1
0
Post-close verification isn’t just a compliance requirement, it’s a valuable tool for identifying data inconsistencies, enhancing risk management, and improving loan quality. At LoanLogics, we’ve been closely analyzing QC reverification trends, and the data from July through December 2024 offers powerful insights. In this post, we examine how reverification trends serve as indicators of loan integrity, share results from our latest discrepancy analysis, and explain how technology like CARBN is reshaping the reverification process.
Reverification as a Window into Origination Quality
Discrepancies found during verification—particularly in income, employment, and assets—are more than isolated issues. They reveal patterns that can indicate systemic problems in the origination process. Consistent reverification issues often point to:
- Incomplete or incorrect documentation during underwriting
- Gaps in pre-closing verification procedures
- Potential borrower misrepresentation or fraud
Tracking reverification trends over time allows lenders to address issues proactively, strengthen internal processes, and improve overall quality performance.
Discrepancy Analysis: July to December 2024
Between July and December 2024, LoanLogics reported 252 reverification discrepancies across its client base. These discrepancies illuminate key areas for improvement and risk mitigation.
Tax Transcript Issues
The highest volume of discrepancies came from IRS Form 4506-C errors. Common mistakes included:
- Listing multiple product types in Section 6
- Including unnecessary years in Section 8 (which adds cost)
- Missing borrower signatures or failure to mark required attestation checkboxes
These recurring issues highlight the need for improved form completion training and validation checkpoints within the loan process.
Employment Verification Discrepancies
We identified cases where borrowers:
- Were not employed at the time of loan closing
- Had never been employed by the stated company
These discrepancies pose serious compliance and fraud risks, often pointing to insufficient pre-close verification.
Asset Verification Discrepancies
Banks, including TD Bank, Bank of America, Wells Fargo, and Chase, reported discrepancies where:
- Bank statements did not align with their internal records
- Balances appeared to have been altered or falsified
This emphasizes the importance of using verified third-party asset data rather than relying solely on borrower-supplied documentation.
Field Review Variance in Appraisals
Of the 16 field review discrepancies reported:
- Ten percent involved a significant valuation difference that could impact loan-to-value (LTV) ratios
- Five of the 16 discrepancies occurred in California, making it a region of interest for increased appraisal scrutiny
Enhancements to Streamline the Reverification Process
To ease the burdens of post-close reverification and improve data reliability, LoanLogics has implemented several key enhancements:
- RV Merge in LoanHD: A one-click feature that consolidates multiple documents into a single PDF, streamlining workflows and improving accuracy.
- Reverification Summary Report: Provides increased transparency and allows clients to monitor discrepancies and performance trends more easily.
- Integration with AccountChek: Enables instant reverification of financial documents, reducing turnaround times and increasing success rates.
These innovations make the reverification process faster, more accurate, and more insightful for quality control teams and auditors.
CARBN: Solving Document Issues Before They Become Defects
Our 12-Month Rolling Report shows that many of the most common defects are caused by missing documents. These include:
- Tax transcripts
- Closing instructions
- Appraisal adjustments
- Seller closing disclosures
- Compliance agreements
- Reverification documentation
CARBN helps fix this problem by identifying and resolving missing documents before funding the loan. This means fewer issues show up during post-close reviews, and audit teams can focus on checking accuracy instead of chasing down paperwork.
With CARBN, lenders can reduce delays, lower defect rates, and improve overall loan quality—right from the start.
Looking Ahead: Quality Control with Fewer Surprises
As reverification data continues to expose common failure points, lenders and audit teams gain critical insights into operational vulnerabilities. These findings, supported by automation and smarter controls, empower stakeholders to deliver higher-quality loans and reduce risk exposure. At LoanLogics, our mission is to help clients not just meet audit standards but exceed them, with better data, stronger controls, and intelligent automation driving every step of the process.
