Leveraging Third-Party Employment Verifications
Verifying that a mortgage or loan applicant is employed and really makes the money they claim they do has always been essential. In today’s world, though, ensuring that employment documents are legitimate isn’t as easy as it was in the pre-digital age. From faking documents themselves to buying financial docs online, dishonest borrowers try a variety of tactics to fool mortgage lenders. It’s essential for lenders to protect themselves by using a third-party service to verify employment.
Why Should Lenders Use Third-Party Employment Verification Services?
Lenders have traditionally required loan applicants to submit pay stubs to prove their employment status. In the pre-digital world, it was generally difficult and expensive for borrowers to make or buy forged documents. Today, dishonest borrowers can easily buy fake pay stubs or make them at home on their own computers. Unfortunately, most lenders are unable to determine if a document is forged or not. The pay stubs are simply accepted, and loan decisions are made using inaccurate information.
This type of fraud can result in substantial financial losses for the lending institution. Dishonest borrowers end up with funds that they do not have the income to repay. Catching borrowers who are using faked documents before loans are funded is the best way for institutions to protect themselves from this type of fraud. Third-party employment verification services provide essential protection for lenders.
What is Third-Party Employment Verification?
Third-party employment verification services such as Private Eyes use extensive employer databases to verify that an individual is really employed at the company he claims to be employed at. First, the database is used to determine if the company that the borrower claims to work for is a real company. Information such as employer name, address, and phone number is verified. Then, borrower claims are checked against employer-provided payroll data to determine if the pay stub information provided to the lender is accurate. This provides a quick, cost-efficient way to detect dishonest borrowers and protect institutional assets.
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