Employment and Income. Employment by industry, occupation of employed residents, and income trends.
Employment and Income. Original documentation verifying employment and income may include the following: • Verification of employment and income forms; • Paystubs; • Salary vouchers; • W-2 forms; • Tax returns; • Financial statements; • Compensation award letters; and • Other documents supporting income. Verbal verification of employment is required to be obtained prior to Closing and must be documented in every Mortgage Loan File. The completion of the pre-Closing verbal verification of employment in compliance with the requirements of the Selling Guide must be verified during the post-Closing QC. The PFI must re-verify all documentation of income used in the original underwriting process. Confirmations must be obtained as to the validity of the documents by sending the issuers copies of the original documentation with a request for validation. Regardless of the sources of the Borrower’s income, a completed and signed IRS Form 4506-T from each Borrower is required at or before Closing. If tax return transcripts were not obtained prior to Closing, the PFI is required to obtain the tax return transcripts from the IRS (or designee) using the Form 4506-T signed at Closing for all Mortgage Loans it selects for a post-Closing QC review (including targeted reviews as applicable), regardless of the type of income documentation provided in the Mortgage Loan File. If tax returns were used in the underwriting of the loan, the PFI must obtain transcripts for the same tax years as documented by the Borrower’s tax returns. The PFI must reconcile the transcript information received from the IRS with the income documents in the loan file. The PFI is required to maintain the IRS tax return transcripts in the Mortgage Loan File. The IRS will not process requests for transcripts received beyond one hundred-twenty (120) days from the date the Borrower signed the IRS Form 4506-T. Therefore, if the Form 4506-T signed at Closing cannot be sent to the IRS within 120 days from the Closing date for Mortgage Loans selected for a QC review, it is highly recommended that the PFI obtain the tax transcripts before the Closing for all Mortgage Loans. The reverification of employment and income should be in writing. A verbal reverification may be accepted provided it is documented in writing. The written documentation must state the following information: • The name of the PFI’s employee making the contact; • The name of the Borrower’s employer; • The name and title of the person contacted at the employer; •...
