What Your Realtor, Loan Officer and Appraiser Forgot to Tell You!

Employment

If you want to buy or refinance a house and you are like me, you’re going to need a job. Some individuals can qualify based on interest income, dividends, royalties, or alimony income. But I don’t have any of these, so I’m going to need a job.

So did Nancy Wilde. Nancy Wilde was a client of John Garland (no relation to Judy) of Southbay Brokers. John found her a beautiful little home: 2 bedrooms and 1 1/2 baths in the Torrance area of Los Angeles. Nancy worked for TRW in the Southbay area and had a solid income of $85,000 a year. She had a 60-day escrow and was fully approved. The appraisal was in, her supporting W-2’s and paystubs confirmed her income, and her credit was great. There was one small problem - and one that you should be made aware. Two weeks before closing, the underwriter called to verify Nancy’s employment.  This is not an exception to the loan process. Verification of employment is often the last thing that gets done.

“Nancy no longer works here. Her last day was this past Friday. She left on commendable terms and we wish her well,” said the Human Resource Representative.

“Thank you,” replied the underwriter. The underwriter then notified the loan processor who notified the mortgage broker who notified John Garland that his deal was quickly flying south.

John quickly called his client. “What did you do that for? If you hated your job, why didn’t you quit after we closed?”

“Why,” asked Nancy? “I’ll get another job. Do I really need one for this loan? I have the down payment and I have the savings.”

Let me interject here, even though this wasn’t my deal, “YES!! I mean, yes.” It is important to show that you have an employment history and that you are gainfully employed during the loan process right through closing. 

On a good note, it only took a week, but Nancy was able to find another job with a similar salary. The seller agreed to delay the closing of escrow for a week and John, not accustomed to making every escrow nerve racking, earned his commission.

In the mortgage industry, there are two types of people in the world: those who can document their income and those who can’t. The latter are typically self-employed, take liberal tax write-offs and don’t show enough income to qualify (per their tax returns). For these individuals, there are “Stated Income” programs.