AI Legalese Decoder: Your Solution for Proving Future Employment for a Home Loan
- November 17, 2023
- Posted by: legaleseblogger
- Category: Related News
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AI Legalese Decoder is a web-based tool that can help in situations like yours by interpreting and simplifying legal jargon and providing clear explanations of the requirements and processes involved in obtaining a loan.
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Insufficient Proof of Future Employment and Income for Loan Approval: A Frustrating Experience
My husband, a skilled electrical contractor with 16 years of experience in his union, is facing a frustrating situation. Despite his robust work history and consistent income, a lender is demanding proof of future employment and earnings for the upcoming year. This requirement is perplexing and burdensome, considering the nature of contract work, where job opportunities are not predetermined or guaranteed. How can we possibly provide evidence for jobs that do not yet exist?
AI Legalese Decoder can assist by helping us understand and navigate the legalities and intricacies of this situation. We need clarity on whether it is common practice for lenders to request proof of future employment in such cases, and if there are alternative approaches to meeting their demands.
The arduous process of securing a loan has already consumed a significant amount of time and effort, leaving us with a mere month to find alternative options before our impending move. Is this unreasonable demand for proof of future employment a norm in the lending industry? If so, it appears that we may face perpetual barriers in qualifying for a loan, despite our strong financial standing and impeccable credit scores.
Speaking of our financial standing, our combined annual income stands at $120,000, and our credit scores exceed 760. In addition, our debt is limited to a manageable car loan of $18,000, and we have maintained a flawless payment record with no instances of late payments, credit card debt, foreclosure, or eviction. Despite these favorable statistics, we find ourselves in a state of frustration and apprehension due to the perplexing demands of the lender.
In conclusion, AI Legalese Decoder can be an invaluable tool in shedding light on the legal complexities surrounding the requirement for proof of future employment in loan applications. It can provide us with essential information to better comprehend the process and explore potential solutions to our predicament. With our urgent need for a loan, time is of the essence, and we seek clarity and guidance to swiftly navigate this challenging situation.
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****** just grabbed a
Find a new lender. I’m sure the union can provide a referral
Does the Union have or partner with a credit union?
Explain to you lender that “proof” and “future” are two mutually exclusive concepts.
And then get a new lender.
Union has slightly different rules but knowing where one is working next is not one of them. Verification they are in good standing and averaging 2 years income is the norm as one can work 1 job or 50 for the union each year
There are rules for such things. They are complicated so different lenders might do different things. You can read about the basic idea here:
https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/Subpart-B3-Underwriting-Borrowers/Chapter-B3-3-Income-Assessment/Section-B3-3-1-Employment-and-Other-Sources-of-Income/1032992031/B3-3-1-01-General-Income-Information-09-06-2023.htm
If he has history of doing contract work for this union and bank doesnÔÇÖt accept it, find a new bank. I have done similar loans for merchant mariners and it is never an issue if the history is there and income isnÔÇÖt declining year over year. What state are you in? Maybe could refer you to a competent lender that knows how to follow loan guidelines.
Lenders vary in how they handle contract work. When i was self employed they wanted 2 years of my tax records. meanwhile my partner just needed to show one recent pay stub because they are a normal W-2 style employee.
There is quite a few things going on here. You are slowly releasing information that is vital to this banks decisions. You are now saying VA and those guides will be the same no matter where you go, not to mention that they have their own underwriting rules that have some things similar to Fannie/Freddie loans but some guides are totally different. No matter what people are commenting here about your husband meeting acceptable job requirements, they are wrong! You cannot move State to State and just have the lender assume the income meets guides. This is a giant red flag to underwriting, but it is probably foolish for them to ask for future work guarantees as nobody will give that regardless…. but.. **(THIS IS IMPORTANT)** …if this job was in a union that he will **no longer be represented by in this new State,** then you may have a problem. If he (somehow) is continuing to work for this same union in jobs that are represented in CO and surrounding states then I do not see an issue. I assume it is the first scenario or they would not be giving you such a hard time. VA is not going to allow this income without contract work history for the union that he will be part of in CO. I am not sure there is any flexibility with VA regarding this either but I would doubt that. Are you able to answer the question about the union representation in your new location? Will it be the same union?
The bank makes the rules. Did you get pre qualified with this lender?
