Automated income and employment verification can speed up the closing process
BLOG VIEW: As the housing market evolves into a market characterized by rising house prices, rising interest rates and declining consumer demand, lenders may feel more pressure to meet borrowers’ expectations of a more efficient, transparent and secure origination process – or risk losing those borrowers to the competition.
In today’s lending environment, the goal is to get borrowers to the closing table as quickly as possible. In response, many lenders are carefully examining their internal processes to find ways to achieve significant operational efficiencies. A key tool for speeding the time to close is the lender’s use of automated income and employment verification data. When leveraged early and throughout loan origination, it can help lenders generate revenue by making faster, more informed lending decisions. Nevertheless, there are some things lenders should consider when choosing a data provider.
First, due diligence is the responsibility of the lender to confirm that their income and employment verification provider has appropriate controls in place to meet standards and requirements related to data security and quality.
Since income and employment data help lenders better determine a borrower’s ability to repay a loan, it is essential that the lender understands where the data is coming from (does it come directly from employers? ), how up-to-date the data is and how often it is refreshed. . In today’s competitive housing market, direct access to high-quality real-time (or near real-time) income and employment data can successfully accelerate the origination process to fence. Additionally, lenders can find value in automated data at any stage of the loan origination process, whether at the time of application, underwriting, or even before closing as a strategy. risk mitigation.
With increasing competition, income and employment data can also play a key role in expanding the pool of borrowers to include consumers with little or no established credit history, who might otherwise be overlooked. Not all consumers behave as their credit scores might indicate and relying solely on credit scores may not give a complete view of a borrower’s credit risk – especially in light of the terms recent economic events that can trigger inevitable setbacks that can damage credit. When layered with traditional credit data, income and employment data coming directly from employers can provide a much more holistic and comprehensive view of a borrower’s true financial situation.
The shift to more digital interactions with borrowers requires a new level of stability and availability. Therefore, when evaluating potential partners, lenders should identify those who can meet this challenge and leverage the latest cloud-based technologies to ensure the highest levels of security, consistency and accessibility, regardless of whatever the time of day. By intelligently automating back-office processes, it creates much-needed efficiencies while freeing up resources to redirect to handle more complex transactions, often resulting in increased revenue for lenders over time.
Ashley Wood is Vice President of Mortgage Verification Services at Equifax.