In the wake of the COVID-19 pandemic, multifamily businesses have seen a significant increase in fraud attempts, particularly as it relates to income and identity. Research from NMHC found that approximately 71% of multifamily professionals surveyed have seen an increase in fraud in the past year. This is especially true on the higher end of the market where individuals lie on applications about income or employment in order to get into the apartment they want

Currently, it’s very easy to go online and create fake pay stubs or new identities that will help individuals get approved that may not meet all of your requirements based on their actual credit history and income. In the past it has been time consuming and/or costly to run background and income checks on applicants. So the question arises how in-depth your screening process needs to be?

When it comes to screening potential residents, it’s not enough anymore to run a simple credit check and call it a day. While a standard credit check can provide important data about the applicant, they only provide a narrow view of the risks that may be associated with the lease. With the wealth of accessible data available today, properties can do much more to avoid bad debt risk and reduce fair housing liability.

This isn’t to say that properties should allocate undue resources to running NSA-style investigations on every applicant who comes through the door. Rather, communities should establish specific criteria that are appropriate for the property and then use tools and automations to ensure those criteria are applied equally to every applicant. The right strategy, applied consistently in each step of the screening process, i.e., gathering, evaluating, and approving applicant data, can be just as effective as more expensive, invasive options.

Collecting the right data

When choosing a screening tool, make sure it has the flexibility to meet your properties’ specific requirements. Additionally, you want to make sure that the process is seamlessly integrated into the application process so it isn’t cumbersome for the applicant or site teams. When verifying residents, your tool should be evaluating information such as income, payment history, debt, and any accounts they might have in collections

Vetting data

Once the information is provided, it should trigger the verification of income, identity, and whatever factors you choose to investigate. Incorporating automations into the application vetting process results in properties approving or denying applications. Many screening tools will use algorithms to allow you to establish proprietary scoring ranges and set pass/fail or recommended actions. For example, the system, not the agent, will determine if a credit score merits an adjustment to a security deposit, or whether a criminal charge merits an automatic fail. This is the best way to keep fair housing liability to a minimum.

Approving applicants

With the right tools in place, this is the easiest step in the process. When your resident criteria has been implemented into your verification tools, it is very apparent who should be approved, who should be denied, and who should be given a conditional approval. When you incorporate automations and AI into these types of processes, it’s imperative that you trust and follow through with the recommendations.

To learn more about how Entrata tools like ResidentVerify, PreciseID, and Verification of Income can improve fraud detection while not slowing down the application process, request a demo today.