If a recent paystub or bank statement is obtained in lieu of the verbal verification of employment (VOE), and the documentation evidences reduced hours and/or pay due to the pandemic, what are the next steps?
For reduced hours or pay, continue to follow the requirements and guidance in the Selling Guide Chapter B3-3 related to income stability and calculation. For example, for declining variable income, the requirements and guidance for declining income trends in the B3-3.1-01, General Income Information are applicable. In those cases, the reduced amount of declining variable income can only be used for qualifying if it has since stabilized and there is no reason to believe the borrower will not continue to be employed at the current level. In no instance may income be averaged over the period of declination.
For more information, refer to the published Lender Letter LL-2020-03, Impact of COVID-19 on Originations.