In our current era of rapid technological advancement, what used to be considered “tech savvy” is now the new normal.
AI is becoming more widespread and new tech developments are far more accessible than they were even 5 years ago.
While these advancements offer many benefits, they require greater heed paid to responsible practices, stricter compliance regulations, and the strategic institution of various checks and balances in order to protect against fraud.
AI is becoming more widespread and new tech developments are far more accessible than they were even 5 years ago.
While these advancements offer many benefits, they require greater heed paid to responsible practices, stricter compliance regulations, and the strategic institution of various checks and balances in order to protect against fraud.
Technology Changing Lending
In lending, compliance has always been of utmost priority.
Compliance that falls through the cracks, can results in lost money, damaged reputation, and can even come to legal blows.
While SBA lending requires the use of IRS-verified documentation, this is best practice for non-SBA loans as well.
If lenders approve loans based on fraudulent documents, they may be out of legal compliance with their regulatory bodies. This leaves them with deployed capital that was risk-assessed based on fake information.
This is a massive financial risk for any lending institution.
With increased tech capabilities, borrowers can easily manipulate important financial information on tax returns that they submit in their loan applications.
Compliance that falls through the cracks, can results in lost money, damaged reputation, and can even come to legal blows.
While SBA lending requires the use of IRS-verified documentation, this is best practice for non-SBA loans as well.
If lenders approve loans based on fraudulent documents, they may be out of legal compliance with their regulatory bodies. This leaves them with deployed capital that was risk-assessed based on fake information.
This is a massive financial risk for any lending institution.
With increased tech capabilities, borrowers can easily manipulate important financial information on tax returns that they submit in their loan applications.
How Can Lenders Protect Against AI-Generated Borrower Fraud?
In recent months, many lenders and facilitators have turned to tools like Plaid as a way to protect their organization against fraudulent bank statements.
Why stop there?
With the proliferation of AI, the technology to create convincing false tax returns or alter real tax returns is now accessible to everyone. Borrowers can manipulate documents without state-of-the-art technology or an advanced technological background.
And because tax returns are provided to underwriters by the borrowers themselves, underwriters cannot be sure the documents haven’t been tampered with. Underwriters that rely solely on tax returns to assess borrowers’ financials are putting faith in unverifiable data.
Obtaining tax transcripts through a third-party like TOD eliminates risk of manipulated tax information by obtaining IRS-verified data, not borrower‑supplied documents.
TOD’s platform also supports underwriters in easily obtaining borrowers’ signatures on IRS Form 8821, which gives lenders access to borrowers’ tax information. This integrated process makes accessing IRS-verified information simple and straightforward, all while ensuring the information being processed is accurate and unmodified.
Why stop there?
With the proliferation of AI, the technology to create convincing false tax returns or alter real tax returns is now accessible to everyone. Borrowers can manipulate documents without state-of-the-art technology or an advanced technological background.
And because tax returns are provided to underwriters by the borrowers themselves, underwriters cannot be sure the documents haven’t been tampered with. Underwriters that rely solely on tax returns to assess borrowers’ financials are putting faith in unverifiable data.
Obtaining tax transcripts through a third-party like TOD eliminates risk of manipulated tax information by obtaining IRS-verified data, not borrower‑supplied documents.
TOD’s platform also supports underwriters in easily obtaining borrowers’ signatures on IRS Form 8821, which gives lenders access to borrowers’ tax information. This integrated process makes accessing IRS-verified information simple and straightforward, all while ensuring the information being processed is accurate and unmodified.
As technology continues to evolve, so do the methods used to commit fraud.
Lenders must stay ahead of these developments by adopting robust, technology-driven solutions to protect their interests and maintain the integrity of their lending processes.
By using IRS-verified tax transcripts to underwrite loans, lenders can protect themselves against borrower fraud while also eliminating major bottlenecks in the underwriting process.
Lenders must stay ahead of these developments by adopting robust, technology-driven solutions to protect their interests and maintain the integrity of their lending processes.
By using IRS-verified tax transcripts to underwrite loans, lenders can protect themselves against borrower fraud while also eliminating major bottlenecks in the underwriting process.
Interested in exploring how TOD could change your lending process?
Contact our partnership team today to learn more!