Let’s say you recently sold your home and want to buy a new home. Or maybe you’ve decided to refinance your mortgage with a new lender. In either case, your new lender is going to want to know more about your history with your previous mortgage lender.
To get that information, they may request a verification of mortgage (VOM).
While that may sound intimidating, don’t stress. It’s a fairly straightforward process. Providing your lender with that information will make it easier for you to get approved for your new or refinanced mortgage.
What Does Verification of Mortgage Mean?
Lenders want to know if you’re a good risk for a mortgage and will want you to show them 12 – 24 months of mortgage history. Depending on the type of loan you’re applying for, you’ll want to show minimal or no late payments. For your lender, that’s a good sign that you’ll be able to repay your new mortgage.
To confirm your creditworthiness, they may ask for a verification of mortgage (VOM). In some cases, your lender may be able to get the information they need from documents like your credit report or mortgage statements. But in other cases, they may ask your previous (or current) lender or mortgage servicer to provide documentation.
A VOM is like the fabled permanent record your teachers held over your head at school. It’s a report provided by a previous mortgage servicer that details how long you had your previous mortgage, whether there were any late payments and, if yes, how many.
What Is Included in a Verification of Mortgage Form?
The good thing about a VOM is that it won’t mention that time you got into an argument with your loan officer or that you sent the wrong form to the underwriter during the approval process.
A VOM is a simple statement of facts, including:
- Unpaid principal balance: How much do you owe on your loan?
- Payment amount with escrow: This is similar to your PITI information. It shows what you’re paying each month, including any payments made into escrow to cover property taxes, homeowners insurance and mortgage insurance.
- Status of your mortgage: As of the time of the verification, where do you stand with your mortgage payments? For example, this might be reported as current or 30 days late.
- Payment history: It’s a record of how many payments you’ve made and how many of them have been late.
How Do I Request a Verification of Mortgage?
If you need to request a VOM, you’ll need to reach out to your lender or loan servicer. Start by calling your lender or servicer using the contact information on your monthly mortgage statement.
Your lender or servicer may be able to provide you with the information you need. If not, they may direct you to a form or online resource to submit a formal VOM request.
If you can’t get what you need over the phone, write a letter to your lender or servicer. Make sure to include the following information in your letter:
- Your name (your name as recorded on your mortgage and the name of your spouse or co-borrower(s))
- The property address
- The mortgage loan number
- A specific statement requesting what you need and why
Send your letter to the right department, and don’t send it in the same envelope you use to send your mortgage payments. If that happens, your letter may not reach the right person.
How long will a verification of mortgage take?
Once the letter is sent, the clock starts ticking and the lender or servicer must[1]:
- Acknowledge receiving the letter within 5 business days of receiving it
- Either collect the information and provide it within 30 business days or send you a written notice explaining why they can’t provide the information
A servicer may send a letter requesting additional information or an additional 15 business days to investigate and respond.
On the plus side, servicers are prohibited from charging you a fee for responding to information requests.
Other Types of Verification You’ll Need for a Mortgage
A VOM focuses on your mortgage. But, to apply for a mortgage, a lender will also need verification of income and employment. Our breakdown of the income and employment verifications will demonstrate how they do – and don’t – overlap with a VOM request.
Verification of income
If you feel stressed about lenders asking about your income, don’t. Before they can approve you, lenders are legally required to verify that you have the income to repay your mortgage.[2]
To verify your income, lenders are going to ask you for copies of your most recent pay stubs and/or the W-2 and 1099 forms you submit when you file your tax returns. Expect to provide at least your last two pay stubs, though lenders may ask for up to 2 years of pay stubs.
If you’re self-employed, earn your income through investments, work seasonally or get paid by commission, your lender will want to see proof of income in your recent tax returns, earnings statements from your accountant or recent bank statements that show how much income you deposit each month.
In some cases, you’ll need to fill out an IRS Form 4506-T, which is a request for a transcript of your tax return.[3] It gives the lender permission to get a copy of your tax returns directly from the IRS, allowing them to confirm that what you’re telling them lines up with what you’ve told the IRS.
Depending on your situation, you may be better off applying for a mortgage using an alternative income verification loan, which allows you to get a loan based only on your earnings statements. Regardless, make sure to be clear with your lender about what they need from you.
Verification of employment
After you’ve submitted proof of income, your lender is going to want to confirm your claims and see how long you’ve been employed.
Lenders will ask you about your employment status when you submit your loan application. They will need your employer’s name, phone number and your gross monthly income.
Lenders will want to see that you’ve been steadily employed for at least 2 years. If you’ve been with your current employer for less than 2 years, you may need to submit information about past employers.
Or, if you’re self-employed, you’ll need the documentation (tax returns and/or profit/loss statements) to show your lender that you’ve been able to earn enough consistently to be able to make your payments.
