How Hazard Insurance Verification Helps Improve the Lending Process
Before approving a mortgage loan, lenders need to verify that the borrower has adequate insurance to protect the property. The amount of time this takes could potentially derail the entire application, wasting time and money for both parties. To speed up the process across the board, you can take advantage of a new Verification of Hazard Insurance (VOHI) data system.
Standard verification of hazard insurance
Hazard insurance, also known as homeowner’s or fire insurance, covers most potential losses to a property, such as fire or lightning damage. It also may provides liability coverage — generally, lenders are concerned with protecting against damage to the property.
Typically, to close a mortgage, borrowers need to bring proof that they purchased hazard insurance, such as the binder of coverage and the receipt to show that the first year’s premium has been paid. This could lead to issues at closing. The borrowers might not set up the right coverage, there could be mistakes in the policy or the borrowers could be presenting incorrect information, such as the receipt from a canceled policy. As a result, you waste taking time for loans that won’t close, as well as, unnecessary frustration for borrowers.
How VOHI helps improve the process
Equifax’s VOHI regularly collects data from insurers to verify customer information, such as whether policies are still in force, ensures that the information on the insurance policy matches what was given to the lender and determines that there is a paid receipt for coverage on file. Armed with this information, you can greatly expedite the loan origination process as you work with borrowers while also avoiding costly delays or errors.
The next generation of verification services
The VOHI service is just the latest of the next generation of verification services for lenders. Equifax also provides comprehensive verification of income (VOI) and verification of employment (VOE) databases. It’s from these platforms that the new VOHI database was developed. All of these programs are continuously updating customer information. So, you can streamline your research of applicants by accessing the verification information you need through these programs.
Verifying hazard insurance is as important as verifying income and employment for a mortgage loan. By using the new VOHI service, you can feel confident that you are using a most effective tool for this research.
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