What is a Verbal Verification of Employment (VOE)?
A Verbal Verification of Employment, or VOE, is one of the final hurdles you must clear before your mortgage is funded. It is a simple phone call made by your lender to your employer, typically within 10 business days of your closing date, and often just a day or two before. The data, information, or policy mentioned here may vary over time. This is not the same as the initial, more detailed written verification of employment that happened when you first applied for the loan. The purpose of the final verbal check is singular: to confirm that nothing has changed about your employment status.
Lenders are confirming two key facts:
- You are still employed at the same company.
- Your employment terms, such as pay structure and hours, have not negatively changed since your initial application.
This is a standard, non-negotiable step for virtually every mortgage in the United States. Whether you're securing a jumbo loan for a home in Los Angeles or a conventional loan in San Jose, the lender must perform this final check to protect their investment. Any discrepancy between what your employer says on this call and what's on your loan application can bring the entire process to a screeching halt.
Why Lenders Wait Until the Last Minute for the VOE
The timing of the verbal VOE often causes anxiety for homebuyers, but it serves a critical purpose from the lender's perspective. A mortgage is a massive financial commitment, and the lender’s decision to fund your loan is based on a snapshot of your financial stability at the time of application. They wait until the last possible moment to ensure that snapshot is still accurate.
Imagine a borrower loses their job or has their hours cut the day before closing. If the lender funded the loan without this final check, they would be originating a loan for someone who no longer has the income to support the payments. This represents an enormous risk. By performing the VOE just before funding, the lender minimizes the window of time in which a financially catastrophic event could occur without their knowledge. It’s their final due diligence step to ensure the loan still meets the strict guidelines set by entities like Fannie Mae and Freddie Mac.
The Specific Questions a Lender Asks Your Employer
The call is usually brief and to the point. The lender’s representative isn't looking to have a long conversation; they are seeking specific 'yes' or 'no' answers to verify data. While the exact script can vary slightly, the core questions are standardized across the industry. Your HR representative can expect to be asked the following:
- 'Can you confirm if [Your Full Name] is still an active employee?'
- 'What is their official job title?'
- 'What was their start date with the company?'
- 'Is their position considered full-time, part-time, or temporary?'
- 'Can you confirm their current rate of pay and if it is hourly or salaried?'
- 'Is there any knowledge of their employment being terminated in the near future?' (Essentially asking, 'Is their continued employment likely?')
The lender’s representative has your original loan application in front of them during this call. They are meticulously comparing the verbal answers from your employer to the data you provided. Even a minor difference can become a major problem. The data, information, or policy mentioned here may vary over time.
How Pay Structure Changes Can Jeopardize Your Loan
One of the most dangerous situations for a homebuyer in California is a change in pay structure during the loan process, especially for those in sales or performance-based roles.
The Salaried to Commission Switch in Los Angeles
Consider this real-world scenario. A sales executive in Los Angeles is pre-approved for a $750,000 mortgage based on a stable, predictable annual salary of $150,000. The loan moves through underwriting smoothly. Three weeks before closing, they accept an internal promotion. Their new compensation is a $90,000 base salary plus the potential to earn significant commissions.
On the final VOE call, HR tells the lender the borrower's pay is now '$90,000 plus commission'. This is a massive red flag. The underwriter approved the loan based on a guaranteed income of $150,000. Commission income is considered variable and, to be used for qualification, typically requires a two-year history of being earned and received. The data, information, or policy mentioned here may vary over time. Since this commission structure is new, the underwriter can now only use the $90,000 base salary for qualification. This drastic drop in qualifying income will almost certainly lead to a last-minute loan denial. The borrower is no longer qualified for the $750,000 loan, and their home purchase collapses.
Preparing Your Human Resources Department for the Call
You can prevent many VOE-related disasters with simple, proactive communication. Do not assume your HR department knows what to do or how critical this call is. Take these steps a week before your scheduled closing date.
Crucial Steps to Take Before the Verification Call
- Give a Heads-Up: Contact the person or department in your company responsible for employment verifications. This could be a general HR line or a specific payroll manager. Inform them that they should expect a call from your mortgage lender.
- Provide the Lender's Name: Give them the name of your mortgage company (e.g., 'XYZ Mortgage') so the call isn’t mistaken for a spam or sales call.
- Confirm Your Information: Subtly confirm that their records match what you put on your application. For instance, you could say, 'Just to make sure we're on the same page for the verification, my official title is still Senior Systems Analyst and my status is full-time, correct?' This clears up any potential discrepancies with internal versus external job titles.