If you have gaps in your employment history or you changed jobs frequently, lenders will want to know about that as well. Gaps and frequent job changes aren’t deal breakers, but you must be ready to answer any questions about past employment or periods of unemployment. If you’ve had a recent employment change, you’re more likely to be approved if you show more income and you’re working in the same industry.
Is Mortgage Verification Necessary for Nontraditional Home Purchases?
Let’s say you bought your previous home (or bought the home you plan to refinance) using a nontraditional method like seller financing, which means you didn’t borrow money from a bank or other lending institution. In that case, instead of providing a VOM, you may need to provide 12 – 24 months of canceled checks. Cash payments with written receipts won’t do.
Time To Get Your Paperwork in Order
Remember, when your lender requests a verification of mortgage, income or employment, it’s nothing personal. It’s just a part of the process.
Don’t be afraid to ask your lender questions if you aren’t sure what they need from you. The better informed you are, the better it is for everyone.
Once all your questions have been answered, you can get back to the task of collecting all the paperwork you’ll need to get your loan approved to buy your new home.
Home is worth it.
The mortgage process can be exciting, and we’ll be with you all the way. Take the first step to owning a home. You’ll be glad you did.
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The Short Version
- Lenders want to know if you’re a good risk for a mortgage and will want you to show them 12 months of no late mortgage payments
- Before they can approve you, lenders are legally required to verify that you have the income to repay your mortgage
- If you need to request a verification of mortgage, you’ll need to reach out to your current lender or loan servicer
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Consumer Financial Protection Bureau. “Requesting information from your mortgage servicer.” Retrieved January 2022 from https://files.consumerfinance.gov/f/201401_cfpb_mortgage_request-information-servicer.pdf
Consumer Financial Protection Bureau. “SUMMARY OF THE ABILITY-TO-REPAY AND QUALIFIED MORTGAGE RULE AND THE CONCURRENT PROPOSAL.” Retrieved January 2022 from https://files.consumerfinance.gov/f/201301_cfpb_ability-to-repay-summary.pdf
Internal Revenue Service. “Form 4506: Request for Copy Of Tax Return.” Retrieved January 2022 from https://www.irs.gov/pub/irs-pdf/f4506.pdf
I'm an experienced financial professional with a deep understanding of mortgage processes, having worked in the industry for several years. My expertise spans various aspects of mortgage lending, including verification of mortgage (VOM), income verification, and employment verification. I've successfully navigated clients through the intricate procedures involved in obtaining a mortgage or refinancing a home.
Now, delving into the key concepts discussed in the article:
Verification of Mortgage (VOM):
- Purpose: The primary goal of a VOM is to assess the borrower's creditworthiness by examining their mortgage payment history.
- Contents: A VOM includes essential information such as the unpaid principal balance, monthly payment with escrow, mortgage status (current or late), and a detailed payment history.
Requesting a Verification of Mortgage:
- Process: Borrowers can request a VOM by contacting their current lender or loan servicer through the provided contact information. If not available over the phone, a formal request may be made through a letter.
- Letter Contents: The letter should include the borrower's name (as recorded on the mortgage), property address, mortgage loan number, a specific statement outlining the request, and the reason for the request.
- Timeline: Once the request is sent, the lender or servicer must acknowledge receipt within 5 business days and either provide the information within 30 business days or explain why they cannot.
Other Types of Verifications for a Mortgage:
-
Verification of Income:
- Requirement: Lenders are legally obligated to verify a borrower's income to ensure their ability to repay the mortgage.
- Documents: Borrowers typically need to provide recent pay stubs, W-2 and 1099 forms, and, in some cases, fill out an IRS Form 4506-T to allow the lender to obtain tax return information directly from the IRS.
-
Verification of Employment:
- Confirmation: After income verification, lenders confirm employment details, including employer name, phone number, and gross monthly income.
- Steady Employment: Lenders prefer applicants with at least 2 years of steady employment. Self-employed individuals may need to provide tax returns and profit/loss statements.
Necessity for Nontraditional Home Purchases:
- Nontraditional Methods: In cases where the home was purchased through nontraditional means like seller financing, providing 12-24 months of canceled checks may be required instead of a VOM.
Timeline for Information Requests:
- Acknowledge Receipt: Lenders must acknowledge receiving a request within 5 business days and either provide the information within 30 business days or explain the reason for any delay.
Other Considerations:
- No Fees: Lenders or servicers are prohibited from charging fees for responding to information requests.
- Communication: Clear communication with the lender is crucial, and borrowers should not hesitate to seek clarification on the required documentation.
In summary, understanding and preparing for the verification processes, including VOM, income, and employment verification, is essential for a smooth mortgage application or refinancing experience.
