How Do Lenders Verify Employment?

A:

A mortgage lender will verify your employment as a part of the mortgage process. The lender does this to make sure that you are still employed and working in the position that you disclosed on the application. If there are any material discrepancy discovered during the employment verification, the lender (usually an underwriter) will dig deeper into the discrepancy. The purpose of the verification is to reduce risk. For example, a lender likely will have difficulty justifying lending to a person who is no longer employed and does not have another income source.

How Do Lenders Verify Employment

Below are the common ways that a lender will verify employment:

Employer Phone Call: The lender will call a listed phone number to your employer and ask to speak with the department in charge of verifying employment. This is usually Human Resources or Personnel. The employer will verbally verify your employment information over the phone. The lender will typically ask for your start date, current position, and inquiry if you are still employed.

There are situations where the employer will not verbally verify employment over the phone. They will request a verification of employment form to be faxed or potentially mailed for completion. Lenders typically have prepared verification of employment forms that they can quickly send to the employer.

Automated Verification of Employment: Some employers utilize automated systems to complete their verification of employment requests. One of the well known verification services is TheWorkNumber.com. Employers supply employment data to the verification service.  The lender obtains their requested employment/income information from the verification service database in lieu of contacting the actual employer.

Full Verification of Employer: The lender has the ability, in many cases, to obtain a full verification of employment. This type of verification supplies income information for the years that the lender requests. They commonly can provide specific income detail. For example, the full verification might reflect the base income, overtime, and bonus income for the past two years and year to date. You can see an example of the form that lenders commonly use here. Note that the full verification of employment is often used to verify a borrower’s income when pay stubs cannot be provided to the lender.

Verification of Employment Turnaround Time: The turnaround time for a lender to obtain a verification of employment will vary based on the employer’s process of handling these requests.  Automated and verbal phone verifications can usually be completed in minutes. However, there are cases where the verification takes a few days as the lender waits for a response from the employer. Generally, they tend to be quick and do not tie up the mortgage process. Some lenders actually have staff devoted to completing verifications to speed up the process.

Final Tip: Be sure to provide accurate details of your employment on your application. Provide the correct employer name, address, and a directory listed phone. Also, provide your correct start date and position. If this information is incorrect on your mortgage application, it may delay your loan from closing.