Automated income verification (AIV) refers to automated processes that allow lenders and others to conduct verification of income (VOI) without tedious manual processes. Industries such as real estate, lending and employment screening increasingly demand artificial intelligence (AI) and automation tools for income verification, as they contribute to faster, more secure decision-making.
This article explores how banks, credit unions and others use automated verification methods to boost loan application efficiency.
What Is Automated Income Verification?
AIV occurs when automated methods are used to conduct income verification for mortgage loans or other purposes. The verification process is handled via application programming interfaces (APIs), data aggregation and other tools instead of manual phone calls or time-consuming document uploads.
For example, automated income verification might involve connecting to employer data. In this manner, the lender can get immediate access to accurate income records. AIV drives better efficiency and accuracy than traditional verification, which might require the individual to gather and submit documents, such as W2s and paycheck stubs. Discover more income verification examples to better understand this process.
Benefits of Automated Income Verification in VOI
When using automated income and employment verification for home loan approvals or other lending processes, banks and clients experience benefits such as:
- Increased accuracy: Automated processes remove some risks associated with errors in data entry. Truv is an authorized report supplier for Fannie Mae’s Desktop Underwriter® (DU®) validation service and an approved support provider of Freddie Mac’s Loan Product Advisor® (LPASM) asset and income modeler (AIM).
- Quicker approvals: AIV creates more efficient processes that lead to faster verifications. Lenders can make quick decisions, helping to speed up loan processes.
- Enhanced security: Encrypted and direct access to data reduces cybersecurity risks, and AI-driven document processing helps reduce fraud.
- Scalability: Businesses can handle higher volumes of income verifications without creating cumbersome staff structures.
- Increased conversion rates: As Femy Ayi, EVP Operations at Revolution Mortgage, explains, “With Truv, borrowers supply data in one fast go, only one time, leading to higher capture percentages, pull-through rates, and conversion.” By streamlining the borrower experience and eliminating repetitive steps, lenders can significantly enhance loan completion rates and improve overall efficiency in their lending processes.
Automated Income Verification and Regulatory Compliance
Using automated income verification for mortgage loan processes and other lending procedures can help businesses support compliance with laws such as the Fair Credit Reporting Act. With AIV, you have more insight and control over approval processes, as manual decisions aren’t made without data to back them up.
AIV helps you support reduced risks of fraud, enhancing regulatory compliance. In one case, a consumer lender realized a 15% increase in fraud detection within six months of using Truv. Since Truv’s primary income and employment solution connects directly to payroll providers and offers a built-in document upload solution in the same experience to use as a fallback, fraud risk is minimized, as there’s no option for falsifying pay stubs or documents.
When there isn’t an option to connect to a payroll provider and customers opt to upload documents within the Truv Bridge, Truv’s Doc Upload solution has a 99.9% fraud detection rate. It notifies the lender of potential fraud so a human can carefully review submitted documents.
Integrating AIV solutions into your processes requires a focus on data security and privacy. Truv offers the peace of mind associated with encrypted data transfers and connections to help you work toward ensuring compliance with the law.
Impact of Automated Income Verification on Customer Experience
The positive impact of automated income verification services extends to customer experience. Customers may enjoy the following benefits when the process involves AIV:
- Reduced waiting time: AIV speeds up verifications by removing tedious manual tasks and potential back-and-forth document requests. This can reduce customer wait times and, consequently, the stress related to loan approval.
- Convenience: Customers don’t need to find specific documents, such as check stubs or W2s, or figure out how to copy, scan, fax, email or mail those documents, leading to a more convenient experience.
- A seamless experience: Automated processes that occur in one location and don’t require logging in and out of multiple applications create a seamless experience that reduces friction and helps customers complete the loan approval process faster.
- Enhanced trust: Transparency throughout the AIV process and the seamless nature with which it works help build confidence, boosting customer trust in the lender’s decisions.
The Future of Automated Income Verification in VOI
As lenders lean on documentation to make regulated, intelligent decisions about loan approvals, automated income verification is likely to become standard in VOI processes across industries such as lending and real estate. Emerging technologies, such as machine learning and AI, could further enhance the capabilities of AIV, creating new use cases across businesses.
Truv continues to provide one platform for all verifications and technology that supports AIV as standard in VOI. Truv’s payroll coverage spans nearly the entire U.S. workforce and leads the market at 96% coverage of the U.S. workforce. We have more than 2.3 million employers in our Truv database to ensure consumers can share income and employment information. Learn more about Truv employment verification by requesting a demo today.
