Employment verification letters are typically necessary for obtaining a mortgage, and landlords often request employment verification letters as well. The letter provides proof that the tenant or home-buyer is employed as stated on their application. Sometimes income verification is required as well, but that isn't always necessary in an employment verification letter. Banks and insurance companies, too, often request verification of employment.
Reason for Employment Verification
One of the most crucial requirements for obtaining a mortgage is having the means to pay it back. After the U.S. mortgage crisis in 2008, many lenders adopted stricter requirements for employment verification. Before this, often applicants could simply state where they were employed without verification, leading to many foreclosures and short sales when the borrowers couldn't pay. By asking for employment verification letters, lenders are able to cover themselves in case of an audit.
Employment Verification for Mortgages
Employment verification has become the standard in the mortgage industry. Many lenders verify employment at the beginning of the mortgage process as well as right before the loan closes. Income verification is usually necessary for mortgage companies as well; this can often be done by providing paystubs, but many banks also verify with a human resources or payroll specialist as well.
Other Employment Verification
Employment verification letters are frequently requested for apartment or home rentals, adoption, issuance of a work visa or for obtaining insurance. Having a verification letter on file helps companies to lower their liability and exposure in case of any problems or nonpayment. Adoption agencies want to know adopting couples can provide for children. A verification letter ensures prospective parents are employed.
Obtaining an Employment Verification Letter
Obtaining an employment verification letter is usually simple. Many human resources departments have form letters they can send to the company requesting it. If this isn't available, often the requesting company has its own form letter to be filled out and returned. Or, sometimes large companies have a third party, such as the Work Number, verify employment and payroll information.