Mortgage Denied? Can this be Why?

Of all home refinancing loan applications in 2018, denials accounted for 25% of the total. Causes for denied loans or mortgage applications are many, with some that are entirely avoidable. One preventable reason that causes loan denials is Human Resources (HR) departments not providing employment verification information of their employees promptly to a lender. Another one is mistakenly providing incorrect employment verification information to a lender.

Delays or the provision of incorrect employment verification information on behalf of a current or former employee is typically a sign that an HR department is overburdened. Overburdened HR departments should not be a surprise. HR departments increasingly have more responsibilities and expectations but not necessarily an increase in skilled staff.

Any department that faces an increasing amount of work must prioritize work tasks. On HR task priority lists, departments are correctly fulfilling critical areas such as benefit and personnel management first. Thus employment verification requests for employees purchasing or refinancing a home may not be addressed promptly. Fortunately, this situation is immediately reversible. One popular option is to outsource employment verification to a trusted and respected vendor. This option saves money and time, which allows HR to support other nonexistent or ignored initiatives.

Why do delays and inaccuracy of employment verification information lead to denied loan applications? As part of the lending process, loan processors and underwriters have a short timeframe to collect and analyze a great deal of information to determine if a loan is approved or denied. Loan processors review credit reports and assets as well as order a home appraisal to validate the value of the property. Additionally, processors verify current employment and income. Any delay in receiving correct employment verification information eventually leads to a missed loan decision due to strict deadlines.

The employment verification process, therefore, requires a quick turnaround from HR departments to verify employment information. Expediting the turnaround of employment verification information leads to faster loan decisions, helping employees who are purchasing or refinancing a home.

Help for HR

Employees may wonder if their phones can be used to complete the lending process. On a typical day, most of us use our phones to complete our daily activities. However, when our phones cannot solve our issues instantly, making them expensive paperweights, we get frustrated. Think about all of the things that our phones help us with from being our morning alarm clock to our nightly sleep aid. During our waking hours, our phones become our:

  • Entertainment
  • Work assistant
  • Calendar
  • Connection to the world
  • Nearly everything else

From an employee’s point of view, disappointment sets in when a bank or lender does not instantly approve a mortgage or lending application. Employees understand that government regulations require banks and lenders to adhere to processes that demand patience and manual intervention. However, we live an age of instant gratification, causing frustration when processes aren’t automated. Making sure that HR departments select the right employment verification vendor is a big first step to realizing a fully automated employment verification process.

Want more information on outsourcing employment verification? Are you looking to switch vendors? Please contact i2Verify here.

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