Equifax Launches Income Verification System

Lenders across the country are trying to build their own versions of the evolutionary, if not revolutionary, Rocket Mortgage.

But there’s one problem. Unlike in the U.S. where automated income/employment verification services are already available, Canada hasn’t had a good solution.

That has now changed. Equifax has formally launched Verification Exchange, a product it’s been piloting since May.

In short, Verification Exchange electronically “verifies someone is working where they say they work, and that they make what they say they make,” says John Russo, Equifax’s VP, Legal International Workforce Solutions, & Privacy Officer.

By the end of this quarter, Verification Exchange will let lenders automatically verify both basic employment information and detailed compensation numbers via an API.

“We believe it is a one-stop solution for income and employment verification,” Russo explains. “We worked with OSFI in development of this product and solicited feedback from OSFI in its creation…We believe it’s in line with the spirit of regulations and guideline B-20.”

He stopped short of saying it was OSFI compliant, however, so users will have to get their own legal opinions if they want to replace their processes (of collecting pay stubs, T4s and employer letters) with this solution.

The benefits of this technology are obvious. It is:

  • Instant
    • Verification takes a few seconds, which means lenders can conditionally approve borrowers online while they wait
  • Convenient
    • Applicants can avoid the hassle of requesting job letters from their employers (although lenders may still call the employer as extra verification)
  • Fraud mitigating
    • It’s “difficult to falsify the data since we’re getting it directly from employers,” Russo said.

But Equifax has gaps to fill. For one thing, its coverage is small (less than a half million Canadians are in its income database). The income/employment of most Canadians can’t be verified by Equifax because the company doesn’t get data from their employer or payroll company.

That said, “80% of Fortune 500 companies in North America contribute to this database,” Russo says. “We’re looking to cover almost every employee in Canada [eventually].”

In the meantime, if Verification Exchange cannot confirm an applicant’s data, Equifax can do so manually within a business day or two.

Secondly, the system is not yet a reliable source of self-employment data. Equifax says it’s working with the Canada Revenue Agency to obtain borrowers’ tax information, which could address this limitation. (Other providers are also in talks with the CRA.)

In Sum

Once coupled with automation like asset/down payment verification (which the company is working on), the system will be able to support lenders who want to fully automate their approval process. Someday, it’ll be routine for customers to visit a lender’s website, enter their data and get approved (with a rate hold) in seconds.

We know lenders are building such systems. The question is, will mortgage brokers be able to offer this convenience too? If the likes of D+H, Newton and MortgageBOSS are smart, they’ll make sure brokers can.


For more information on Verification Exchange visit:
https://www.consumer.equifax.ca/business/income-and-employment-verifications

  1. Hi Rob!
    Given the latest security breach at Equifax, I’m not sure I’m happy to give them (and hackers, eventually) access to credit history, income and assets data at the same time. Are you?

    Thanks for your good job!

    1. Thanks Phil,

      Some folks will certainly be nervous about Equifax having more of their personal data, but it seems inevitable.

      Going forward, the company will be under a whole new level of scrutiny from lawmakers, regulators, lawyers and consumers. If they’re breached again, then:

      1) Equifax will experience severe regulatory and punitive consequences;
      2) Income data would be the least of my worries (relative to the other more sensitive info hackers would get).

    1. Hey David, It’s early days as V.E. was just formally launched, but Equifax is already negotiating with “many” different players in the broker channel. I know at least one broker lender who’s on board, as well as two insurers. Expect additional announcements later this year.

  2. Finally the lender will be able to decide it much faster.With all due respect the data is stored on a server.There is always a threat of misuse or stolen identity.
    I believe the future of getting a mortgage in Canada will be matter of same day. Keep us posted.

    Cheers!

  3. We already ran into this at General Motors, using this interface is the only way to get the equivalent of an “Employment Letter” we were charged $50.00 to join. So it has indeed begun.

  4. This will be amazing if it all works out like the article says, at the very least we could potentially provide an approval conditional upon verbal. Which speeds things up tremendously.

  5. Hold on – how can the Government of Canada, Canada Revenue Agency, or my employer agree to give my confidential personal tax information and my income to a private company to sell for profit? I would like to see how the Office of the Privacy Commissioner of Canada would rule on this, though personally I would like to see them shut this down immediately.

    There is no chance that the majority of Canadians would agree to their income and tax information being provided to Equifax. Our debts are reported to Equifax, which I get as that is the lenders information and in some form we provided consent. Equifax does not have the right to access our personal information in order to create profit for their company.

    This sounds like something our finance minister Bill Morneau and his company, Morneau Shepell would be fully on board with, though this clearly appears to me something that contravenes our rights and privacy as Canadian citizens. Most troubling is even the consideration that Equifax would have access to Canadians private income tax information.

  6. One other item I will add – to allow readers to have more information to decide if they think it is a good thing for the Canadian government to allow Equifax to have access to their personal income and tax information, here is a link to a very good article on the subject posted January 30th, 2018 in the New York Times, Financial Post:

    http://www.nationalpost.com/fire+equifax+your+employer+mine+just/16901004/story.html

    Again I will mention, does this not seem like something Morneau Sheppell and our finance minister, Bill Morneau, would fully support?

  7. This system could be a very practical and real time saver, however, we must be certain the approval of the files remains under the control of mortgage brokers to be able to analyze and, to avoid fraud and allow the verification documentation provided by the customers moreover, the consumer should also take advantage of this program and sign up with Equifax and monitor their credit status and receive alerts once their credit being looked at by someone without there consent.

  8. Actually the premise of Equifax’s value proposition is the opposite of what you stated. Equifax will be selling this program to the bank executives, not to the public nor mortgage brokers, for its’ own profit. Neither brokers, nor branch staff or underwriters, will be in control or analyzing Equifax’s results – which is the point of this service. If, after considering that you are OK with your personal information and income tax records being given to Equifax to sell, then so be it. I personally have a problem with my information being given out freely to a company to sell.

    As for signing up for Equifax credit monitoring, this is a sales pitch based on fear – and I would encourage you not to do so. This is signing up for a steady drip from your bank account of $16.95 each month, (plus tax) each month to Equifax for an event that statistically you have a better chance of winning the lottery than it occuring to you. If your are currently doing so, it would be in your best interest to stop.

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