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The Pros and Cons of Digital Asset Verification

Mar 5, 2019 by Tim Simpson

As internet connectivity reaches all-time highs and 5G networks are becoming a reality, it is no surprise that businesses in every industry are adopting new technologies to stay ahead of the game. This digital disruption even affects mortgage lending and compliance. From more agile loan origination systems, to speedier and more effective compliance software, technology is helping borrowers and lenders rapidly reduce their loan closing times.


One aspect of loan closing that can take a significant chunk of time is the verifying of assets. Many institutions are very quick about verifying their client’s assets, but some take a dizzying amount of time. For example, many require asset statements to be sent through the mail (yes, remember snail mail?) and have a turnaround time of roughly two weeks. That is a massive amount of time to waste when you’re trying to close in 30 days.


Recognizing this bottleneck, some companies have created verification of asset software to completely upend this process. It allows lenders to instantly view a borrower’s financial transaction history with a few clicks of a button. As with any new technologies, there are a few pros and cons that need to be discussed.


Pro: Instant Verification and Ease of Use

When the time comes to verify assets, lenders can request a report through an API. The borrower then receives a notification, clicks the link, and enters their logins for their financial institution. A financial report is auto-generated and sent directly to the lender. The entire process takes only a few minutes. Compared to turnaround times of a week or more, this process is a no-brainer.


Con: Not 100% Adopted

It is important to note that not everyone is on board with this technology yet. There are still borrowers who are wary of using their online banking logins through a third-party site. Not to mention, there are borrowers who have never set up online banking logins, and banks that don’t have online portals.


Pro: Fraud Prevention

Here at QuestSoft, we perform quality control reviews and fraud audits for mortgage insurance companies. We are all too familiar with doctored bank statements ranging from the laughably bad to impressive forgeries. From a risk manager’s perspective, automated asset reports remove the borrower’s ability to forge a bank statement. This direct from institution to lender transmittal can help reassure lenders that the balances they are seeing are accurate. Plus, many institutions will allow reverification of these asset reports during quality control reviews. Therefore, QC teams and mortgage insurance companies can often confirm the accuracy of the original asset verification that was provided to them.


Bank Security

Pro: Saved Money

Time is money. Increasing the efficiency of each lender’s operation allows them to take on more business and decrease expenses. Utilizing technology to minimize closing times can help both lenders and borrowers save money and reduce stress. Borrowers who save money and ultimately think highly of their lender are more likely to become repeat customers and refer business.


Despite some borrowers’ hesitation, these automated services are held to the same cyber-security standards as your local bank. They are usually SOC2 certified and use SSL/TLS encryption to make sure that borrowers’ data is secure.


While it is unlikely to capture 100% of the market in the foreseeable future, being able to instantly validate asset information on a sizeable portion of loans will greatly increase lenders’ efficiency and risk management. If you are interested in reducing closing delays, contact our verifcations team today.


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