- Explain the Importance: Briefly explain that this is the final step for your home purchase and that accurate, timely answers are crucial. This little bit of context can make a big difference.
Navigating Time Off and Leave During Closing
Taking time off around your closing date is common, but you need to understand how it can be perceived by a lender.
Can Taking Vacation Time Cause a Problem?
Generally, taking a planned, paid vacation will not cause a problem. When the lender calls, your HR representative will confirm you are still an 'active' employee currently utilizing your paid time off (PTO). Your income stream is uninterrupted, so your ability to repay the loan is not in question. However, the risk lies in miscommunication. If an HR representative simply says you are 'on leave' without specifying it is a paid vacation, it could be misinterpreted as a more serious, unpaid leave of absence, forcing the lender to halt the process and ask for more documentation.
The Risk of Unpaid Leave or FMLA
Going on any form of unpaid leave, including the Family and Medical Leave Act (FMLA), short-term disability, or a personal sabbatical, is a deal-breaker. If the VOE reveals you are on unpaid leave, the lender must put your loan on hold. The reason is simple: you are not actively earning the income that was used to qualify you for the mortgage. The loan cannot be funded until you have officially returned to work, can provide documentation of your return, and have received at least one full pay stub to prove your income has resumed.
Handling Recent Job Changes and Title Updates
In California's dynamic job market, especially the tech sector around San Jose and San Francisco, career moves are frequent. Here’s how they can impact your mortgage.
What If I Just Changed Jobs?
Changing jobs before you apply for a mortgage is usually fine, as long as it's a stable, documented position in the same field. The cardinal sin is changing jobs during the mortgage process without immediately notifying your loan officer. If you start a new job after your initial approval, the original VOE is now invalid. When the lender calls your old employer for the final VOE, they'll be told you no longer work there. This will result in an immediate denial for failing to disclose a material change in your circumstances.
If you must change jobs, you must inform your lender the moment you accept the offer. You will need to provide a signed offer letter, and the lender will need to verify the new employment. They will likely delay your closing until after you have started the new job and received your first pay stub. The data, information, or policy mentioned here may vary over time.
My Title Changed, Is That an Issue?
A minor, logical title change, like 'Software Engineer II' to 'Senior Software Engineer', is rarely a problem if your pay remains the same or increases. It shows career progression. However, a major title change that implies a shift in duties or pay structure—like moving from a salaried technical role to a commission-based sales role—will trigger a full re-evaluation by the underwriter, as discussed earlier.
VOE for Freelance and Gig Workers in San Francisco
For the thousands of self-employed individuals, freelancers, and gig workers in cities like San Francisco, a traditional VOE is impossible. Lenders use different methods to perform their final due diligence right before closing.
How Lenders Verify Self-Employment Income
Instead of a phone call to an employer, a lender will ask for proof that your business is still active and generating income. This can include:
- Updated Profit & Loss Statement: You may be asked to provide a P&L statement that is current through the most recent month.
- Recent Business Bank Statements: A lender will want to see the last one or two months of your business bank statements to confirm consistent cash flow and operational activity.
- Proof of Current Work: This could include recently signed client contracts, copies of recently sent invoices, or proof of payment for completed projects. The goal is to prove your business is still a going concern.
- CPA or Tax Preparer Letter: In some cases, a lender will accept a formal letter from your accountant confirming that they are aware you are purchasing a home and that, to their knowledge, the business remains viable and is not projected to be negatively impacted by the new mortgage debt.
The data, information, or policy mentioned here may vary over time. The final verification of employment is just one of many hurdles in the mortgage process. If your employment situation is complex or you're concerned about a last-minute surprise, proactive planning is essential. A knowledgeable mortgage strategist can help you anticipate these issues and structure your application for a smooth closing.
The verbal verification of employment highlights how crucial every detail is in the mortgage process. If you're ready to work with a team that anticipates these steps and ensures a smooth journey to closing, let's connect. Take the first step toward a seamless home-buying experience and Apply now.
Author Bio
David Ghazaryan is the expert mortgage strategist and founder behind iQRATE Mortgages. With a mission to fund home loans that traditional banks won't touch, David specializes in helping clients with unique financial situations, including those recovering from foreclosure or bankruptcy. He expertly crafts smart, strategic, and stress-free mortgages by leveraging a vast network of over 100 lenders to secure competitive rates for investors and homebuyers alike. Praised for exceptional customer service, David has helped hundreds of families with a 97% satisfaction rate, guiding them to the mortgage they deserve.
References
CFPB: What is a verification of employment (VOE)?