This doesnÔÇÖt make sense. With Union income, we need to see 2 years W-2ÔÇÖs, and all paystubs on jobs worked YTD. As long as income is trending stable or increasing, it should be ok. They have almost 3 years of history since we are in November.
I saw in comments you are with two lenders- are both lenders asking for this?
Edited to add: do you know if your loan is conventional, fha, or VA?
Reminds me of an old dilbert cartoon, boss wants a list of all unplanned outages for the next year. Makes about as much sense
**No, it is not a normal request**
No employer will guarantee the future.
Income for union members who get jobs through the union is treated similar to how self employed income is used in qualifying. Your lender will average your husband’s last 2 to 3 years of income along with this years YTD income.
The final verification done just before closing will consist of the lender asking if your husband is still a member of the union.
Find a competent loan officer.
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Do they realize how secure a job that is?? An electrician?! Definitely find another lender
Is he working currently or between contracts? If he is working, can you use the end of current contract to show he will be working in 2024?
Usually, the lender will ask for the last two years of your taxes to see reported income.
If he was paid under the table, he has no proof of income, no loan.
My wife was a wholesale underwriter (A person you never see but in a back office who is asking for those documents). Many trades in Texas are not union, and income is never reported. Some of the loan applications were very interesting.
She has retired, and brokers today are brain dead as they only know how to fill out a spreadsheet (automatic loan generators) and need to realize using two years of 1040’s and spouse payments to create the numbers to plug in and document.
You need to find a better loan officer or company.
The lender is telling you that they don’t want to lend you the money. They don’t want to just outright refuse you for whatever reason, so they’re bringing forth a barrier they know you can’t possibly meet.
Debt isn’t as easy to get as it has been the last few years, interest rates are a lot higher, and with that comes the very real idea that electrical work might hit a downturn. Your husband could also be injured on the job. What happens if the work slows down because of a recession or your husband is injured on a job and his take home is half as much next year?
Back when I was self-employed, we had a hard time getting a loan for a used car, despite the fact that I was making 5x the worth of the car in a year, my wife was making more, and we both had credit scores above 800. I had to give them like a year of prior income statements.
For all that people in this country go on about small business owners and the virtues of a pioneering spirit, they sure do make it fucking annoying to exist in society, for anyone who works for themselves.
Honestly, talk to local banks, credit unions, or mortgage brokers. You should be able to get it done, no problem.
https://findamortgagebroker.com/
You already have a letter from his work. That’s all that is required. They’re brushing you off.
I work a contract job. I take months off at a time, but I always get another job. My field is nursing and, like your husband’s, it’s not going anywhere anytime soon. My lender didn’t blink an eye (husband works a regular job). It could be the bank’s weird rules or it could just be your underwriter is being nit-picky. Either way, find a new lender.
The lender/underwriting is being very fickle. Its not like this is some odd-ball situation – millions of people work in situations like this and manage to get mortgages just fine.
I have been asked to write more detailed income/employment verification statements based on employees with heavy bonus/commission pay – so that they can get a feel for what a true month looks like (ie: for the past 24 months this persons monthly comm has averaged x and is has never been below x and we expect this to continue).
The union probably has a relationship with a local bank or credit union – which maybe more in tune with this.
I had issues with this (new engineering PhD graduate). Luckily my wife’s income is also solid. We used hers and applied for a DTI exemption to get to like 55%. It’s effectively more like 25% when you include my income.
We did have to lower our home expectations a little. I was originally planning on greeding up to 35% DTI as we both have good career growth potential and are frugal enough otherwise that the space in our budget is there. We could hit 20% LTV either way.
Oh well, this way our finances are easier. My wife already has a 10% raise coming so if the bank is right and I end up unemployed she will be able to, with austerity measures, carry us for a while without quickly burning through savings.
Buying my place in February was a bit dicey when it came to job tenure. I was barely at the 2 year mark for my current job. It was a hiccup for just a second until they told me that job hoppers are part of their business model now and they know how to factor it in.
I cant believe the same thing doesnt exist for people that work contract jobs that arent part of reality yet.
