Historically, verification of income and employment (VOE) was an inefficient process. Lenders had to track down employers’ contact information and reach out several times, often to the detriment of their other workflows. Thanks to the development of instant hit VOE technology, this is no longer the case.
While instant VOE was a game-changer upon its launch, the innovation hasn’t stopped there. Many mortgage solution providers are actively developing new VOE tools to help lenders embrace an increasingly automated approach. In turn, they can get the data they need faster and keep their manual VOE demands to a minimum.
In this article, we’ll discuss how the latest VOE technology is enhancing the lender and borrower experience. We’ll also share our predictions for the future of VOE and how they’ll help mortgage lenders qualify more borrowers in the coming years.
How Technology Has Revolutionized VOE
Manual VOE can be expensive, time-consuming, and disruptive to lenders’ workflows. Fortunately, mortgage lenders now have access to the following tools:
- Instant hit VOE – Instant hit VOE provides income and employment verifications in minutes. Experian Verify and The Work Number are two popular instant hit providers.
- Cascade VOE – Cascade VOE is an automated VOE ordering tool created by Certified Credit. It can integrate with many well-known instant hit verification vendors.
Together, these solutions reduce lenders’ reliance on manual VOE and make the process faster and more affordable. Better yet, they can enhance the borrower experience.
Let’s take a closer look at each of these tools.
What is Instant Hit VOE?
Instant hit VOE can provide mortgage lenders with immediate income and employment verifications. They do so by leveraging expansive employment record databases.
While there are many instant hit VOE companies in the market, two of the most popular are:
- Experian Verify – Experian Verify has access to a growing database of over 50 million employment records. It currently owns four payroll providers and expects to acquire more soon.
- The Work Number – The Work Number utilizes the largest commercial repository of American payroll information. This repository receives new data from over 2.7 million employers every pay cycle.
Since these instant hit VOE companies have access to so much data, they can provide verifications at an affordable price. Better yet, they both boast impressive hit rates that are well above the rate of manual VOE. Thanks to these features, instant hit VOE vendors:
- Allow lenders to underwrite loans in a shorter amount of time
- Reduce friction for borrowers by taking VOE-related burdens off their plates
- Mitigate fraud by reducing reliance on paper documentation
- Can integrate with other tools, including Cascade VOE and some loan origination systems (LOS)
What is Cascade VOE?
Another tool that’s enhanced the VOE process for many mortgage lenders is Cascade VOE. This automated VOE solution enables lenders to arrange a custom cascade of verification vendors. After that, its rules-based engine submits orders to each vendor one by one until it returns a hit.
After initiating a VOE request, mortgage lenders don’t have to lift a finger. Instead, they can simply wait for Cascade VOE to send them a text or email notification as soon as it yields a hit. Cascade VOE often completes verifications in a matter of minutes, so lenders rarely have to wait long.
By automating the verification ordering process, Cascade VOE provides the following benefits:
- Time savings – Cascade VOE can return quick verifications, speeding up your time to close.
- Enhanced efficiency – Rather than manually tracking verification orders from multiple vendors, Cascade VOE lets you initiate orders and track them all from one place.
- Greater consistency – Cascade VOE follows your customized specifications the same way every time.
- Consistent costs – Cascade VOE can make your VOE costs more predictable, enabling you to pass them on to your borrowers while adhering to TRID requirements.
- Reduced costs – With Cascade VOE, you can strategically arrange your cascade of vendors to start with the lowest cost options first. In turn, you ensure you get the most affordable verifications every time. Better yet, you’ll only ever have to pay for verifications that actually produce hits.
- Seamless integrations – Cascade VOE can integrate with many popular LOS and POS, allowing you to craft a seamless, customized tech stack.
- Continuous improvement – The Certified Credit development team is constantly fine-tuning Cascade VOE to make it the best product it can be.
Experian Verify and the Work Number are just two of the many third-party vendors Cascade VOE users can feature in their cascades.
