Lenders are facing some extraordinary times right now as they try to prepare for the months ahead. Underwriting risk has become almost impossible and fraud is bound to surge as desperate people look to all options for survival.
Last week we hosted a webinar that was presented by Equifax which featured their Director of National Accounts, Chad Gray. The conversation centered around fraud as it relates to paystubs and other key underwriting data. Uncertainty has only increased the amount of anxiety lenders are feeling and with unemployment skyrocketing they will soon wonder if any applicant has a job.
Loan applicants are required to fill out a lot of different forms and add a lot of personal data in order to acquire funding. Within these different data sets consumers might inflate or misreport their income as is the case with mortgages for example. Knowing the red flags will help to identity fraudulent data quickly so the lender can accurately assess the risk of that borrower.
It has become pretty simple to make fraudulent paystubs, as according to Equifax there are more than 160 websites that help create paystubs. Some of these sites can also falsify bank deposit forms, bank statements and W2’s. Making a change in your application from estimated income to verified income could make a huge difference for the lender.
Equifax’s Work Number Database enables employers to update the payroll data every pay cycle which provides lenders with the most up to date income data on a borrower, thereby eliminating the need for paystubs at all. The company has amassed more than 500 million total records with more than 500,000 employers contributing. The Work Number can be used throughout the loan cycle which gives lenders a deeper understanding of their borrowers.
As uncertainty continues in the near term a tool like the Work Number can help lenders better asses risk and cut down on potential fraud. Lenders using the Work Number saw a 40 percent increase in conversions to closed loans.
If you’re interested in listening to the entire webinar you can access the recording here.
More from LendIt Fintech
Our next webinar is called COVID-19 Planning for Fintech: 5 Ways to Maximize Efficiency with At-Home Agents on Thursday April 9th. As the effects of COVID-19 become more widespread and impactful, many fintech leaders are considering having some, or all of their contact center agents, work from home. Join Jennifer Kuechler of Strategic Link Consulting, Stephen Picciotto of ARB Call Facilities, and Jason Swift of Marlette Funding with moderator Jim Lynch of LiveVox.
Todd is the host of PitchIt: the fintech startups podcast, a weekly interview show featuring emerging fintech founders and leading venture capitalists. He is responsible for leading the content team which covers fintech through daily & weekly email newsletters, editorial, virtual events, and in-person conferences. He has been covering fintech, banking, and venture capital for more than 15 years, including speaking regularly at industry events.