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With all of the on-line tools that appear to exist to create a ficticious business (web pages, efax, etc, etc…), how does a lender verify a small company actually exists when verifying an application for a mortgage loan. Specifically Mr Jones, indicates that he works for X small company and provides realistic looking proof of employment of recent employment by XYZ company.

I am thinking about selling a piece of property and holding the paper myself. I have verified:

1. via credit report that the person has excellent credit history with a score in the low 900’s and his only debt is his existing home mortgage.

2. via bank and brokerage, that the person has substansial financial means, but VERY LITTLE current income

3. the open question is that although the person has a history of greater than 10 years of very good salary (150-500K/year) he did not work (he indicates by his choice for over a year) until very recently (just less than a month).

4. My preference was not to hold the paper on the property so I asked him why he did not just go get traditional mortgage financing and pay me out. He indicated that the bottom line was he tried but even with his credit and work history that the current lending guidelines will not allow him a mortgage soley because: a) his current income is from a small company and for less than one month…

5. He is putting up 40% in cash (as he offered to the mortgage lenders) and based on his bank, brokerage, and retirement accounts he would have enough to pay his current home loan for years and pay this new note for years without ever working a day.

So my bottom line is….I am suspicious of why a traditional mortgage lender would not lend money to him and I wonder if they know something I do not about his current (new) employer.

Your insights/expertise would be greatly appreciated. Thank you
I guess what I want to know, is how would those that make a living off of making mortgage loans look at this. How would they investigate, or would they investigage, the ’employer’ given everything else is pristine (I only wish my financial situation was as positive as what I have verified on his). It brings me back to why wouldn’t they loan him the money?

3 Thoughts on How can a home mortgage lender verify an applicants provided employer actually exists?
  1. Reply
    Frank112
    April 29, 2011 at 10:39 pm

    If it smells funny and the banks wont touch it, then you shouldnt either. If you want to verify that his company is legit, then you can check their EIN number (the number that the IRS provides them with) to verify that they exist and are a legal entity.

  2. Reply
    Sprinter
    April 29, 2011 at 10:43 pm

    Larger companies will have a record on the better business bureau website. It’s free to look it up online. Check the yellow pages for a business listing and possible ad, do a reverse lookup of the phone number for the business on http://www.whitepages.com.

    As for your suspicion on him getting turned down with the bank it’s that the banks are failing all over the place. 2yrs ago he would have no problem getting a loan with his circumstances.

    If it makes you feel better, you could try doing a rent to own for one year just to test him out and then give him a private mortgage. Worst case, you can always foreclose on him and keep all the payments he made up to that point (profit for you), then re-sell the house for the original price.

  3. Reply
    Bart M
    April 29, 2011 at 11:22 pm

    I’d do 3 things: Ask for current pay-stubs; give him a rate of 8-10% apr; charge him a discount of 2% of the mortgage.

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