Verification of Mortgage. (VOM) & Verification of Rent (VOR)
As FICO score are driven by the contents of the credit report, checking for accuracy is another thing. A derogatory in mortgage rating can adversely affect the scores of your borrower. Mortgage companies are careful in assessing derogs on borrowers as they know the consequences of an incorrect rating. Though this is true however, we cannot discount the fact that there are some instances that the credit bureaus still don't get it right. What is the recourse? Well, most of the time the borrowers would have an incline of what happened and will intend to present proof to remove it. More often than not, liens, bankruptcies and collections information are not updated.
As mortgage is one of the bigger debts in credit report, it is not unusual for it not be reported. In instances as borrower paying the mortgage under someone's name, straw-buyer purchases or a lease to own type transactions are examples of such. Lenders require minimum of 12 months mortgage history on most loans over 12 months old or maximum thereof if lesser than 12 mos. Canceled checks can proof both payment history and interest in the property. In the absence of canceled checks, some lenders will take credit supplement of mortgage ratings provided the supplement contain the lender's information-contact person, phone # and other statement/s made by this contact.
For borrowers with no mortgage history, a Verification of Rent (VOR) can be given in lieu of. As this is customarily used for the purposes of payment history, this too can be supplemented by the credit reporting company and be considered as another line of credit for borrowers with limited history. By having a third party verification, this may help in its credibility and swift processing time. Most lenders prefer VOR to come from a reliable source such as management companies but we know that small investors have rentals which they privately managed so lenders do not insist on this. Hence, when VOR is from a private party, you must always check if the person completing this form is the owner of the property.
Whichever verification may apply to the file, opt for the credit reporting agency to get a supplement first before or while you are waiting for the completed verifs. Address any negative remarks prior to submitting the document to the lender.