Ben Eisen
speaker
1,467 appearances
35 recordings
1 series
first heard Jul 2017
last heard Nov 2024
Ben Eisen’s voice in public audio — every appearance, attributed to the second.
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Appearances
WSJ Your Money Briefing · Buying a Car: Some Dealerships Inflate Borrowers' Income · 31 Dec 2019
podcast
Yeah, so income verification is literally the practice of requesting documentation or calling up the borrower to make sure the amount that's stated on the application is correct.
So if my credit application says that I make $60,000 a year, do I have pay stubs to back it up?
Do I have W-2s to back it up?
If the lender calls me, is that the number that I would say?
And that happens less and less.
We did an analysis of public loan data in some of these loans that get wrapped up into bond deals and found that 7% of loans in the pools that we looked at had income verification.
That means that in only 7% of the cases, is there really any effort made to- So 93% had no verification.
Right, exactly.
Oh, wow.
There was no effort beyond the actual stating of the income to verify that that number is correct.
That is really what happens.
And you are starting to see that early payment defaults, they've been ticking up over the last few years.
And that is defined as a loan that goes delinquent by two months or more.
within the first six months of the loan.
So think about getting a car loan that really you can't afford.
You're going to stop paying on that pretty soon after you buy the car.
And so early payment default can be one kind of signal of fraud in the application process.
I mean, I think we should be clear that it's not as if there's no regulation of car dealerships here.
The sort of main regulatory body for these types of issues is the FTC.
And they have actually brought cases.
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