Employment Verification: 5 Steps to Avoid the Fictitious Employer Scam

Employment Verification Fraud AlertJun. 8, 2018 – 

Recently Fannie Mae issued an alert to Mortgage Lenders and Servicers related to potential fraud schemes in Southern California, Los Angeles County.  The alert centered around a scheme involving misrepresentation of borrower employment. Fannie Mae was unable to confirm existence of of 34 entities / businesses that were listed as an applicant’s place of employment.

Fannie Mae lists what lenders can do:

"Verify that the borrower’s place of employment actually exists and obtain supporting documentation.”

Here are 5 steps you can use to button up your mortgage lending operation to avoid the fake employer scam.


Step 1: Use an automated service to complete the employment verification.  Vast databases of payroll information exist where employee information is available directly from the employer, provided through a trusted 3rd party provider, such as 
The Work Number®.  Automated employment verification services can be purchase online or, more conveniently, through a reseller such as Credit Plus: 

"Employment verifications submitted through Credit Plus go directly to The Work Number so there’s no waiting for the VOEs you need. The Work Number, a solution offered through Equifax® Workforce Solutions, is the largest collection of payroll records contributed directly from employers. Its database houses employment records from thousands of employers nationwide. This information is updated every payroll cycle, so you’ll always receive the most up-to-date information possible."

Click the Credit Plus logo to learn more:


Step 2: Validate the borrower provided employer phone number.  If the employer does not contribute payroll data to an automated service you should validate the borrower provided phone number before you make the call to the employer. There are online search options that can be utilized to validate an employer's phone number, such as: 

 

Step 3: Check out other sources.  

  • Perform a Secretary of State business license lookup
  • A screen shot of the company's website or a Yellow Pages listing
  • Order a business report (such reports are sold by Credit Plus)

 

Step 4: Show your work.  Document your research with a screenshot attached to the loan file.

 

Step 5: Consider hiring a vendor to perform verification of employment for your business. Employment Verification can be purchased through Vendor Surf partners Credit Plus, IE Settlement Services or NCS. The product is typically referred to as a “manual” or “verbal” verification of employment. The vendors who perform verification of employment have built the employer validation steps into their process and automated workflow. These are efficient and smart processes that may lead to a cost save, allowing your processor to focus on more value added activities.  These resellers also provide other verification services, such as address verification, income verification, identity verification and asset validation. Click the images below to learn about the verification services provided by Vendor Surf partners.