The Value of Data Amidst Election Year Uncertainty–Equifax Workforce Solutions’ Jarod Jones
Jarod Jones is Senior Director of Mortgage Verification Services at Equifax Workforce Solutions
U.S. presidential election years typically spark heightened uncertainty regarding government policy, with historical data since 1985 indicating that the U.S. Economic Policy Uncertainty Index increases by approximately 17% during election years as compared to non-election years.
With election year uncertainty compounded by an already-volatile mortgage market, lenders rely on accurate and reliable data, with access to verified income and employment data serving as one way to help bring greater certainty even amidst these market factors.
Why Verification of Income and Employment (VOIE) Matters
Verifying a borrower’s income and employment information is foundational to making informed lending decisions, empowering lenders with the insights needed to accurately gauge a borrower’s true ability to repay while also mitigating risk. The ability to swiftly obtain this critical data through reliable and secure methods helps ensure lenders can navigate market complexities with confidence and precision.
Given today’s digital landscape, consumer expectations have shifted as borrowers now expect their interactions with lenders to be fast, seamless and secure, especially when sharing sensitive personal data like income and employment information. Unfortunately, many financial institutions are still using outdated verification methods that delay the origination process by requiring manual intervention and extensive borrower participation.
Traditional methods — such as paper pay stubs or W-2s — are inherently prone to delays. Even some newer methods, which rely on user-provided payroll credentials, can slow down the verification process by requiring the borrower to set up and access a separate account. A loan may be placed on hold until all verification requirements are completed, which can take days or longer depending on the borrower’s responsiveness.
Lenders must also comply with regulations like the Fair Credit Reporting Act (FCRA), which mandates that lenders obtain a borrower’s consent before accessing their income and employment information. This law seeks to ensure that personal data is handled responsibly and that borrowers’ privacy is protected throughout the verification process.
The Value of Automated Digital Verification
Automated digital verification solutions deliver on meeting modern consumer expectations by providing a faster, more streamlined process for borrowers and lenders. These solutions enable lenders to verify income and employment data instantly, reducing the need for borrowers to manually submit documents or share sensitive account credentials. This speeds up lending decisions, enhances the borrower’s experience by removing unnecessary friction from the process, and fosters trust and loyalty.
For lenders, automated verifications offer several advantages. One key benefit is that they do not rely on third-party applications that require consumers to share sensitive bank or payroll account login details, such as username, password or bank account number. And unless the borrower remembers to later revoke access, these third-party platforms may continue accessing the borrower’s detailed financial data — potentially across multiple types of accounts — even after loan approval. This sharing of credentials can create a security risk, while the ongoing sharing of data also raises consumer privacy concerns. Automated verification solutions avoid this by removing third-party platforms from the process, allowing lenders to access verified income and employment data directly and securely, and without the need for borrower intervention.
Additionally, automated solutions can eliminate the delays associated with employer- or employee-provided verifications. In some cases, lenders must request proof of income or employment directly from an employer, which can slow down the process if the employer is not responsive. Similarly, when employees are responsible for handling their own verification requests, the manual processes can become tedious, especially if an employee must gather proof of employment or proof of income from pay stubs, W-2s or tax returns. With digital verification, this manual process is bypassed, allowing lenders to access accurate data in real-time.
Using timely, accurate income and employment data allows lenders to minimize their overall risk. This includes the ability to better evaluate borrowers’ financial stability, thus reducing the likelihood of loan defaults. It also helps prevent misrepresentation of income or employment by verifying data directly from trusted sources while aiding compliance with regulations like the FCRA.
By streamlining the verification process, automated solutions promote faster decision-making, especially in unpredictable markets, and can improve the quality of the loan portfolio by confirming that loans are issued to qualified borrowers based on reliable information.
As the upcoming election adds another layer of uncertainty to the mortgage market, and as potential policy changes could impact borrowers’ financial stability, lenders must focus on prioritizing certainty and efficiency. By embracing automated digital verification solutions, lenders can take advantage of trusted income and employment data, allowing them to make informed decisions quickly and securely. In doing so, they can better navigate the challenges of an unpredictable market while enhancing the overall borrower experience.
(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)
