Second Employment Verification Before Loans Close.

By
Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

Many areas of this great county of ours are facing serious employment issues.  Here in Connecticut the Insurance Capital of the world, we have been particularly hard hit.  Insurance Companies have suffered many losses, and as a result, have had to down size and let many people go.

Because of the many job loses, several of the Lenders/Banks have add one more condition to their Commitment Letters, condition #3 of the Commitment Letter below:

Employment Verification has always been part of the Loan Approval Process, but I have never seen Employment Verifications done a second time until recently.  Most people might think that this condition might not apply very often, but in reality we are finding that a number of Borrowers have lost their jobs between the time they meet with the Loan Officer and the Loan Closes.

I had a young couple just a couple of weeks ago the met with me on a Thursday night to do a Loan.  Everything looked great until the next morning when I got a call from the female borrower that she had been notified that morning that she was being laid-off.  She had just been hired two weeks before and was not concerned about finding another job, because she had, had several job offers before accepting her present position, but this was a big problem in approving the loan.

Luckily for them just about all of their debt, except for one small car payment was on her, so losing her income did not affect the Debt to Income Ratios much once I removed her from the loan, and proceeded with just him as the Borrower.  But in most cases this would have been a major problem.

I advice every Borrower of this condition at the time we meet to do the loan so that they will do what this young couple did, notify me right away once they have any hint of possibly losing their jobs.  But this is also something that especially Realtors need to know will be checked before loans close these days with many Lenders.  Let's just hope that it does not happen to any of our Buyers/Borrowers.

 

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who is licensed in #CT, #RI, #MA, #NH, & a #FL Licensed Lender who can assist you with all your #FHA, #Conventional, #VA, #USDA, and #State Bonded Progam #mortgage needs in #CT, #RI, #MA, #NH, & #FL. George resides in Middlesex County which includes #Middletown, #Old Saybrook, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or souto@snet.net

Comments (16)

Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Very timely reminder George.

In addition to

Don't by a new vehicle.

Don't test drive any new vehicles.

Don't open any new accounts with furniture stores.

Don't give your SS# to anyone for anything.

 

May 01, 2009 09:21 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Lenn I can always depend on you to provide great additional information to my blogs THANKS :)

May 01, 2009 09:46 AM
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

George,

This is nothing new! It has always been done randomly and in unusual circumstances, normarly as a funding condition.

I've lost only one loan to it. My most experienced clients ever, we closed on their 32 loan (yes 32 mortgages) and after closing the wife stopped and quite her job! Before funding the next morning the investor, with nothing else to do revivified the woman's employment! It took 6 month's and an additional 2% to get them in a new home.

Bill

May 01, 2009 11:16 AM
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

This is now the 2nd time I have heard this George. I guess getting a loan today is nothing like it used to be.

May 01, 2009 11:30 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

William I am sure that was some thing you enjoyed going through at the time, but boy is that a great story to tell later on.  I am sure that other lenders have done this from time to time, or that there are even some that have always done it.  But for me and the Lenders that I am aware of this is new to us.

Bill, yes these are different times, but this too shall pass :)

May 01, 2009 11:44 AM
Celeste "SALLY" Cheeseman
Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE

Yeah...they did that to one of my clients and found he bought TWO new cars right before closing...nope...he didn't wait like I told him.

Same with verification... I know there's a reason for that :)

May 01, 2009 12:53 PM
Celeste "SALLY" Cheeseman
Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE

P.s. FYI...I also come back to see what you answered lol

May 01, 2009 12:53 PM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Sally, TWO new cars.  That is a new one on me.  I hope one of them was for you ......  LOL

May 01, 2009 01:47 PM
Ann Hayden 636-399-7544
Berkshire Hathaway HomeServices Select Properties-St. Louis Missouri - Chesterfield, MO
SelectAnn.com

George,

Sounds like the process is getting more difficult everyday.

Ann

May 01, 2009 02:23 PM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Ann yes, but this one makes sense.  There has been a lot of job cuts around here.

May 01, 2009 02:40 PM
Esko Kiuru
Bethesda, MD

George,

The way the job market in many parts is, it's understandable that mortgage lenders do a second VOE. But it is vital that borrowers inform the mortgage consultant immediately about any potential changes to the application.

May 02, 2009 01:19 PM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Esko, I agree, we can't help them if we don't know about it.

May 02, 2009 03:26 PM
Ann Hayden 636-399-7544
Berkshire Hathaway HomeServices Select Properties-St. Louis Missouri - Chesterfield, MO
SelectAnn.com

George,

Yes, I know it makes sense.  But after the loan commitment deadline passes what is a buyer to do?  I have been wondering if I should make loan commitment due a day or two before closing.

Ann

May 04, 2009 02:42 PM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Ann it would not make a difference because the Underwriter is still going to commit the loan as soon as she can, and would still be doing the second verification just before closing.

May 05, 2009 12:27 AM
Ann Hayden 636-399-7544
Berkshire Hathaway HomeServices Select Properties-St. Louis Missouri - Chesterfield, MO
SelectAnn.com
George, Here they verbal confirm emplyment prior to closing. Ann
May 05, 2009 10:47 PM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Ann, we also try to do just a verbal verification of employment before closing, but some employers will not give any information, even if they have given it before, without first receiving a Borrowers Certificate authorizing us to obtain the information.  It would be nice if they all did it verbally, because the other way slows things down.

May 05, 2009 11:59 PM