It’s somewhat surprising that real estate investors who are applying for financing provide their bank with some rather sensitive information that’s rarely, if ever, shared with anyone else. Lenders are required to verify quite a bit of data before approving a mortgage. Being able to afford the monthly payments,bank lending secrets having enough funds to close on the transaction and showing evidence of a responsible payment history is just a start.

That means providing pay check stubs, income tax returns, bank statements and your personal credit history. Try and think of anyone else you would provide all of the information to and I’ll bet you can’t. But lenders don’t stop there, they may do some things you may not be aware of before finally issuing funds.

Banks are required to verify your employment and they do that by reviewing your recent pay check stubs and two years’ worth of W2 forms. They may also send a Verification of Employment form without your knowledge. This is a form sent to your employer who then completes various fields by hand regarding your pay, when you’re paid and how long you’ve worked there. They can also ask if the likelihood of continued employment is reasonable but most employers refuse to answer that one.

Banks also contact the IRS directly, forwarding a form 4506-T that grants the bank authority to request and review your federal income tax returns from previous years. You may not remember it but you did sign a form allowing them to do so. Oh, and before your mortgage funds are wired to your settlement agent? You may have signed all your closing papers and provided a cashier’s check for your down payment and closing costs, but some lenders will, after receiving your signed documents, contact your employer by phone one more time to make sure you still work there. Really. They do can that.