5302.2: Employed income documentation and verification requirements (07/06/17)

This section contains income documentation and verification requirements for the following subjects:

Year-to-date (YTD) paystub (Section 5302.2(a))
W-2 form (Section 5302.2(b))
Written verification of employment (written VOE) (Section 5302.2(c))
10-day pre-closing verification (10-day PCV) (Section 5302.2(d))

(a) YTD paystub(s)The following chart contains requirements and guidance pertaining to YTD paystubs:

Subject

Requirements

YTD paystubs

The YTD paystub(s) must enable the Seller to determine and support the stable monthly income used for qualification. At a minimum, the paystub must:

Clearly identify the employer's name, the Borrower as the employee and the date issued
Show the time period covered, the current pay period dates and earnings, and the complete YTD earnings

YTD paystubs with less than the required information

When the YTD paystub does not contain the required information (e.g., paystubs that are handwritten or typed by the employer and do not contain YTD earnings), the Seller must verify the required information by obtaining additional documentation (e.g., written VOE, a review of payroll deposits on bank statements).

(b) W-2 formsW-2 form(s) must be the complete Internal Revenue Service (IRS) Form W-2 distributed by the employer issued for the preceding tax year(s).The following documentation may be used in lieu of the W-2 form:

Subject	Requirements
Year-end YTD paystub or military Leave and Earnings Statement	The year-end YTD paystub(s) or military Leave and Earnings Statement may be used in lieu of the W-2 form(s) provided the documentation reflects the complete income earned in the previous calendar year
W-2 transcript for all income and earnings types	The W-2 transcript(s) may be used in lieu of the W-2 form(s) provided the transcript reflects the complete income earned in the previous calendar year

(c) Written VOEAll written VOEs must contain the following information:

Signature, printed name, title and contact information (e.g., phone number) of the authorized employer representative who verified the information and the date completed
Borrower's name and employer's name and address

If the employer provides additional information, such as the probability of continued employment and/or income, or comments, the Seller must consider the information with the income and employment analysis.

Refer to Section 5102.3 for additional information about verifying documents.

The following chart contains additional requirements pertaining to written VOEs:

Subject	Requirements
Current employment and income	Date employment began Current position Gross base non-fluctuating earnings per pay period (e.g., monthly, bi-weekly) Fluctuating hourly earnings and rate of hourly pay Year-to-date earnings with paid through date Earnings from either the most recent one or two-year calendar period, in accordance with the requirements in Chapter 5303 Earnings (e.g., base non-fluctuating, fluctuating hourly, bonus, overtime, tips, commissions) must be split into separate categories for both YTD and prior year(s) earnings
Current military active-duty employment base (basic) pay and entitlement income	Date employment began Current position Base (basic) monthly pay Current monthly entitlement income (e.g., rations, clothing, quarters) Year-to-date earnings with paid through date Earnings from most recent one-year calendar period
Current military Reserve or National Guard income	Date employment began Current position Year-to-date earnings with paid through date Earnings from most recent one-year calendar period
Previous employment and income	Date employment began Date employment concluded Position held Gross earnings amount

(d) 10-day pre-closing verification (10-day PCV)Verification of the Borrower's current employment (10-day PCV) must be obtained in accordance with the requirements of this section. Refer to Sections 5303.2(c), 5303.2(e) and 5303.3 for additional information about when a 10-day PCV is required.The 10-day PCV, when required, must either be obtained no more than 10 Business Days prior to the Note Date, or after the Note Date but prior to the Delivery Date.The following chart contains requirements for eligible 10-day PCV types:

10-day PCV types	Requirements
Verbal verification of employment (verbal VOE)	The Seller must provide Form 90, Verbal Verification of Employment, or a similar written document that includes all of the following: Name of the Borrower, employer's name, name and title of the individual contacted at employer, date of contact, and the phone number used to contact the employer Name of the third-party source used to obtain the phone number for the employer (e.g., phone directory, reliable internet source, directory assistance, etc.) Borrower's current employment status Any additional information that was verified Name, title and employer of the representative who contacted the Borrower's employer and completed the Verbal VOE In addition to the verbal VOE requirements above, for employment commencing after the Note Date (refer to Section 5303.2(e)), the Seller must confirm and include the following information on the verbal VOE document: The terms reflected on the non-contingent offer letter or employment contract accepted by the Borrower have not changed since the acceptance date, including employment start date, base non-fluctuating salary and any other relevant income or employment information used to qualify the Borrower
Written VOE	A written VOE verifying the current employment status of the Borrower in accordance with the requirements of Section 5302.2(c)
Military Leave and Earnings Statement	A military Leave and Earnings Statement dated no more than 30 days prior to the Note Date (or 31 days for longer months)
Third-party employment verification service provider – electronically generated	Employment information must be verified and documented by the third-party verification service provider directly through the electronic database of the employer or the employer's third party payroll services provider and must contain the following information: Name of Borrower Name of employer Borrower's current employment status Any additional information that was verified Date employment information was issued from the employer to the third-party verification services provider (e.g., effective date, current as of date) Date verification was issued to the Seller by third-party verification services provider The form used by the third-party verification services provider must contain the name, address and phone number of the provider. Refer to Section 5302.3, for additional information.