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Following the great interest we had in our 2019 six-part blog series, “Millennials Mortgage Process,” which followed one of our colleagues on her home buying journey, we are back in 2020 with a new take on generational perspectives in the mortgage industry.
Riffing off a fairly well-known and controversial 2019 meme, “Ok, Boomer,” we are kicking off our “Hey, Boomer.” series where a long-time industry vet and Baby Boomer shares how technology in the mortgage industry has changed or hasn’t in the years since Millennials were first born.
Not familiar with the “Ok, Boomer!” terminology? Just Google it. There’s plenty of articles out there explaining it in detail. Here’s one from The New York Times.
So, Boomer…. Tell us how mortgage reverifications were done.
Dave O’Malley, LoanLogics Director of Quality Solutions:
Thinking back over my 30+ years of mortgage industry experience, the use of barcodes in reverifications must have been one of the very first technology advancements in loan quality control (QC).
Back then fax machines were scarce and the internet certainly wasn’t available to expedite letters to employers, relatives, banks and the like. And so, as required by Fannie and Freddie, lenders did everything for reverifications by hand. The process suffocated many under a pile of never-ending paper documents and surely led to the demise of many a tree farm.
The biggest reverification challenge in those days was tracking documents going out and coming back in, to the corresponding loan. Every month staff had to physically cull through all the documents and responses to match them to the loan file.
This was until one fed up client asked a former company of mine to begin printing barcodes on the outgoing reverification documents. As documents were returned, these barcodes would not only pull up the loan directly in the DOS-based system (Does anyone remember black and green screens with DOS based programs?), but light pens were used to record answers to yes/no questions in a checklist which would then automatically update the system with the responses in the reverification notice. These documents however were still in paper format and stored an office filing cabinet for future reference
So, what’s changed in reverifications in the 30+ years since then? I got with a colleague of mine, Ann Dragon, who manages the LoanLogics reverification department and here’s what I learned.
While the post close reverification process has improved and barcode hardware is no longer cutting edge, it’s still very labor intensive.
Unique identifiers are automatically generated for reverifications on a loan being managed in our loan quality management platform, LoanHD®. Seasoned processors then use that ID number to build a reverification order based on an investor’s reverification guidelines. Data from the loan file is leveraged in the outgoing documentation and the order is tracked to completion.
A large percentage of the outgoing employment, income and assets reverifications are still done by mail. It is currently LoanLogics policy to mail out reverifications rather than fax or email on the first try. (Note: The FHA requires an additional attempt by phone, as well.)
While faxing and email seem more efficient, they require a different set of manual steps to ensure the reverification goes to the correct individual when using one of those methods of delivery. Calling and confirming the fax or email address, possible phone tag and such can add extra time in getting the reverification “out the door.” There is the risk that salary information would be on a general office fax machine where others could see the data if the person intended to receive the fax is not available to retrieve the request.
To discourage the possibility of the wrong person viewing personal information, LoanLogics addresses each employment verification to the attention of Human Resources/Payroll. Each envelope is stamped “Confidential” in big red letters on the front and back of the envelope to encourage the recipient to deliver our request to the intended party without opening it.
Once the documents are returned, which typically averages about 30 days, the paper responses are scanned and electronically filed within the loan using the unique identifier previously assigned by the LoanHD platform.
On average there are about 2.5 reverifications needed per loan. Because our technology provides the processor with a queue of the required documents necessary to create the reverification (think, build and go) and redacts personally identifiable information (PII), LoanLogics staff produces a minimum of 60 reverifications per person, per shift.
Reverification managers, like Ann, must be able to track and manage their productivity to meet the level of service expected by clients. Reverification reporting capabilities supported by loan quality management platforms, such as LoanHD, make that easy.
So, in summary, while advancements have been made to eliminate some of the old procedures for reverifications, such as physical filing cabinets and bar code technology, many aspects of the process are still manual. The future holds promise for more innovation through integrations and automation.