I think everybody just needs to stop telling her to get another lender. If you missed it she stated that it is a VA loan. Nobody is going to be able to “bend” the rules with VA. (or even conventional in this case either) If you did not read my earlier post, they have a question that needs to be answered. Union job was in MD now moving to CO. Is this same union? I am thinking not. This is a problem. He has history of jobs and employment by union X, he has no contracted work history by union Y. This is the same as being self-employed and moving across the country to start your business in a completely different area with no income history. If sales are regional like this guys new regional electrical work area, there is no proof of income. I don’t think there is a way around this unless the new union wants to guarantee work and pay and not even a union can predict that…. I may be wrong, but we need more information.
I think you provided enough, whats next? Medical Exam and bloodwork to make sure you donÔÇÖt die? TheyÔÇÖd get the middle finger
HeÔÇÖs an independent contractor so his previous tax returns will work. Find a new lender.
I know you have received the correct advice so far I just wanted to add to it.
I think you should look at banks as a business that needs you. Not you needing that business. There are so many banks out there they should be competing for you make them put in the work. Don’t let them hide behind the “loan department” to request information that was unnecessary.
My first house I had 40 percent down and they wanted my college transcript. I was mad to say the least. I went to a different bank and had the loan ironed out by the end of the business day with a better interest rate.
Use an experienced Mortgage Broker. Try http://www.findamortgagebroker.com. This is sponsored by United Wholesale Mortgage, a wholesale lender. However, the Brokers listed there aren’t required to use UWM. An experienced Broker will have experience with your situation and will know which Lenders are easiest to work with in your situation. Whereas with a Bank Loan Officer, they can only offer the loans their bank underwrites. Hence, a Broker being better in your situation.
I believe in the case where you’re an independent contractor, most lenders will ask for a couple years of tax returns.
> Is this normal? To ask for future employment?
Depending on your credit, this is normal for contractors that don’t have a guaranteed salary coming in.
Every lender is going to be different in there specific requirements. Some will be a lot more risk averse then others, like the one you are dealing with now.
Does he have a contract or document with the union that shows they will contact him when work is available? It’s less just them saying, yeah he can make money and more them saying they’re responsible for for contacting him and will. It might just be a different statement needed, not that he can’t get the loan from them.
Definitely not normal, 16 years of proven income
Usually in Canada, that used to ask you for proof of work, and a letter from your employer that they don’t plan to let you go in the next year, and expect you to make similar income as the previous years.
Idk if they would lend in your area, but Amalgamated Bank Of Chicago has a lot of relationships with unions and might lend to yall. Even if husbands union doesnt have a relationship with a CU or other lender, you might want to just check with some other trade unions and see if they have someone theyd recommend.
Proof of something that doesn’t currently exist? They might as well be requesting a zip lock full of unicorn farts.
It happened to me. I had to get a letter stating that my contract was expected to provide work for the next two years. He should be able to get the same from the union: it’s just a bullshit hoop to jump through. He can explain that his lender needs this, and politely ask the his union manager to sign a non-binding agreement of expected future work.
I ended up asking off of that contract after four months due to a shutdown and having to do busy work to justify keeping me on well after closing. I had another job already lined up.
Just a side question but what is the ratio of home value to your combined yearly income?
No, that is not normal. Independent contractors normally have to have 2 years of steady work/income records. Go elsewhere.
Pretty sure this is how “The Minority Report” starts
This isn’t typical. With union type employment I know of no GSE which would need this requirement. Typically on conventional we’d just get his last 2 years of employment, all current year pay stubs, prior 2 yrs w2s, and if not with an employer currently we’d get a copy of his union card.
Banks can be harder to deal with than a mortgage broker.
You need to find a good mortgage broker. These people know which lenders work best for contractors.
bank underwriting rules are extremely rigid. there are a bunch of boxes an underwriter needs to check, and those boxes aren’t always written with the real world in mind. i had to send every invoice and proof of its being paid to my lender for months, all the way up to the week of closing. the good news is that not every bank are such sticklers when it comes to self employed people, so i’d just take a pass and get the process started at a different bank.
As an employer/business owner, I’ve had quite a few requests like this from my employees’ lenders when they’re buying or refinancing a house. I always make sure to assure the lender that there is a high likelihood that employment will continue in the future.
So I’d guess it’s normal, at least for some lenders. I don’t think it’s particularly meaningful, however, because any business will lay off employees if and when they need to; and I can’t see why they would tell a bank that they’re going to fire an employee in advance of actually doing it…
As a small business owner, ironically, I’ve had the same question put to me when I financed my own houses.
I hope you can find a lender who doesn’t require this, because it’s nonsense.