The Next Generation of VOE

The Next Generation of VOE.
Steps to enhance the accuracy of information
and increase the quality of your loans.
By Lisa Binkley

It is critical for a mortgage lender to consider a 3rd party VOE/VOI (Verification of Employment/Income) as a crucial piece of the lending puzzle in mitigating the threat of fraudulent information.

The next generation of VOE requires a 3rd party
 verification  service provider to be eligible for 
D1C Rep & Warrant relief.
Fannie Mae’s D1C program (Day One Certainty) has launched a whole new meaning to an organization’s process of obtaining verifications. In addition to benefiting from the value of Rep & Warrant relief, it provides freedom from paper-based processes associated with verifications of assets, income, and employment. With the advent of D1C, lenders now have an opportunity to fully embrace independent verifications and use the corresponding data to enhance their lending footprint and increase the quality of their loans.

Verification of employment has evolved considerably in recent years. A VOE completed in 2017 is notably more efficiently completed and portable than the old FNMA 1005 form sent through the U.S. Mail in years past. However, as “bad actors” continue to refine their methods for creating fraudulent, but authentic looking documentation for originators, it remains imperative for lenders to keep their guard up and utilize 3rd party verification providers. Internet templates for pay stubs, high-quality printers, and payroll software programs are simple technologies available for fraudsters to present realistic looking proof of income and employment to originators. 

As the mortgage industry has matured into its new underwriting posture, several years post Great Recession meltdown, the following VOE/VOI sequence has evolved per GSE guidance:

  1. The borrower provides pay stubs, W2s, and tax returns. 
  2. The lender authenticates these forms to make the lending decision. 
  3. 10 days prior to close they perform a Verbal Verification of Employment that includes validation of an employer’s existence and a call to confirm the borrower is currently employed.
Income verification is not typically requested. However, D1C requires a third-party verification of both the employment and income for the loan to be eligible for the Rep & Warrant relief. As a result, the primary model used by most originators today for most applicants will no longer work if you desire the benefits of D1C.


Employment and income misrepresentation has always been a driver of fraud in mortgage lending. It’s perhaps the key component to the 3 C’s of credit. “Bad actors” falsifying documentation, and even setting up fictitious phone banks to perform employment verifications, are alive and well.  According to the FNMA June 2017 Misrepresentation Data report, 27% of loans originated in 2016 contain employment/income that is inflated or fabricated in the loans where FNMA has performed a post-closing review.  Given this information, the VOE process in any organization could be at risk.

"27% of employment and income applications contain falsified data."

Creating a strong policy manifest is critical to any mortgage shop’s underwriting environment. Internal policy makers must craft intuitive procedures to manage data quality, including steps to mitigate and document errors or potential fraud by an appropriate team member. Red Flag identification training throughout the organization must be robust and consistent in its application to each loan. Interpreting VOE/VOI results as a red, yellow, or green light to an underwriting decision is no less critical today than it was during the Great Recession.


3rd party providers are continually adding new employment data and new participating employers to their robust databases of employment and earning histories; the lender pays a fee and can verify that information. However, those services only cover approximately 25% or less of the employment verifications leaving 75% or more to be manually verified.  Additionally, providers who rely on an automated database do not typically embrace a manual verification process with a satisfying customer service experience to support the demand.

The Next Generation of VOE, as I’m calling it, embraces that the majority of the employed U.S. population work for employers that do not report to employment database entities.   Therefore, efficiently fulfilling a VOE for the remaining 75% of the population is critical to reducing loan manufacturing costs and staying on schedule for closings.  I’m an advocate for 3rd party fulfillment of VOEs; but for lenders determined to keep the process in house, it’s critical for the organization to consider Verification of Employment/Income as a manufacturing step and apply the time and resources to that crucial piece of the lending puzzle. There’s a tacit decision made by each lender whether this verification is another step to closing the loan, or is a critical data confirmation and compilation process. 

For example, a regional lender originating in 5 surrounding states could institute a database objective to capture employer information that indicates whether the employer participates in a database verification service.  Take it one step further to enhance accuracy-- the employer data is captured and validated into a contact database, pinged for each future verification, and regularly updated thereafter.  These are the steps a quality third party service provider can perform for you, providing an accurate report on your lending footprint and the employers in your area. 

At NCS we are excited to bring you the NEXT Generation of Verification of Employment / Income.  We go beyond the expected in delivering quality manual processes with an experienced customer support and operations team who measure the success or failure of each process.  We welcome your feedback to continue enhancing our service offering and customer support. Future information on the Next Generation of VOE/VOI is available by contacting our business development experts at 


  1. Hi Guys,
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    Create Pay Stubs, Paycheck Stub Sample, Generate pay stub, Create pay stubs allows you to generate sample pay stubs that includes your personal information, employer, and state tax rates


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