As the housing and lending markets struggle to rebound from financial crisis, lending criteria is becoming more stringent in an effort to minimize risk. Regulations issued by the Consumer Financial Protection Bureau require that lenders and mortgage originators verify the income and employment of applicants using documented records. On the surface, that means more work and slowed productivity for lending professionals, who must now devote time and resources to tracking down employment verification information before issuing a loan.
Minimize risk while verifying employment information
Contacting employers and collecting pay stubs to verify employment and salary information can be a lengthy and arduous process. Thankfully, improved technology provides solutions that can save time and effort. But even when mortgage originators receive a timely return on information, what is provided often does not furnish details that could greatly affect the final decision on an applicant. Verification of gainful employment doesn’t always tell the whole story. A breakdown of week-by-week salary information stretching back several years can reveal patterns of instability that would not be otherwise visible in a summary report.
Receiving such detailed information can be streamlined by outsourcing the verification process. This allows lenders to minimize the risk of fraudulent credit inquiries and obtain an in-depth view of an applicant’s financial history without investing more time into the process. Verification outsourcing means that lenders can rely on others to provide information that would otherwise be time-consuming for them to obtain.
How verification outsourcing works for mortgage originators
Outsourcing the verification process eliminates the time a lender has to spend tracking down an applicant’s employer and allows them to focus on other tasks at hand. The reduction in workload is significant, but it is only the tip of the proverbial iceberg. Risk assessment becomes more robust, as mortgage originators are able to obtain a more complete picture of an applicant’s financial landscape. The process of verification is streamlined and simplified, allowing lenders to focus on their most important task: risk assessment.
Employment and income information related to about one-third of American workers is already contained within The Work Number®, Equifax Workforce Solution’s proprietary database of more than 55 million active employment and income records, meaning there’s a strong possibility that a lender will be able to instantaneously access salary and employment verification information during the underwriting process. If information related to prospective homebuyers cannot be located within The Work Number database, lenders can still get relevant information about them, as the program handles direct employer contact, as well.