News & Resources

Underwriters: Are you using Instant Bank Verification tools?

Sep 13, 2016 Philip Burgess

Underwriters: Are you using Instant Bank Verification tools?

Assessing a person's capacity to pay back loans is arguably one of the most challenging steps of the loan underwriting process. You need to corroborate every source testifying to a borrower's monthly income and employment history.

To reduce the time and resources you have to dedicate towards scrutinizing borrower capacity, you have the option of using bank account verification and aggregation tools. These solutions register real-time bank account transactions, providing not only information about a borrower's employment but also insight regarding his spending behavior - a key detail underwriters need to assess.

How does Instant Bank Verification work?
MicroBilt's Instant Bank Verification solution gathers real-time transactional data from more than 15,000 financial institutions across the U.S. and 20,000 throughout the globe. Compliant with security standards specified in the Payment Card Industry Data Security Standard 3.0 and Safe Harbor regulations, Instant Bank Verification corroborates the following details:

  • A person's ability to pay back loans
  • Income and direct deposit accounts
  • Current and available account balances
  • Social security numbers
  • Address and telephone number details

All the information within the bank account verification and aggregation solution enables you to make an accurate assessment of an individual's financial responsibilities. Is he currently paying off a car loan? Does he pay his utilities, credit card and internet bills on time and in full? Does the borrower regularly receive deposits separate from his primary income such as bonuses, commissions, or payment from additional part-time employment?

One of the greatest benefits to using Instant Bank Verification is that you eliminate the chances of acting on false information. According to British accounting firm PKF Littlejohn LLP, fraud losses amounted to £9.76 trillion ($13.11 trillion) globally between 1997 and 2013. Instead of having to verify physical bank statements that look legitimate, Instant Bank Verification tells you immediately if you're dealing with the appropriate party.

Instead of assessing a borrower's financial details in person, review them online.

Smarter than automated underwriting systems?
Despite advances in machine learning, data analysis and other software designed to simplify the loan underwriting process, relying on automated underwriting systems to approve loans may not be the optimal option. This is due to the fact that automated underwriting solutions cannot interpret the context of certain data and rely too heavily on specific criteria to approve loans.

Lisa Marquis Jackson, senior vice president at John Burns Real Estate Consulting, wrote a piece for HousingWire, noting automated underwriting hinders highly qualified individuals from obtaining loans. For example, if a person is self-employed but making decent money, an automated underwriting system may perceive self-employed individuals as particularly risky.

In contrast, you as a person can distinguish qualified individuals among self-employed borrowers. For instance, Instant Bank Verification will show you whether a freelance computer technician not only makes decent money on a monthly basis but also manages the expenses associated with the business - does he have a separate bank account for computer parts, travel costs, and so forth?

Only a hands-on, detailed, analytical review of a person's capacity will confirm whether he's capable of handling another loan. If you want to learn more about Instant Bank Verification, download our product sheet today.