Selling Guide

Published June 3, 2020

The Selling Guide is organized into parts that reflect how lenders generally categorize various aspects of their business relationship with Fannie Mae. To begin browsing, select from any of the sections below. You may also download the entire Selling Guide in PDF format.

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B3-3.1-07, Verbal Verification of Employment (10/02/2018)

Introduction

This topic contains information on verbal verification of employment requirements for all borrowers.

 

Verbal Verification of Employment

Lenders must obtain a verbal verification of employment (verbal VOE) for each borrower using employment or self-employment income to qualify. The verbal VOE must be obtained within 10 business days prior to the note date for employment income, and within 120 calendar days prior to the note date for self-employment income. The verbal VOE requirement is intended to help lenders mitigate risk by confirming, as late in the process as possible, that the borrower remains employed as originally disclosed on the loan application. A change in the borrower’s employment status could have a significant impact on that borrower’s capacity to repay the mortgage loan and must be fully reevaluated.

Alternatively, lenders may obtain the verbal VOE after closing, up to the time of loan delivery. If the verbal VOE cannot be obtained prior to delivery, the loan is ineligible for delivery to Fannie Mae.

 

Note: If the employer confirms the borrower is currently on temporary leave, the lender must consider the borrower “employed.” See B3-3.1-09, Other Sources of Income, for details on temporary leave.

 

The following table describes verbal VOE requirements:

Type of Income Verbal VOE Requirements
Hourly, Salary, and Commission Income (Non-Military)

Requirements:

  • The lender must independently obtain a phone number and, if possible, an address for the borrower's employer. This can be accomplished by using a telephone book, the Internet, directory assistance, or by contacting the applicable licensing bureau.

  • The lender must contact the employer verbally and confirm the borrower's current employment status within 10 business days prior to the note date.

    Note: If the employer confirms the borrower is currently on temporary leave, the lender must consider the borrower “employed.” See B3-3.1-09, Other Sources of Income, for details on temporary leave.

  • The conversation must be documented. It should include the following:

    • name and title of the person who confirmed the employment for the lender,

    • name and title of the person who completed the verification for the employer,

    • date of the call, and

    • the source of the phone number.

Exceptions:

  • If the employer will not verbally verify employment, the lender can obtain a written verification (other than an additional paystub) confirming the borrower’s current employment status within the same time frame as the verbal VOE requirements. The written documentation must include the name and title of the person who completed the verification for the employer.

  • If the borrower is a union member who works in an occupation that results in a series of short-term job assignments (such as a skilled construction worker, longshoreman, or stagehand), and the union facilitates the borrower’s placement in each assignment, the lender may obtain the verbal VOE from the union.

  • If the employer uses a third party employment verification vendor, the lender must obtain written verification from the vendor of the borrower’s current employment status within the same time frame as the verbal VOE requirements.

 

Note: Because third-party vendor databases are typically updated monthly, the verification must evidence that the information in the vendor's database was no more than 35 days old as of the note date.

 

When employment is validated by DU, DU includes in its assessment the age of the information in the vendor’s database. The DU message will include a date by which the loan must close. This may differ from the age of data and 10 business day requirements above. Compliance with the DU message satisfies the requirement for completing the verification of employment. See B3-2-02, DU Validation Service for additional information.

Military Personnel

If the borrower is in the military, in lieu of a verbal or written VOE, the lender must obtain either

  • a military Leave and Earnings Statement dated within 30 calendar days prior to the note date (or 31 days for longer months), or

  • a verification of employment through the Defense Manpower Data Center (https://www.dmdc.osd.mil/appj/mla/).

Self-Employed Income

Requirements:

  • The lender must verify the existence of the borrower's business within 120 calendar days prior to the note date

    • from a third party, such as a CPA, regulatory agency, or the applicable licensing bureau, if possible; or

    • by verifying a phone listing and address for the borrower's business using a telephone book, the Internet, or directory assistance.

  • The lender must document the source of the information obtained and the name and title of the lender's employee who obtained the information.

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