Post-closing review of a loan funded 3 weeks ago finds the borrower's employment was verified 71 days before consummation, against an internal standard of 10 days. If the loan purchaser also requires verification within ten days, what principal risk does this stale verification create?
Correct Answer
A) A saleability problem: at 71 days an investor may decline the loan
A. The stale verification creates a purchaser-eligibility problem. The hypothetical purchaser expressly requires verification within ten days; 71 days does not meet that condition. Funding does not establish compliance with a purchaser’s documentation requirements. The file needs investigation and an appropriate cure assessment. Scope and exceptions: Do not generalize the hypothetical deadline to every program. Fannie Mae’s actual employment-verification policy has specified timing and alternatives. This scenario alone does not establish an automatic repurchase obligation or rule out a separate legal violation. Source: Borrowers Using Employment-Related Income — https://selling-guide.fanniemae.com/sel/b3-3.1-04/verbal-verification-employment
Why This Is the Correct Answer
A. The stale verification creates a purchaser-eligibility problem. The hypothetical purchaser expressly requires verification within ten days; 71 days does not meet that condition. Funding does not establish compliance with a purchaser’s documentation requirements. The file needs investigation and an appropriate cure assessment. Scope and exceptions: Do not generalize the hypothetical deadline to every program. Fannie Mae’s actual employment-verification policy has specified timing and alternatives. This scenario alone does not establish an automatic repurchase obligation or rule out a separate legal violation.
Why the Other Options Are Wrong
Option B: A TILA violation, since verification timing is set by Regulation Z
The facts do not establish a Regulation Z ten-day violation merely because an investor standard was missed.
Option C: A rescission trigger, giving the borrower a fresh 3-day window
This finding alone does not establish a new rescission period.
Option D: Nothing to address, as the loan has already funded and disbursed
Post-closing defects can still require attention.
Exam Tip
Distinguish purchaser eligibility from a proven statutory violation.
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