20-09

Update to Employment/Income Verification for ALL Programs

Fannie Mae and Freddie Mac have issued new guidance regarding verification of employment in response to the COVID-19 outbreak which states, that due to the current economic impact of COVID-19, lenders should practice additional due diligence to ensure the borrower’s ability to repay.

At this time FHA, VA and USDA have not provided direction therefore Homebridge will apply the guidance provided by Fannie Mae and Freddie Mac to FHA, VA, and USDA transactions until such time FHA/VA/USDA provide guidance.

Homebridge is implementing the following policies regarding employment and income effective immediately for all Fannie Mae, Freddie Mac, FHA, VA, and USDA transactions:

  • Homebridge will verify both wage earner/salaried borrowers and self-employed borrowers’ employment prior to the file being sent to closing AND again, within the 48 hours prior to funding to confirm the borrower’s employment status has not changed using one of the methods detailed below:
  • Wage Earner/Salaried Borrowers
    • Verbal VOE, or
    • Written VOE, or
    • Email from the borrower’s employer

NOTE:  Homebridge will not accept a paystub or bank statement as the only source to verify the borrower is still employed

  • Self-Employed Borrowers:
    • Written verification provided by a CPA or Accountant (must be dated within the 48 hours prior to funding), or
    • Verification business is still operational via telephone confirmation

NOTE: NDC Transactions: Homebridge will only verify employment 48 hours prior to purchase

  • As part of the initial employment verification process Homebridge will also request the employer to confirm the borrower’s income has not been/will not be adversely affected; if confirmed no additional documentation will be required
  • In the event the employer declines to comment on whether the borrower’s income has been adversely affected during the initial employment verification process the following will be required from the borrower for underwriter review:
    • The borrower’s most recent paystub, and/or
    • The most recent bank statements showing receipt of income
  • In the event the employer indicates the borrower’s income has been adversely affected, the Homebridge underwriter will determine loan eligibility. Additional documentation from the borrower may be required
  • In addition to the above, Homebridge will perform a “reasonability” test of the borrower’s income to consider the likelihood of continuance since certain industries are far more affected than others (e.g. service industries that rely heavily on tips – restaurant, casino, hair/nail salons, etc. vs. industries deemed “essential” or where telecommuting is a viable option)

Refer to Fannie Mae Lender Letter 2020-03 and Freddie Mac Bulletin 2020-5 to read the complete guidance.

If you have any questions, please contact your Account Executive