Why Lenders are Placing Experian Verify First in their Cascades
At Certified Credit, we’ve noticed that many Cascade VOE users position Experian Verify first in their cascades. The reason? Experian Verify has recently incurred some exciting updates to its technology. These updates include the addition of:
- Employment status filters – One noteworthy update is that Experian Verify is allowing lenders to filter their employment data to suit their needs, whether they want active employment data, inactive employment data, or both. Using these filters can prevent lenders from purchasing stale data that’s of no use to their verification process.While many lenders prefer restrictive filters, some still opt for full employment reports. These comprehensive reports can help them obtain waivers of representations and warranties when they deliver their loans to government-sponsored entities (GSEs).
- Employment status customization – Experian’s developers noticed that every lender defines “active employment” slightly differently. For instance, some may define it as employment data from the past 30 days, while others may prolong that timeline up to a full year. Fortunately, Experian Verify allows lenders to customize their definition of “active employment” to accommodate their unique requirements.
- More employment record acquisitions – At its launch, Experian Verify had access to over 25 million employment records. Today, that number has doubled. This influx of data has boosted Experian Verify’s hit rate considerably. For filtered verification requests, its hit rate is around 22%. Meanwhile, unfiltered verification requests boast a hit rate of 32%.
By placing Experian Verify first in their cascades, lenders can take advantage of these features whenever possible. If Experian Verify doesn’t have the data they need, Cascade VOE will simply move on to the next vendor in their cascade, whether that’s the Work Number or a consumer-permissioned vendor.
Save Money By Reviewing Your VOE Milestone Strategy
Another benefit of Cascade VOE is that it allows you to set up milestone ordering. With milestone ordering, Cascade VOE automatically initiates borrowers’ orders after certain loan manufacturing milestones have been met.
While milestone ordering can be very convenient, it’s important to select the right milestone. Many lenders order VOE too early in their loan origination process, only to end up paying for verifications for loans that don’t close. By re-evaluating your timing and selecting a better milestone, you may be able to cut your VOE costs even further.
What Does the Future of VOE Look Like?
As you can see, tech tools like instant hit VOE and Cascade VOE are helping mortgage lenders cut costs, save time, and streamline their workflows. As these products evolve, these trends are only expected to intensify.
Along with higher hit rates and lower costs, the future of VOE will likely focus on verifying a wider variety of employment types. After all, a growing number of people are participating in the gig economy, engaging in lucrative side hustles, or are self-employed. These workers naturally want to use their extra income to qualify for mortgages. Unfortunately, verifying this income has been difficult thus far.[i] That’s because self-employed income and side hustle earnings aren’t always recorded in traditional payroll systems.
Experian is tackling this challenge by seeking out partnerships with data providers that can amass alternative employment information. Once their new product is released, mortgage lenders will be in a much better position to qualify gig workers and self-employed individuals.
Certified Credit: Your Trusted Partner For Automated and Manual VOE
Technology is quickly transforming the VOE space, along with many other aspects of mortgage lending. The right tools can make a once cumbersome process much more convenient and efficient.
While tools like an instant hit VOE and Cascade VOE can reduce your reliance on manual verifications, some borrowers may still require manual VOE from time to time. Rather than assigning this time-consuming task to someone on your team, you can outsource it to a trusted partner instead.
Here at Certified Credit, we’re happy to take care of any manual verifications our Cascade VOE customers need. In addition to Cascade VOE, we also offer many other automated solutions and innovative tools. Our products and services include:
- Automated lead generation and borrower retention tools
- Automated prequalification
- Automated undisclosed debt monitoring
- Flood zone determinations
- Fraud and risk support
- Settlement services
For more information about the future of VOE and Experian Verify, check out the latest episode of our Talk Data to Me podcast. In this episode, we discuss VOE with Experian’s Director of Mortgage Market Engagement, Ken Tromer, and Certified Credit’s Vice President of Sales, Paul Robinson.
[i] Business Wire. Nearly Half of Gig, Freelance, and Contract Workers Are Denied Access to Financial Services They Can Afford, New Study Reveals.