Dear Sher,
I recently attended the Section 502 training at the HAC Conference and heard that the source of someone’s employment does not need to be in the same field, we just need two years history. I am now trying to tell an RD specialist that some really smart people told me this. They are asking for something in writing, could you point me to the right spot for this?
Sincerely,
Employment History
Dear Employment History,
You heard correctly! With regular employment (not seasonal or self-employment), it is about income stability, not employer stability. In the 502 Direct Course for packager certification, we give examples of applicants who may have worked for five employers in the past two and a half years, but during that time they exhibited a stable income, as evidenced by tax returns. This is acceptable. The applicant does not have to show they have worked in the same line of work or two years with the same employer, although gaps of employment in excess of 30 days must be explained.
Here’s the language from HB-1-3550 to share with those other really smart people!
- HB-1-3550 Paragraph 4.2
- Overview [7 CFR 3550.53(a) and (g), 7 CFR 3550.54]
- 5. Stable and Dependable Income
The Agency has no minimum history requirement for employment in a particular position. The key concept is whether the applicant has a history of receiving stable income and a reasonable expectation that the income will continue. Instead, the Loan Originator must carefully assess the applicant’s income to establish whether it can reasonably be expected to continue for the next two years (e.g., child support and contractual income). Nonetheless, most income cannot be guaranteed, nor will employers certify that income will continue for the next two years. A VOE should not be requested to obtain ‘probability of continued employment’ in order to make this determination. Instead, the Loan Originator and Loan Approval Official will compare projected income with the last two years of income (if applicable) to determine if the applicant has demonstrated an income level which is likely to continue.
The applicant must provide an explanation letter for employment gaps in excess of 30 days unless their income history is clearly seasonal in nature (e.g., construction, farm labor, recreational). The Loan Originator must review the employment gap explanation, as well as the historical/projected income to determine the applicant’s ability to receive stable and dependable income. If the Loan Originator determines that an applicant’s income source is unstable and undependable, the income must be excluded from repayment but included in annual income.
Sincerely,
Dear Sher
