How does suspending representation and warranty relief for employment validation impact income validation?
We will continue to offer income validation with representation and warranty relief through DU. When a borrower’s income is validated through DU, the lender can rely on DU’s income validation provided the close-by date is met. In addition, DU will continue to review the employment status on the VOI/VOE report and will not validate income if there is any indication that employment is not active. When income is validated, lenders must follow the close-by dates and instructions issued in the income validation DU messages and the Selling Guide to obtain representation and warranty relief.
Because income validation for a borrower is still dependent on the borrower being employed, lenders should continue to verify the employment of the borrower as near to closing as possible and in accordance with the Selling Guide. If the lender discovers that the borrower is no longer employed, the associated income can no longer be considered in the qualification of the borrower, and the employment and associated income information should be removed from the 1003 and the casefile should be resubmitted to DU.
For more information, refer to the published Lender Letter LL-2020-03, Impact of COVID-19 on Originations.