Human Resource teams have had something of a break in recent years when it comes to responding to income & employment verification requests. With interest rates at a two-decade high in the fall of 2023, not many employees were in a rush to take on loans for new cars or homes. All this is about to change as the Federal Reserve cut its interest rate by half a percentage point in September. Is your HR team ready for a wave of refinancing-related verification requests?
Lower Interest Rates Equal Higher Mortgage Refinancing Applications
According to the Mortgage Bankers Association, mortgage rates plummeted in August to their lowest level in more than two years, causing mortgage applications to surge 17 percent due to homeowners seeking to refinance. Borrowing costs are expected to come down further as the Federal Reserve interest rate cuts settle in with more expected before the end of 2024.
Why does this matter to employers? An estimated 4 million loans are waiting for interest rates to hit 6 percent before refinancing. Some economists believe the number could be closer to 5 million loans. This could result in an avalanche of work for HR teams who will be responsible for fulfilling the income & employment verification requests that mortgage applications, including re-finances, create. For large employers, this could put HR teams in an unmanageable position, taking their attention away from day-to-day responsibilities just to respond to the mountain of verification requests from lenders looking to confirm an employee’s loan information.
Protecting the Employee Experience
Employers may view this as a simple problem of time and workload that will sort itself out once the refinancing wave has passed. But there is more at stake than the additional workload for HR teams. Failing to respond to a verification request in a timely manner could forfeit approval of an employee’s loan application, with their employer squarely to be blamed. Furthermore, the increased workload could lead to increased mistakes, such as providing incomplete or inaccurate information and causing more delays, or running afoul of the Fair Credit Reporting Act by failing to obtain employee consent or by providing data to unverified requesting parties.
There is a lot at stake when it comes to verification fulfillment, and these pitfalls will become increasingly more common as the number of requests increase due to falling interest rates.
Finding the Right Verification Solution for Employers
There are several options for employers to offload the work of verification fulfillment, but not all solutions are made equal. It can be a common experience for many employers to have a significant amount of verification work come back their way when their partner is unable to solve unique scenarios or provide the right data to a requester. Furthermore, having easy access to all the data and quickly confirm employee consent is a necessity not all verification fulfillment providers can offer.
Experian Employer Services designed its award-winning income & employment verification fulfillment solution for employers to eliminate 100 percent of the workload. Our verification team understands the challenges for HR teams beyond responding to verification requests, and how important it is to rely on a fast and secure system.
Our solution also offers a few client-favorite features designed to address unique scenarios employers or industries face:
- Public Service Loan Forgiveness Verification:Through our new verification portal, Experian Verify, you can verify eligible applicants for the Public Service Loan Forgiveness program by looking at their employment and income status.
- Customizable Employer Letters and Templates:Your team can access and create customizable letters and templates to increase productivity and employee self-service.
- Signatures:Rather than signing employment and income verification documents one by one, our innovative solutions allow you to add secure digital signatures to paperwork to save time.
- Expanded Wage Types:With Expanded Wage Types, employers can provide more information about their employees’ pay and income. With more detailed information, employers can reduce the chances of being contacted by verifiers looking for more information.
If you’re interested in preparing your HR team for the great refinancing wave coming as interest rates continue to fall, schedule a demo of our solution today.