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What do Equifax and the IRS have in common? They both house tons of consumer personal data. Equifax got hacked. Could the same happen to the IRS?
Some regulators are saying no and pushing for the IRS to get more heavily involved in the data verification game. Rep. Patrick McHenry (R-NC) introduced legislation aimed at fast-tracking the IRS’s capability to verify an applicant’s income, which he says will also validate their identity.
“We need to get away from relying so heavily on the credit bureaus,” said McHenry. “We need to modernize the way lenders verify identity. And a huge component of that is income verification and making that process much more seamless than it currently is.”
Simply put, the bill would require the IRS to automate their income verification processes to drastically reduce the time it now takes lenders to verify employment and identity. This upgrade must incorporate the latest in cybersecurity safeguards as well.
Some say this could also aid lenders, as too much emphasis today is placed on the current credit score for loan approvals.
This will give Lenders more information – quicker, to better analyze a potential borrower’s financial history and experience. If a lender can verify an applicant’s income quicker some believe more non-traditional borrowers may get approved. Can you say sub-prime?
With this and the return of the more traditional trended credit data, it seems we are getting closer to the old way of underwriting loans; albeit with automated employment and asset verifications and less use of standard appraisals. A little of the old, with a little of the new. Could it be a winning combination?
Verifying identity and income through the IRS would sure simplify things for lenders and the agencies. Lenders using this process could approve their loans faster while receiving rep and warrant relief on income, one of the biggest components in a loan’s approval.
With this, IRS identity validation trended credit data reviewed by the agency AUS, automated employment and asset validation, and appraisal waivers, there really isn’t much left for a lender to do. Other than getting the application on the newly designed agency Uniform Residential Loan Application. Now that’s something to think about…
A quicker, more comprehensive and secure way to verify and validate income and identity is a good thing. But, how might it affect how mortgage loans are done in the future?
