Weekly Real Estate News
Fannie Mae is giving mortgage lenders more flexibility in how they verify a borrower’s employment, removing prescribed verbal-verification methods while keeping the underlying requirement that qualifying employment be confirmed.
The change is part of Announcement SEL-2026-09, Fannie Mae’s Oct. 7 Selling Guide update. The revised guide says a verification may be obtained verbally, in writing, through an employment-verification vendor or by another method acceptable to the lender, provided it is reasonable, verifiable and appropriate for the borrower’s employment or income type.
That is operational flexibility, not elimination of employment verification. The updated Selling Guide still requires a verification for borrowers using employment income, Schedule K-1 income with less than 25% ownership, or self-employment income to qualify.
Why the change matters for originators
The prior framework prescribed specific methods and timing rules for different forms of verification. Fannie Mae’s new language places more responsibility on lenders to choose a defensible method while continuing to identify and resolve employment changes or discrepancies before delivery.
Fannie Mae also retains a hard eligibility consequence: if the required verification cannot be obtained before loan delivery, the loan is ineligible for sale to Fannie Mae. Employment validated through Desktop Underwriter can satisfy the requirement when the lender complies with the applicable DU messages and close-by date.
The October update also addresses borrowers using Schedule K-1 income with less than 25% ownership, income continuance, employment offers and contracts, Attorney Opinion Letters, rights of first refusal and changes to certain lender-application forms.
Broader shift toward flexible documentation
The update arrives as mortgage underwriting continues to move toward electronic verification and automated validation. Fannie Mae’s DU validation service can use approved employment, income and asset reports to validate components of a loan file and, in qualifying cases, provide representation-and-warranty enforcement relief.
For lenders, the practical implication is not less responsibility but more discretion. Policies and quality-control procedures will need to define which verification methods are considered reasonable for different borrower circumstances and document why the evidence supports continued employment.
