ATR Rules – Verification of Employment/Income

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    If we have a borrower that has provided the lender two years of W-2s/Tax Returns and a current paystub, is this considered enough proof for the verification of employment requirement in App. Q or does a form need to be completed or a phone call made to the employer to try and verify employment? If the employer won’t verify, does the lender just document and move on or does this hold up the closing?

    In addition, if the bank is receiving a borrower’s social security income through direct deposit into a deposit account, is the borrower required to provide the “award letter” from social security or is the direct deposit considered enough proof of this type of income?

    Thanks! Kelly


    I believe this would be considered reasonably reliable. I would try to implement a procedure to obtain these documents from a third party (other than the applicant/borrower) when possible. See page 15 of the CFPB’s small entity compliance guide: .

    As for the social security income, IMO you would need the letter to determine whether the benefit is set to expire in three years. See excerpt from Appendix Q below.

    Regulation Z, Appendix Q, B-11. Social Security Income. Social Security income must be verified by a Social Security Administration benefit verification letter (sometimes called a “proof of income letter,” “budget letter,” “benefits letter,” or “proof of award letter”). If any benefits expire within the first full three years of the loan, the income source may not be used in qualifying.
    i. If the Social Security Administration benefit verification letter does not indicate a defined expiration date within three years of loan origination, the creditor shall consider the income effective and likely to continue. Pending or current re-evaluation of medical eligibility for benefit payments is not considered an indication that the benefit payments are not likely to continue.
    ii. Some portion of Social Security income may be “grossed up” if deemed nontaxable by the IRS.


    May need to consider that in our CMG Training material, the Social Security Income section Q-1-B-11 states, “Social Secuirty income must be verified by the SSA or on Federal tax returns”. I went to appendix Q on BOL and it doesn’t state “federal tax returns” that I can see. I think that was the source of some of my confusion.

    Thanks so much for your help!!


    The original Appendix Q has been revised. I have pretty much completed a review and update of the materials previously provided to the CMG. We will distribute to CMG members upon completion.

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