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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 52 December 2024 F E A T U R E S T O R Y REIMAGINING CREDIT AND VERIFICATION WORKFLOWS Updating verification workflows is not merely an understandable reaction to new technologies, but a necessity driven by market conditions, regulatory requirements, and customer expectations. B y G R E G H O L M E S F ew, if any, industries in the world have experienced such dynamic shifts in recent years as the mortgage indus- try. Within that rapid evolution, the landscape of credit and verifications has also experienced a fundamental shift. Mortgage lenders are no longer restrict- ed to traditional and often time-con- suming processes that have historically bogged down the loan journey. From pre-application through post-closing quality control (QC) reviews, lenders are increasingly recognizing the need to update their verification workflows to assist in enhancing operational effi- ciency, cutting costs, and maintaining compliance. This shift requires not only technological adjustments, but also a top-to-bottom cultural transformation within lending institutions and their missions. It goes without saying that such a change will require a mindset overhaul when it comes to how industry verifications are handled, but it can— and should—be done. Why Update Your Credit and Verifi- cation Workflows? U pdating verification workflows is not merely an understandable reaction to new technologies, but a necessity driven by market conditions, regulatory requirements, and customer expectations. The mortgage market is more competitive than ever. And as margins tighten, lenders are under immense, ongoing pressure to cut costs without sacrificing the quality of their processes. This means that the entire loan cycle is undergoing constant scrutiny and reevaluation to identify outdated processes and blind spots. One key area in which lenders can implement cost reduction is verification services. Mortgage lenders often find themselves in relationships with multiple vendors for credit and verification-related tasks: credit reports, income verification, em- ployment verification, etc. While it may get the job done, this piecemeal strategy creates inefficiencies and unneces- sary expenses. By reevaluating these workflows and cutting out extraneous partnerships, lenders can reduce the number of verification providers they work with, streamlining operations, and cutting expenses. Evaluating Costs and Workflow Efficiency To determine whether their costs are being properly minimized, lenders must first examine their current workflows to identify inefficiencies. For example, one common issue many lenders encounter is ordering verifica- tions too early in the process. Before the advent of today's cutting-edge assistive tech, lenders would often pull a tri-merge credit report early in the pre-application stage to "get ahead of the game." However, this strategy sometimes led to unnecessary costs if the borrower chose not to proceed with the application. To avoid this roadblock, some lenders are adopting a more efficient approach, starting with a soft credit pull that functions like a hard pull without triggering credit monitor- ing alerts. The tri-merge report is then ordered later in the process, as required to underwrite the loan. By shifting the timing of these man- datory verifications, lenders can better manage costs while still adhering to regulatory requirements like the Loan Quality Initiative (LQI). Additionally, G R E G H O L M E S is Chief Revenue Officer at Xactus, a verification innovator for the mortgage industry. Follow the company on LinkedIn at LinkedIn. com/company/Xactus-LLC/. .