Verification Of Rent Required On Manual Underwrites: Proof Of Rental Payments

Mortgage loan borrowers who need manual underwriting loans need to realize that verification of rent required on manual underwrites. Verification of rent, also referred as VOR, is one of the most important compensating factors when it comes to qualifying for a mortgage.  Verification of rent, also known as VOR, is proof of rental payments for the past 12 months and the only way to prove it is by providing a mortgage lender 12 months canceled checks to a private landlord.  One missed rental payment without a check will void the verification of rent.  If you are renting your rental unit from a registered property management company, you can get a letter stating that you have been timely on your rental payment for the past 12 months and 12 months canceled checks is not required.

Why Is Verification Of Rent Required On Manual Underwrites?

Verification of rent required on manual underwrites is mandatory and those who cannot provide VOR will not qualify for manual underwriting. If a mortgage lender is requiring verification of rent, VOR, from a mortgage loan applicant who is living with family or rent free, it can create major issues in getting a mortgage loan approval.  Reason verification of rent is so important for mortgage lenders is because it determines payment shock.  For example, if a renter is paying $1,000 per month and his new proposed mortgage payment with property taxes and insurance is $1,200, the rental shock is 20%.  Mortgage lenders will feel comfortable seeing a renter who has had a history of paying $1,000 rent in the past 12 months being able to pay a $200 increase in his new housing payment.  If a renter goes from paying zero a month because he or she is living rent free and the new mortgage payment is $1,200 per month, that would be considered payment shock.

Need Proof For Verification Of Rent To Be Valid

There are so many renters who deserve to have verification of rent credited but cannot use verification of rent because they have been paying their monthly rent with cash instead of a bank check.  If you are renting from a private landlord, you need 12 months of canceled checks in order to provide proof of verification of rent with no late payments in the past 12 months.  Cash payment or one miss payment without a check will disqualify the verification of rent.  Unfortunately, many renters who pay their landlords with cash and get a cash paid receipt will not be able to use this a verification of rent.

If you are renting your home or apartment from a property management company that is registered and licensed by your state, then a letter from the property management homeowner association manager can be used in lieu of the 12 months canceled checks.

Do All Mortgage Lenders Ask For Verification Of Rent?

Verification of rent may be required by all mortgage applicants with certain mortgage lenders as part of their mortgage lender overlays.  However, most mortgage lenders will require verification of rent for certain applicants.  If you have solid credit, good income, great credit history, solid employment history, reserves, than the chances are that a verification of rent will not be required.  However, if your credit scores are lower than 620 FICO, have outstanding collections, limited credit trade lines, short credit history, high debt to income ratios, and derogatory credit, then the mortgage lender may require verification of rent.  Just because one mortgage lender requires a verification of rent does not mean another mortgage lender will require it.  If you have a mortgage lender that demands verification of rent and cannot provide it in Illinois, Florida, California, Washington, Wisconsin, or Indiana, please contact me at www.gustancho.com.  I have many investors that will approve a mortgage loan with no verification of rent required.

Manual Underwriting: Verification Of Rent Required On Manual Underwrites

On cases where you cannot get an approve/eligible per DU FINDINGS or LP FINDINGS and get a referred/eligible per FINDINGS, you can still get your mortgage loan application approved via manual underwriting.  Manual underwriting is when a mortgage applicant can qualify for a residential mortgage loan but not through the Automated Underwriting System.  Almost all manual underwrites require verification of rent, VOR.  There may be a lender or two that will not require a verification of rent, however, strong compensating factors will be required such as high credit scores, larger down payments, and strong reserves.

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