Temporary Leave Income

Temporary leave from work is generally employee-initiated, short in duration and for reasons including, but not limited to maternity or parental leave, short-term medical disability, or other temporary leave types that are acceptable by law or to the borrower's employer. Borrowers on temporary leave may or may not be paid during their absence from work.

Note: Mandatory leave initiated by an employer, such as a furlough or layoff, is not considered temporary leave regardless of an expected return to work date. For income from unemployment benefits received as a result of mandatory leave initiated by an employer, see Public Assistance Income above.

If an originator is made aware that a borrower will be on temporary leave at the time of the loan closing and that borrower's income is needed to be documented for the loan, the underwriter must determine allowable income and confirm employment as described below.

	Temporary Leave -- Employment Requirements
	The borrower's employment and income history must meet standard eligibility requirements as described in Section Employment and Other Sources of Income.
	The borrower must provide written confirmation of their intent to return to work.
	The underwriter must document the borrower’s agreed-upon date of return by obtaining, either from the borrower or directly from the employer (or a designee of the employer when the employer is using the services of a third party to administer employee leave), documentation evidencing such date that has been produced by the employer or by a designee of the employer. Examples of the documentation may include, but are not limited to, previous correspondence from the employer or designee that specifies the duration of leave or expected return date or a computer printout from an employer or designee’s system of record.
	The underwriter must receive no evidence or information from the borrower's employer indicating that the borrower does not have the right to return to work after the leave period.
	The underwriter must verify the borrower's income in accordance with Section Employment and Other Sources of Income. The underwriter must obtain the amount and duration of the borrower's “temporary leave income,” which may require multiple documents or sources depending on the type and duration of the leave period; and the amount of the “regular employment income” the borrower received prior to the temporary leave. Regular employment income includes, but is not limited to, the income the borrower receives from employment on a regular basis that is eligible for qualifying purposes (for example, base pay, commissions, and bonus). Note: Income verification may be provided by the borrower, by the borrower's employer, or by a third-party employment verification vendor.

Note: These requirements apply if the underwriter becomes aware through the employment and income verification process that the borrower is on temporary leave. If a borrower is not currently on temporary leave, the lender must not ask if they intend to take leave in the future.