March 17, 2021 – Fulfilling employment verification requests for employees is nothing new to any established business. Applying for credit, getting and keeping a work visa, recruiting and salary negotiation, issuing a lease; all of these (and many more) are activities that frequently require verification of employment. In most instances, of course, the employer is the only entity that can provide the information required to verify — although, as we’ll mention later, the task of actually issuing employment verification is increasingly being outsourced to third party companies.
The past year has seen a massive uptick in employment verification requests specifically for mortgages, and the result has put a strain on verifiers to fulfill their obligation. The problem is two-fold; not only are there more requests, the timeframes to complete these requests are also increasingly demanding. In order to understand why, we have to look at employment verification requests against the backdrop of a global pandemic.
The influx of requests that businesses are experiencing can be explained relatively simply. As organizations of all kinds — and especially large-scale employers — transition to a model of increased remote work, employees are taking the opportunity to spread their wings, buying and leasing new homes at unprecedented rates. What necessarily follows is a parallel rise in employment verification requests from those same employees.
Even by itself, this change represents a problem for businesses, many of which are already treading water in an afflicted, unstable economy. More verification requests means more work — work that doesn’t generate any returns. It’s not just more requests that companies have to worry about, however; it’s the nature of them.
The verification of employment process in 2021 is not what it was just 18 months ago. With respect to mortgages in particular, those processes have been overlaid with a number of increased protections against what lenders perceive as a higher risk period for borrower default. A few examples:
- United Wholesale Mortgage updated their policy to include an additional verification of employment check on closing day.
- United Home Mortgage and Caliber Home loans both changed their age of document requirements from four months to two.
- First Community Mortgage now requires verification of employment to take place within three business days, applicable to all loans.
Additional alterations to policies and processes have taken place, including the broad implementation of tighter verbal employment verifications. Lenders are taking these stances in part because other socioeconomic developments, like rising unemployment and rapid changes in government orders for businesses, are making it harder to assess borrower risk. Employment, just like the world at large under the influence of COVID-19, is changing from day to day.
All of this means that employers aren’t only being inundated with employment verification requests but are also being forced into an obligation to fulfill them faster than ever. Naturally, HR and payroll departments are expected to roll with the punches (it is, after all, their job), but the added operational output is taking a toll on businesses’ employees and finances. This is why more and more companies are looking into the benefits of outsourcing the issuance of employment verifications.
These third-party service providers, like TCC, bring expert knowledge and streamlined processes to the table. They take requests directly from the parties which need to verify and perform the legwork of obtaining and assimilating the necessary data and documentation.
If your company is experiencing the stress of an increased employment verification burden, you may be asking yourself if this is a good move. At TCC, we obviously want you to believe that it is — but we also want you to do what’s best for your business. At the very least, this means doing due diligence before contracting with a third-party verification provider. If in doubt, ask these questions:
Will this company value and protect my employees’ privacy?
A quick think back to the huge data breach at Equifax in 2017 paints a picture of what’s at stake regarding information and data security. Even if you’re not familiar with indicators like encryption types or confirmation processes, you can’t go wrong by refusing to sign on with a company that fails to convince you it takes privacy seriously.
Are the services offered up to the standard I need?
Automated answers to requests, digital tracking of on-going requests, fast turnaround times, one-click responses — features like these are the least you should expect from an employment verification issuer. Make sure the provider you choose has the technology and experience to come through on their promises.
Could this come back to bite me?
Any new relationship inherently constitutes a threat vector. To mitigate the risk of anything going wrong down the road, you should feel confident that your employment verification provider is totally compliant with state and federal regulations. Preferably, you don’t just get compliance, but transparency as well — a good provider will differentiate itself by thoroughly demonstrating how it will keep you compliant regarding employment verifications as well.
Dealing with employment verification is just business, and it has to be done. The bottom line is that whether you keep it in-house or decide to shop for a third-party service, you want a solution that’s reliable, secure, and minimally disruptive to other business processes. That solution may look a little bit different for every company, so if you’re unsure of what’s right for you, don’t be afraid to reach out.