What is a Written Verification of Employment (WVOE) Loan?
WVOE loans are mortgage programs considered alternative financing because they are neither Conventional nor government-issued loans. They are available through private lenders, but they are non-conforming to the Federal Housing Administration criteria. They only rely on the written verification of employment – thus the abbreviation WVOE loans.
If your client is a wage earner or has trouble meeting the requirements for Conventional mortgages, WVOE loans might work for them. There are regulations and criteria, but the process is much shorter and less stringent.
What is a Written Verification of Employment?
Verification of employment is a widespread practice in the loan application process that banks and lenders use to determine the job stability of the potential borrower. This verification ensures that borrowers have a stable job and a sufficient income and that they do not lie on their applications. There are written and verbal VOEs that all current and previous employers a borrower listed on an application should fill out.
Commonly, applicants must submit W-2 forms, pay stubs, and tax returns to apply for a loan. However, A&D relies only on their employment and credit history with WVOE loans. If your borrowers have proof that they have been working for the past two years in the same company and have a credit score not lower than 599 – they are suitable WVOE loan candidates.
Why use a WVOE Loan?
There are numerous reasons to get a WVOE loan including:
Foreign Nationals and Non-Permanent residents can be approved for WVOE loans.
WVOEs can work for foreign employers with no rate adjustment.
No tax return to use rental income, just a lease agreement is acceptable if it is reasonable.
No tax return or pay stub, they can just state their income.
100% gift funds are allowed as long as the income is reasonable.
The interest rate of WVOE loans can often be better than the Conventional loan rate.
The max loan amount of WVOE product or P&L product can exceed the county loan limit eligible for the conforming loan limit.