Mortgage Lenders Need Human-Tech Collaboration to Make Verification More Precise and Accurate

Cross-verifying mortgage documents is a task that can put the strongest nerve to the hardest test. However simple the task may sound, it is, in fact, anything but simple. A small, undetected inaccuracy can make the lender stare down the barrel. From credit reports to income statements, the process demands a nerve-wracking level of scrutiny. Each piece of paper holds a chapter of the borrower's financial story, and you've got to read between the lines to unravel the twist.?

There is yet another major challenge with cross-verification which cannot be undermined at any costs. It is the challenge of time constraints. This challenge can transform an already intricate process into a high-stakes race, making it prone to the very inaccuracies it aims to eliminate. A ticking clock invariably leads to rushed assessment risk oversight, potentially jeopardizing accuracy and completeness. Yet rush one must to meet backlogs, or else be left behind in the race. All these together, makes cross verification a tightrope act with zero room for error.

How Complications Arise -Few Scenarios in Case

Consider a scenario where a borrower has multiple income streams, including self-employment, rental properties, and investments. The complexity arises when these intersecting financial facets, along with tax returns, business statements, and rental income records, need to be analyzed and interpreted holistically. Chances of the borrower misrepresenting his earnings and presenting a flourishing business on paper, eclipsing recent financial downturns, can be high. If the cross-verification fails to map the multiple income streams appropriately, it will fail to identify the discrepancies. This might result in an approved mortgage based on false financial information.?

Fraudulent property valuation can be an insidious tactic that, if not carefully scrutinized, may slip through the cross-verification process. For instance, In some cases, dishonest borrowers might collude with unscrupulous appraisers. The appraiser knowingly or unknowingly inflates the property's value to meet the borrower's desired loan amount. This collusion can be challenging to detect, especially if the appraiser is skilled at presenting the inflated valuation as legitimate. Similarly, a borrower might intentionally conceal property issues or manipulate photographs to present a more favorable condition. This is mostly done to hide structural damage, water leaks, or other significant problems and inflate the appraisal value. Without thorough verification, these issues may go unnoticed.

While all of these cases are challenging in themselves,? a hectic mortgage processing environment can make it all the more complicated. In such an environment, it is possible to overlook concurrent loan applications or alterations made to employment verification documents, miss variations in income reported across different financial statements, synchronize property appraisals across various applications, etc.?

Can Technology be the Savior?

Technology can be a savior to some extent. Automated systems, for instance, utilize advanced algorithms to analyze vast datasets, comparing applicant information with various databases and verifying documents in a matter of minutes. Likewise, optical Character Recognition (OCR) technology enables seamless data extraction from scanned documents, reducing manual errors. Similarly, blockchain technology ensures the security and immutability of records, enhancing trust in the verification process.?

But technology can only be relied upon partially. That's because automated systems may process datasets quickly but need more nuanced interpretations of the data. This comes as no surprise because these tools are built to operate as per pre-defined rules and patterns that fail to account for unpredictable variables. In situations with insufficient or biased data, the algorithms may provide inaccurate or skewed interpretations of complex financial scenarios. For example, an automated system may fail to recognize an applicant's ability to repay a mortgage if the applicant has recently changed careers, shifting from a salary-based income to a commission-based one.

Therefore, the need of the hour is to blend technology with human judgment. While technology would lend speed, human judgment will help contextualize information, recognize irregularities, and understand the subtleties of financial nuances. In complex cases where there is a need to discern intent, human judgment excels. A human touch can accurately access non-standard situations, like a sudden change in financial circumstances or assessing borrower credibility beyond numerical data. For instance, in the example cited above, human judgment will recognize the significance of the career transition after conducting a thorough interview of the applicant and assessing the long-term earning potential in the new position.?

There are several such cases in which there is a need to interpret complex situations that fall outside the scope of automated algorithms. Therefore, combining technology with human expertise ensures a more comprehensive and reliable mortgage verification process.