NCS Reports 75% of All Verification of Employments Still Require Direct to Employer Inquiries
by Lisa Binkley
The long-standing information services firm has embraced multiple data sources and a transparent operations model in its updated VOE offering to address the imbalance.
NCS (National Credit-reporting System, Inc.) is no stranger to deconstructing mortgage origination and underwriting processes - often to inject automation and efficiencies in the most mature tasks. The company is known for its processing speed and IRS order acceptance level for TRV® Services, the firm's 4506-T processing solution.
Last year, NCS turned its sights on verification of employment (VOE). Industry estimates have shown that approximately 75% of all VOEs require a manually performed verification (inquiry) direct to the employer. NCS found a significant service and performance gap between VOEs completed with instant workforce data and those that required an inquiry direct to the employer. Direct employer inquiries consist of a phone call or a form pushed to the employer for completion - and lenders were seeing consistently poor service levels with limited status updates regarding the fulfillment of their requests.
89.4% of American business firms employ less than 20 workers.
In 2014, according to US Census Bureau data, there were 5.83 million employer firms in the US. Firms with fewer than 500 workers accounted for 99.7% of those businesses. And 9 out of 10 businesses employ less than 20 workers. This indicates that small employers dominate large Fortune 500 firms, such as Walmart, who employs approximately 1.5 million people nationally and actively reports employee data to employment databases. This imbalance necessitates a strong employer inquiry process to deliver data rapidly and cost-effectively.
With nearly 3 out of 4 VOEs completed via a direct inquiry to the employer, this leaves a limited portion of VOEs completed instantly and digitally via an employment workforce database. The likelihood of using a single database solution becomes even less of a reality with joint applications.
Significant VOE market share for third-party fulfillment of VOEs rest with large entities who own the workforce databases and focus heavily on the 25% of VOEs fulfilled instantly with automation. NCS has engineered a solution that turns the focus upside down, and squarely towards the majority of direct employer inquiry.
Using a third party for VOEs makes a lot of sense. A third party is unbiased and gains nothing from the outcome of the lending decision. Additionally, with strict industry and investor guidelines governing the performance and outcome of verifications, many lenders prefer to outsource the risk to a 3rd party.
NCS' VOE Services solution injects technology via new data sources, a 2018 re-engineered processing and UI platform and an enhanced interaction platform between the employer and NCS for rapid results. Process improvement policies are spread throughout production activities. User experience is greatly enhanced with VOE lifecycle statuses and transparent reporting.
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