West Virginia Mortgage Law Practice Test

Which of the following is least likely to be an acceptable verification of repayment ability?

1. Bank statements

2. Employment verification letters

3. Tax returns

4. Verbal statements of earnings from the loan applicant

The correct answer is: Bank statements

The correct answer is based on the reliability and robustness of documentation required to verify an applicant's ability to repay a mortgage. Verbal statements of earnings from the loan applicant are least likely to provide an acceptable verification of repayment ability because they rely solely on the applicant's word without any supporting documentation. This type of information can be subjective and potentially misleading, as there is no third-party validation to confirm the earnings reported. In contrast, bank statements can demonstrate actual income deposits over time, employment verification letters provide confirmation of current employment status and salary, and tax returns give a comprehensive view of income over a longer period. These forms of documentation provide verifiable and objective evidence of an individual's financial situation, making them much more credible for assessing repayment ability.