Still Relying on Manual, Paper-Based Methods for Asset Verification in Loan Underwriting? There’s a Better Way.

Posted by Ravi Loganathan on Feb 24, 2016

Cross-Bank Automated Data Can Close Loans Faster, Improve Quality and Reduce Fraud

The loan market’s reliance on manual, paper-based methods for underwriting remains a common pain point for stakeholders. Each year, 85 percent of the approximately 8.7 million mortgages originated in the United States are sold into the secondary market and securitized. With that, there is significant loss of revenue as potential loan capital is tied up during asset verification, not to mention unnecessary labor costs related to fielding underwriting requests for assets, identity and income.

Here’s a picture of what involved parties contend with:

  • Lenders are the ones responsible for verifying various borrower data points right before a loan closes or when sold into the secondary market, a process that has proven costly and time consuming;
  • The burden is on the borrowers to research, collect and supply the appropriate documentation, on time; and
  • Government-Sponsored Enterprises, or GSEs, are tasked with manually aggregating incoming responses from a vast group of financial institutions and non-bank parties.

The lack of underwriting automation and subsequent asset assurance in home loan lending contribute to inefficient operations, poor customer experience and a higher risk for fraud. Finally, change has come.

Now, for the first time, lenders can systematically verify liquid asset information in an automated approach through the use of collaborative bank intelligence. Rather than collecting and managing paperwork to verify borrower assets or relying on dangerous screen scraping techniques, lenders can gain certainty on assets reported through a unique consortium model.

Early Warning, a leader in payments, fraud and risk management, has developed Asset Search and Verification Service℠ for Home Loans enabling lenders and GSEs to quickly and accurately verify assets for both the underwriting and securitization phases of the loan lifecycle. The service is fueled by the company’s National Shared Database Resource – the industry’s most current and accurate source of collaborative financial data. It includes account location, ownership status and up to ninety days of balance and transaction history. By leveraging cross-bank data to systematically verify asset information, loan decisions are simplified as well as expedited to the benefit of lenders, the GSEs and borrowers.

Early Warning’s Asset Search and Verification Service for Home Loans provides value to each stakeholder, including:

  • May eliminate need for borrower-provided bank statements;
  • Increases borrower satisfaction;
  • Reduces lenders’ operating costs;
  • May enable representation and warrant relief, as well as capital relief, for lenders;
  • Facilitates an efficient origination and underwriting process;
  • Mitigates GSE systemic securitization risk; and
  • Minimizes potential for fraud and borrower misrepresentation.

 To learn more about Asset Search and Verification Service for Home Loans, download solution brief at

About the Author:

Ravi Loganathan is chief market development officer for Early Warning’s Regulatory Solutions Practice. He has more than 20 years of experience in compliance, operational risk and marketing analytics in the financial services and retail sectors.


Topics: Regulatory

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