Solving the Manual Employment Verification Headache with Cascade Technology

The mortgage industry was significantly transformed after the 2008 financial crisis by the Dodd-Frank Act of 2010. A core change was the Ability-to-Repay rule, making it mandatory for creditors to determine a consumer's ability to repay a loan in good faith. Consequently, comprehensive employment verification became a critical, non-negotiable step in the underwriting process to ensure loan performance.

Historically, meeting these requirements was a manual and burdensome endeavor, as lenders relied on in-house staff to contact HR departments by phone. This process was vulnerable to human error and limited by employer business hours, which could stall the entire loan approval timeline. Simple mistakes increased both the time and cost of the process.

Today, cascade technology offers a modern solution for rigorous compliance and operational efficiency. This "waterfall" approach prioritizes automated employment searches and seamlessly transitions to manual verification only when necessary. This evolution allows lenders to streamline workflows, verifying employment and income faster with guaranteed results.

What is Cascade Technology?

At its core, cascade technology is a sequential, multi-step verification process designed to automatically seek the most accurate employment data available before requiring human intervention. Rather than relying on a single method, this "waterfall" approach works through a hierarchy of data sources to ensure completion.

The process typically follows these specific steps:

Step 1: Automated Employment Providers

The system first queries major automated databases like The Work Number and Experian Verify for instant records.

Step 2: Secondary Networks

If data isn't found, the system "cascades" to secondary networks, including over 30 third-party providers or consumer-permissioned payroll networks.

Step 3: Intelligent Fallback & Manual Verification

If digital records are still unavailable, intelligent fallbacks, sometimes using AI to capture employer contact info, engage. Finally, if no automated data exists, the order seamlessly transitions to a manual process with a dedicated team completing verbal or written verification.

The ultimate goal of this technology is to provide a one-stop experience. Lenders no longer need to log into multiple portals or stop and restart orders with different vendors; the technology manages the entire lifecycle of the verification request until a result is guaranteed.

The Benefits of Streamlining

Adopting cascade technology offers transformative benefits that go beyond simple convenience, directly impacting a lender's bottom line and risk profile.

• Speed and Efficiency - In an industry where time is money, cascade technology delivers results with remarkable speed. True cascade systems can complete a significant portion of orders—49%—within just 12 hours, achieving up to 87% completion within two days. As lenders constantly seek ways to cut costs and increase efficiency, utilizing technology that provides upfront indicators of data availability helps streamline workflows and prevents the delays associated with traditional methods.

• Risk Reduction and Compliance - Automated checks often come with "Day 1 Certainty" (D1C) eligibility, which is critical for protecting lenders from buyback risks. We also offer an insurance wrapper for each Income+ and manual VOE/VOI report. Since third-party VOE providers receive payroll information directly from the employer's HR or payroll departments, the data is secure and significantly less vulnerable to fraud compared to manual methods, where unscrupulous borrowers might create fictitious company names and phone numbers.

• Operational Savings - By leveraging mortgage technology to handle these routine verification tasks, lenders can free up their employees to focus on more complex, troublesome files or pressing customer service issues. This shift allows staff to apply their expertise where it is needed most, rather than spending hours chasing down HR representatives for simple checks.

When Automation Isn’t Enough – The Tough Cases

While automation handles the majority of requests, not every borrower fits neatly into a standard database. The modern labor market is increasingly complex; for instance, it is estimated that as many as 14.9 million Americans are self-employed, representing a sizable chunk of the mortgage market. Additionally, "gig economy" workers often have layered employment situations that change rapidly, making up-to-date information critical yet difficult to find in static databases.

A robust cascade system shines in these scenarios by acting as a safety net. When an automated search returns no results, the system seamlessly transitions the "no-hit" files to a dedicated manual processing team. This means the lender does not need to stop the process or restart with a different vendor to get the final report.

This hybrid approach delivers unified reporting. Regardless of whether the data was retrieved instantly from a database or through a phone call by a specialist, the final output is delivered in a standardized, consistent format. This consistency simplifies the underwriter's review process, as they receive a single, easy-to-read report rather than disparately formatted documents from multiple sources.

The Guaranteed Solution

By adopting cascade technology, lenders can automate the heavy lifting, ensuring that every loan file is processed with the highest speed and accuracy available. This is where partnering with a proven leader becomes essential. VOE Services, powered by Service 1st, delivers a true cascade solution that seamlessly integrates automated database checks with expert manual processing. 

With Service 1st, lenders gain access to "Day 1 Certainty" eligibility and a unified workflow that handles even the most complex employment scenarios without the need for multiple vendors. And our insurance wrapper provides additional protection against buybacks from verification errors. Don't let outdated manual processes slow down your originations. Embrace the power of automation  to streamline your verifications and move your borrowers to the closing table faster.