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Verification of Employment
Verification of employment is a method or strategy used by lending institutions in the United States to review a borrower’s employment history to determine his or her job stability and cross-reference income history with what stated on the Uniform Residential Loan Application of the 1003. Lenders require that the borrower complete the verification of employment stating all positions held for the last two years of employment history.
Many mortgage loans need to have both written and verbal verification of employment. After the lender receives the initial loan application, they will send a Written Verification of Employment, or From 1005, to all current and previous employers within the last two year as declared on the application. This form requires that an authorized representative of the employer to fill out, including dates of employment, position or positions held and a breakdown of compensation received. Once the lender receives this information back from the employer, they will compare it to two more documents, which are the loan application and the income documentation such as W2’s and paycheck stubs. All this process must be down to ensure that the information is correct.
Once the lender approves a mortgage loan, the borrowers will have signed their mortgage documents. Then, a Verbal Verification of Employment will be conducted with all current employers before the loan can be funded. This step is necessary to ensure that the borrower has not stopped working since the time the application was submitted. If the borrower has stopped working, this can negative influence the terms on which the loan was previously approved.
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