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Lauren Adkis…, Home Buyer in Aurora, CO

Loss of employment after mortgage was approved--will they verify employment at closing?

Asked by Lauren Adkison, Aurora, CO Thu Feb 26, 2009

When my fiancee and I first got approved for a mortgage loan and put a bid on a house, we were both employed full-time. He quit his job last week, and today our offer on the house was accepted--we will close sometime next month. Will the lender do another employment verification check prior to closing? If so, what's the best way to handle this situation?

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13
Although I am not a Lender, I do know that if he is quick to get another job in the same field they may be able to still qualify his new income. I hope this helps.
1 vote Thank Flag Link Sat Feb 28, 2009
First of all...How did you react when your fiancee told you he quit his job before closing on the house? I hope you're both O.K. with the decision, what a great test of your relationship. Like everyone before me has said...call your lender and Realtor immediately, honesty is best. If you can't get the house, it's best to know now, before you pay for the Inspection and the Appraisal.

Good luck to you, I hope you can make it work out.

Sandy
1 vote Thank Flag Link Thu Feb 26, 2009
In your loan package that you will sign at closing there is likely going to be a letter wherein you represent that your financial condition has not changed from loan application. For most people, losing employment would constitute a major change. If it is a major change & you represent otherwise, it could be considered loan fraud.

Your earnest money may be at risk at this point as well. Get advice from your lender, your real estate agent and perhaps an attorney as to what you should do at this point.

A lender will also do a verification of employment pretty close to closing. I've also heard of lenders even having buyers sign a document that their company has not suggested upcoming layoffs.

This is tricky and be very cautious how you proceed. A lawyer's fee woudl be money well spent. If the seller has just accepted the contract today, in fairness to them the sooner they know this the better for them as well.
Best of luck.
1 vote Thank Flag Link Thu Feb 26, 2009
Well, it wasn't fraudulent or anything like that when you applied so you definitely didn't do anything wrong. However, if your credit and past employment has been good and stable then if he should be able to just obtain a new job and use that info to update the loan application (I know that is not easy right now). You should not lose your loan approval based on that.

However, keep in mind that even if the lender does not re-verify employment when you close, you still will have to re-sign an entire new set of loan docs which will still have your employment info on it as was stated when you applied. Signing those docs could put you at risk of commiting mortgage fraud. The lender could at the very least call the loan and make it due - putting you at risk of losing the home.

If his income is what is making it possible for you to qualify for the home and he no longer has it, then you need to wait until you can qualify to go forward with your purchase. If you are doing an FHA loan, keep in mind that you can add a non-occupant co-borrower to help with income and keep your approval intact.

Contact your loan officer and discuss it. He/she is the middleman between you and underwriting and he will help you determine what the path of least resistance is.

Luke Allison
Flagstar Bank
828-777-8828
Luke.Allison@flagstar.com

Apply Online: flagstarloans.com/lallison
1 vote Thank Flag Link Thu Feb 26, 2009
This if not and answer, is a question, I did the closing and after a month later they notice that I lie to them, what will happen. my leander never check , and I ask but many people that i ask said is ok they can not do anything I'm not behind any payment yep becouse I dont have to until firts of Octuber,
0 votes Thank Flag Link Thu Sep 3, 2009
from the sound of your question, it appears that you were "pre-approved" while he was working... but now, since you have an accepted contract... yes, it's highly likely that they verify his employment.

And quite honestly, even if he gets another job, in the meantime... that still may mess up your loan, as most lenders like to see some stability in employment... oftentimes 2 years of employment at the same job.

As others have said before me... trying to deceive your lender could be considered fraud, and is a federal offense. Do not try to mislead your lender. It's a bad idea.
0 votes Thank Flag Link Sat Feb 28, 2009
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
Be honest and use the time to think about how things are going to go if one of you quits or looses their job after becoming obligated to a large loan.
0 votes Thank Flag Link Sat Feb 28, 2009
L,

I just answered you question about inspections, and as you can see by the other answers communication is the key. Speak to your lender and your agent. I'm sure they have both seen this situation before. The good new is, if you haven't passed the inspection resolution date you should be able to walk away from this contract without losing your earnest money.

Good luck,

John Keene
Keller Williams
303-547-7578
0 votes Thank Flag Link Thu Feb 26, 2009
Prior to closing, lenders always verify that the information provided at the time of application has not changed since then, and as a borrower you must attest to this in writing at the closing.

Call your lender ASAP and make them aware of the situation. Your lender may be able to qualify you for the loan based on just your income. If they can't then you may have to back out or do a loan that permits a cosigner. Otherwise, you can't buy a home that you cant afford.

The sooner the better, because if you wait you could be subject to losing your EMD and any money shelled out for inspections,appraisals, etc

Sorry to hear about the situation, but there are a lot of people in your shoes right now. Best of luck in figuring it out

Tony
0 votes Thank Flag Link Thu Feb 26, 2009
Talk to the lender and your Realtor right away and tell them what happened. You may still be able to buy the home, if you can qualify without your fiancee's income or if he finds another job right away. However, if you won't be able to qualify under the new circumstances, you would find that out quickly and be able to terminate the contract before the loan conditions deadline, which should allow you to get your earnest money back. Even if you don't qualify for this home, you may be able to qualify for a lower amount that would let you find a different home to buy.

If you don't take care of this right away, you will be in jeopardy of losing your earnest money, losing the home, and/or committing mortgage fraud. You will have to sign a final loan application at the closing that will include the employment information that got you approved in the first place. If you sign the application with that information on it, then you could be prosecuted for loan fraud. If you need your fiancee's income to qualify for the mortgage, you won't be able to afford the payments without it. If you say you can't sign it, then the loan won't close, you'll lose the home, and you'll lose your earnest money.

As I said, the best thing to do is to talk to your lender and Realtor as soon as possible to find out what your options are. Good luck!
0 votes Thank Flag Link Thu Feb 26, 2009
All good answers, be honest and see what your Realtor and lender have to say. Good luck.

Chuck Strauss
0 votes Thank Flag Link Thu Feb 26, 2009
They will verify employment and will find out. The only way that you will be approved is if he gets another job or you have enough income by yourself to qualify. I have heard stories of people losing their job a week before closing and the financing falls through (that was when lending was easy). You should talk to your Realtor and lender to try to figure out the next step. Your Realtor wants the deal to go through as well so see what they say.
0 votes Thank Flag Link Thu Feb 26, 2009
L,

There is a very good chance your lender will call your fiances employer the day of closing to make sure he still has a job. The same with yours. Its called a VOE, verification of employment. If your contract is still prior to the loan commitment deadline, i would strongly suggest you communicate with your agent or lender on this to see if this will affect your loan. If so and you havent passed the loan commitment deadline, you can get your earnest money back and terminate due to inablility to obtain financing. You are risking your earnest funds otherwise.

Good Luck
0 votes Thank Flag Link Thu Feb 26, 2009
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