West Virginia Mortgage Law Practice Test

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

1. Bank account statements

2. Letter from employer

3. Pay stubs

4. Tax returns

The correct answer is: Bank account statements

Bank account statements are the least likely to be an acceptable verification of repayment ability compared to the other options. This is primarily because bank statements only provide a snapshot of someone’s financial situation at a specific time and do not show a consistent income flow. They can indicate availability of funds but do not directly demonstrate regular income or the ability to meet ongoing payment obligations. In contrast, letters from employers, pay stubs, and tax returns are all more substantial forms of income verification. A letter from an employer typically confirms employment status, job title, and can state the salary, giving lenders a reliable source of current income information. Pay stubs provide detailed information about an employee's earnings over a specific period, including deductions and net pay, which illustrates the applicant's capacity to repay the mortgage. Tax returns offer a broader view of an individual's income over the year, including any additional sources that may not be captured in pay stubs or a single letter from an employer. Thus, because bank account statements do not consistently affirm the ongoing repayment ability of a borrower like the other options do, they are considered less reliable for verifying a borrower’s capability to repay a loan.