Six Reasons to Hire a Verification of Employment Partner
After record-breaking revenues and volume over the past few years, 2021 has proven to be something of a “pivot” year for the nation’s mortgage lenders. A diminishing refinance market has redirected focus back to building purchase business. The new administration in Washington, D.C. has heightened the need for sound, compliant processes. Add to that the ongoing technological revolution in the industry that continues to drive both innovation and efficiency, and it's clear that the lenders need to capitalize on every available resource to remain competitive.
One tried-and-true method of increasing efficiency remains outsourcing tasks and responsibilities that either aren’t core competencies or don’t require in-house staff to execute. Third-party vendor management has become a critical part of every lender’s overall strategy. Particularly for small to mid-size lenders, outsourcing can be a way to allow overtaxed leaders to focus on what they do best. Increasingly, outsourced vendors are now strategic partners that grow with their lender clients and have become key to their success.
Specifically, outsourcing your verification of employment (VOE) services can provide your company with several tangible (ROI) benefits.
For investors such as Fannie Mae/Freddie Mac, the primary conditions needed to be clear to close are:
1. Is the applicant a real person? 2. Does the applicant have a job? 3. Does the applicant have income that supports the loan request?
Any mortgage investor you work with will likely need to see substantial evidence to meet these conditions. Working with a VOE partner can help obtain those documents faster and keep your pipelines flowing. You’ll also be able to free up in-house personnel who won’t be tied up tracking down files, limiting your origination capacity.
Accelerate and Improve Customer Experience
As lenders continue to improve the customer’s experience throughout the loan process, each step that isn’t incorporated into the automated process is made painfully clear. No need for manual entry and clunky processes, although you will need to inform applicants and, in some cases, obtain consent to use a third-party vendor to verify employment or other important information.
Outsourced VOE will also lead to more qualified applicants getting approved, so more loans move down the pipeline.
Reduce Cost and Risk
We’ve already mentioned this, but freeing up employees to focus on more critical tasks improves efficiency; however, you’ll also see a drop in operational costs – a key advantage in a market not swamped with easy refinance volume.
Get Your Data Right from the Source
An outsourced vendor will go straight to the employment source, saving your team many hours on the phone. Based on the level of experience, a vendor may have developed a product or service that can directly obtain the information needed, often much faster than an in-house lender solution.
Plays Nice with Your LOS
Integration is key to your tech stack strategy, and using an outsourced provider means that you can get the data required integrated directly into your LOS platform. This reduces operational costs – you won’t need to hire or have employees waste their energy talking to HR representatives and coordinating how that information is provided. You’ll also see a drop in operational risk because your VOE partner can feed data automatically into your existing LOS architecture, minimizing the risk of human error.
Is VOE Enough?
VOE alone might not be enough verification when trying to avoid fraudulent applications. Depending on an applicant’s circumstances, lenders may need to perform additional verifications. That might include:
Social Security verification
Direct Deposit verification
Instead of spending hours training and specializing staff to handle such issues, a diversified VOE partner will likely be able to help with more products and services, providing a complete suite of verification offerings.
Bottom line: outsourcing continues to be a strategic way to cut costs, increase efficiencies, and focus employee productivity. VOE providers can also improve customer experience, reduce risk, and much more.