Equifax Workforce Solutions’ Chad Whittenberg: Utilizing Instant Verifications Earlier in Mortgage Lending Cycle Provides Value to Lenders, Consumers
Chad Whittenberg is Vice President of Marketing and Product Strategy at Equifax Workforce Solutions, leading development and promotion of verification solutions. He brings more than two decades of experience deploying innovative B2B technology solutions. Prior to joining Equifax, he was Director of Product Management and R&D at Computer Services Inc. There, he oversaw the growth of the fintech-focused company by driving vision, technology and product strategy.
Today’s technological advances have completely changed how successful mortgage lenders conduct business. If lenders want to stay competitive, they must take a holistic approach that leverages relevant data at every stage of the lending process. This approach can result in significant improvements to both the borrower and lender experience. Implementing automated verifications of income and employment (VOIE) at the start of a mortgage application is one part of a modernized process. Verifications at this stage are now essential for fostering a seamless and informed decisioning process. With this data, mortgage lenders can quickly and confidently qualify borrowers, help lock them into rates, avoid extended closing times and efficiently grow their lending portfolio.
Instant Verification Saves Time, Money, Effort
The success of today’s mortgage lending process can hinge on when and how automated VOIE is utilized during the application process. A lack of speed and consistency can cause a fissure with potential borrowers and become a deal breaker. This makes it a mission-critical objective for mortgage lenders to adopt a standardized loan decision framework grounded in integrated income and employment data from a single source. Revamping efforts in automated VOIE transformation can help to combat the issue of cost-inefficiency and tedious manual processes.
Even while pushing to streamline the process, mortgage lenders may wait until much later in the mortgage lending cycle to pull income verification. There is, however, value and cost-effectiveness in utilizing instant verifications earlier in the lending process. When used at the start of an application, automated verifications can save lenders time on data requests that are time consuming and redundant.
Automated VOIE can also help mitigate errors when determining applicants’ loan repayment propensity. Having built-in decisioning criteria with every loan that is seamlessly backed by data can reduce costs, labor, errors and possible oversights. Mortgage lenders that let go of their reliance on paper-based VOIE reviews in favor of a data-backed automated process can expect to be more confident in lending and potentially reduce default rates on loans. Moreover, effectively utilizing automated VOIE may alleviate the uncertainties associated with relying solely on paper-based processes.
To get the most out of instant and automated VOIE, mortgage lenders ideally would pull a VOI at the start of an application, a VOE during the underwriting and decision-making process, and then acquire another VOE when the mortgage loan is being closed.
Extending Loans to a Larger Range of Applicants
Obtaining a mortgage can be the first step toward an individual accumulating generational wealth and building a solid financial base. Mortgage lenders that go the extra mile to provide expanded opportunities to home buyers may find themselves in the ideal position to greenlight more loans while also creating lifelong customers when they use automated VOIE.
With the mortgage lending market becoming increasingly competitive, lenders are feeling pressured to find ways to gain and retain customers. Lending decisions should not be provided through outdated legacy processes that may force originators into a narrow model. Financial Institutions making decisions based on limited data may deny otherwise qualified mortgage loan applicants without considering their entire financial picture.
If used up front, mortgage lenders gain the potential to qualify more borrowers for a loan quickly and with rates better suited to the individual. Additionally, early usage of automated VOIE can help retain consumers and prevent them from ending up in the hands of competitors by equipping lenders with the ability to make informed decisions rapidly. The need for consumer-provided documentation, like W-2s and bank statements, is reduced, resulting in fewer processes that hinder the potential of application acquisition.
A Way for Data to Be More Secure
There are several risks and challenges FIs encounter when acquiring data to verify a borrower’s income and employment through consumer-provided documents and permissioned data. Although these can be viable options for VOIE in some cases, they can increase consumer friction, especially if consumers can’t find the necessary documentation or if they don’t want to provide private credentials.
The advantage that automated VOIE brings to data security is in its secure data transfers. These seamless data transfers combat issues that may arise, like under- or over-inflated stated borrower income. Successfully integrating instant verification, especially early in the loan process, fosters a direct connection to a hub of encrypted consumer data that can be transmitted securely to verifiers with a permissible purpose.
In addition to providing secure data transfers, automated VOIE can provide instant financial strength indicators regarding potential borrowers. Mortgage lenders gain the ability to reach better-informed lending decisions at a faster rate while potentially seeing an increase in conversion rates on borrower applications.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Michael Tucker, editor, at mtucker@mba.org, or Anneliese Mahoney, editorial manager, at amahoney@mba.org).
