The Federal Housing Administration published Mortgagee Letter (ML) 2019-01:Third Party Verification Services, which provides guidance for the use of Third Party Verification (TPV) services as an alternative for verifying borrowers’ employment, income, or assets.
Mortgagee Letter 2019-01 revises documentation requirements to allow the use of vendors to verify information directly with borrowers’ employers or financial institutions without the need for additional documentation and is consistent with industry practice. The mortgagee remains responsible for the quality of its FHA-insured mortgages and must ensure that its TPV vendors fully comply with all applicable laws and FHA requirements.
Currently, the Single Family Housing Policy Handbook 4000.1 (SF Handbook) and the Home Equity Conversion Mortgage (HECM) Financial Assessment and Property Charge Guide allow for electronic verifications in lieu of written Verifications of Employment (VOEs) and allow for Verifications of Deposit (VODs) in lieu of bank statements, but make no specific reference to the use of third party verification services to perform those functions. FHA also requires current employment income to be documented by obtaining borrower paystubs in addition to obtaining VOEs or Alternative Employment Documentation (W-2’s).
The provisions outlined in ML 2019-01 are effective immediately and apply to all FHA Title II forward and HECM reverse mortgages.