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How Income Verification Undermines Lending Efficiency

Picture of Jamie Lovell, COO
Every lending department has a step that quietly drags everything down.
It’s not the application. It’s not underwriting.
It’s income verification.
 
Seems straightforward—collect a few documents, verify, move on.

 

But between the request and the upload, friction builds:
  • Borrowers upload the wrong file.
  • Staff miss the submission.
  • Clarification emails stretch for days.
  • Loans sit idle with no one realizing why.
 
Multiply that across your pipeline, and you’re not just losing time.
You’re losing funded loans.

Where the Breakdown Hides

When income documents are missing or incorrect, the fallback is always the same:
Follow up. Wait. Re-explain. Repeat.

 

A borrower uploads a paystub to a shared folder.
A processor checks it—something’s off.
A new request goes out. The borrower is confused.
Another file comes in. Still not right.

 

The process stalls. And no one has visibility unless they go digging.

 

This isn’t a tech issue. It’s a coordination issue—made worse by the fact that income verification often happens outside the LOS, on systems not built to manage it.

What Lending Departments Feel (Even if Reports Don’t Show It)

Income verification rarely appears in dashboards as the reason a loan was delayed. But ask any lender, and you’ll hear it’s the step that slows everything down.
  • Borrowers stop responding after silence.
  • Staff spend hours each week sorting files and double-checking what’s still missing.
  • Leaders see a growing lag between “approved” and “funded”—but not the reason why.

 

These are real costs. They don’t show up in charts, but they erode efficiency, trust, and morale.

The Hidden Time Drain

In one case, a credit union’s HELOC took over 25 business days to fund—not because of credit concerns, but because a W-2 was missing and no one caught it in time.

 

Another loan sat in limbo for 3 full days, simply waiting for someone to confirm receipt of a file.
These aren’t edge cases. They’re symptoms of a broader structural issue:
 
Income verification happens off-platform, and that disconnect slows everything down.

Why It’s Worth Solving

This isn’t just about shaving hours off a task. It’s about protecting your team’s time, your borrowers’ trust, and your institution’s ability to deliver. Fixing income verification doesn’t require a new LOS or a staffing overhaul. It starts by recognizing where friction hides—and how a small, unmanaged task becomes a systemic slowdown.

 

If your team spends more time chasing income docs than closing loans, it’s time to look closer.