Rob Strickland: Automated Income Verification Saves Lenders Time, Money, Aggravation


PERSON OF THE WEEK: As rates rise and home sales stagnate, mortgage lenders will be looking for ways to reduce operating costs and improve customer service through their digital channels. Those that have not yet considered automated income verification will probably be looking at this new technology as an option.

To learn more about the advantages automated income verification can deliver for m mortgage lenders, MortgageOrb recently interviewed Rob Strickland, CRO of VeriFast.

Q: In your experience, what are the most common challenges for those charged with verifying income?

Strickland: For lenders and underwriters, the biggest challenge is the reliance on manual checks and balances that act as a speed bump throughout the loan approval lifecycle. 

Historically, there has been a heavy reliance on operations teams verifying paper paystubs or bank statements. From start to finish, creating a complete financial summary can take 10 to 15 hours of labor and multiple days of back-and-forth communication to gather and verify all valid income, assets, employment data and taxes.

With new rules continually emerging to limit risk, lenders are tasked with constantly re-checking employment and income before-and-after closing to assure the highest quality loan.

These processes are time-consuming, error-prone and place undue burdens on lender teams and borrowers to deliver, analyze and validate documentation multiple times throughout. 

Fortunately, new tech solutions can streamline access to digital verification data to save time, money and aggravation.

Q: Today, millions of Americans are considered gig economy workers. These Americans are either supplementing or completely earning their full-time wages through this work. How can VeriFast help these potential borrowers through the income verification process?

Strickland: The market has definitely shifted as remote work becomes the norm and more people are empowered to be entrepreneurial. On the flip side for lenders, it’s incredibly time-consuming to validate self-employed borrower information using traditional methods. 

Underwriting teams must evaluate hundreds of data points culled from six to 12 months of bank statements to create an accurate, trended cash flow statement from scratch.

The leading digital AI platforms orchestrate an end-to-end, fully digital income verification process that empowers gig economy workers to easily share all their income streams to maximize their buying power. They accurately detect, organize and deliver transparent insight into a borrower’s true ability-to-pay.

In the case of our system, the lender sends the borrower an encrypted link where they can connect to their bank through secure login or directly upload bank statements. Then, our AI engine reads multiple months’ worth of transactions, detecting and organizing all income sources and expenses on the spot and displays an intuitive and interactive income statement.

Q: How can technology improve and increase access for those who have been historically excluded from the home-buying process due to their incomes?

Strickland: Open finance and AI categorization technologies allow lenders to tap into a new market and redefine what a low-risk borrower looks like. As Fannie Mae and Freddie Mac move toward more equitable “cashflow based” underwriting processes, automated analysis delivers an unbiased, accurate and fraud-free picture of a borrower’s ability to pay.

Additionally, technology can improve the experience for borrowers who may have been excluded in the past. For instance, supporting the bank connection and statement upload activities with live-chat assistance assures less tech-savvy applicants complete the application process.

In short, encouraging borrowers to provide all relevant banking data allows forward-thinking lenders to create a more accurate borrower cash flow that considers all payment and income history. In turn, previously overlooked borrowers with less traditional income streams are approved more often and with higher loan limits.  

Q: With mortgage applications expected to decrease on 2023, what advice do you have for lenders faced with navigating this environment?

Strickland: If we have learned anything over the last few years, it is that lenders willing to re-analyze business models, key processes and tech tools are more likely to uncover new opportunities to automate manual steps, lower costs and add more loans to their book of business.

Given the challenges that lay ahead, investing in solutions like digital verification automation can be an elixir to attract and approve more borrowers, more quickly. Leadership teams can build cultures that challenge the status quo and replace brittle processes and technologies with more modern, flexible solutions that support lender re-invention and transparency.

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