and am facing some concerns on why the bank is delaying our approval. We are worried they will not approve our loan, or delay our closing.
We are using a major bank (US Bank) for the loan.
We are putting down almost half cash for a $360K home, have excellent credit, and my husband has a state job he started last April. We have no debt and good income.
We provided all documentation to prove employment verification for the previous 2 years for my husband at the college he worked at prior to the state job.
This includes w2's, 2 years of tax returns, pay stubs for the last 4 years, letters by management from the previous job, and we signed a paper giving the IRS access to verify our tax returns to US Bank.
A week ago we gave contact information...
A week ago we also gave all contact info for them to call my husband's previous employer, but they procrastinated and waited until yesterday to contact them. We are only days away from our loan objection deadline, and 10 days from closing.
Problem is, it can take weeks to get that slow college Human Resource office to respond to that request.
On top of this, the college where my husband worked sold to another company halfway through his employment. The bank wants proof of employment during that time. Though we provided paystubs back two years proving he worked at the same college before it sold and changed hands and name, the loan officer said this is not enough.
Our loan officer ignores us and we have lost confidence...
We have asked our loan officer if we will still get our loan if the college does not respond in writing, and he has ignored us. We have lost all confidence that we will be approved, and told him so.
Also, they have not provided us with the appraiser's report information. The appraisal was done a week ago and we already have to extend the appraisal objection deadline on our purchase agreement.
In fact, the bank had us sign a waiver that they did not have to give us the report in the 3 days before closing according to law. But we told them today that we would not close UNTIL we read the report, as our contract states we have a right to object to the appraisal if it does not meet the value, etc.
Is there a chance we will be denied this loan if the employers fail to respond...
Is this normal for a bank to request confirmation from ex-employers, even after they have all documentation in their possession proving employment? Is there a chance we will be denied this loan if the employers fail to respond? If they deny us the loan, should we cancel them, extend our contract, and try another bank? Will another bank request the same things?
We simply are shocked...
We simply are shocked that our documentation in writing is not enough for them. We have given them everything we possibly can to prove his employment. US Bank says it is law for every bank and these are new regulations by the government...so if this bank denies us...are we simply out of luck in getting a loan?
We feel so shocked that this is even an issue especially with all legal documentation currently proving his employment.
Kate Answers: Mortgage Approval Without Employment Verification
Although there have been changes after 2007 in mortgage guidelines and procedures, I still find lenders interpret them differently.
Regardless, underwriters (the individuals with the authority to grant mortgage approval) must be able to understand the intent of the guidelines.
In your case, the guideline to which they refer is there to protect the lender and you from mortgage fraud, not to block a well-qualified borrower from receiving mortgage approval. Even so verbal verifications are preformed on current employment.
Per Fannie Mae Selling Guide - November 13, 2012:
The lender must contact the employer verbally and confirm the borrower's current employment status within 10 business days prior to the note date.
I would suggest getting straight to a supervisor. Your originator or his processor may have dropped the ball during your transaction. The fear of this being brought to light could be hindering one of them from seeking help to expedite your husband's verbal verification of employment on his current
I wish I could say if going to another lender would yield better results. I certainly don't want you to jump out of the frying pan into the fire, so to speak. So do this!
Talk with your real estate agent. Ask them if they have a trusted agent you can call to discuss this mishap. Ask again if their company can pull your transaction together and get it closed on time.
While you are on the phone with them, inquire into their appraisal and verbal verification of employment policies.
Quite a few years ago, before the mortgage debacle began, I wrote Cure Mortgage Loan Approval Hiccups
. The principle remains true today. I hope it will be of help to you.
Good luck and best wishes,
Every borrower should keep in mind that they must qualify a lender before applying for a mortgage. You have given me two additional questions to add to my guide for interviewing loan originators. You can see this list at The Easy Path to Low Mortgage Payments
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