Asset Verification for MPL Secondary Markets and Securitizations

Equity ETFs

VeriComply, headquartered in San Francisco, California, was founded by Roger Cohen in late 2015 with the goal to improve and scale the workflow processes around the documents a lender needs to assess. The company is focused on leveraging its proprietary technology to automate the entire chain of reading, extracting, and verifying data from financial documents. […]

Equity ETFs

VeriComply, headquartered in San Francisco, California, was founded by Roger Cohen in late 2015 with the goal to improve and scale the workflow processes around the documents a lender needs to assess. The company is focused on leveraging its proprietary technology to automate the entire chain of reading, extracting, and verifying data from financial documents. Cohen has 35 years of experience in the financial services industry as a consultant, a professional attorney, and a business owner. As a lawyer, he helped five companies go through the IPO process and understands the massive inefficiencies existing in the document management space.

He founded Portford Solutions in 2000 as a document management company. Its flagship product, DocuNECT was designed to connect business users with the information locked in documents. To achieve this, DocuNECT maps the document lifecycle to capture the document, extract the appropriate data, and distribute the data/document to third party business applications, and/or workflow and data specifications. This became the backbone of VeriComply. Cohen essentially took the underlying DocuNECT system and re-engineered it exclusively for use in the financial services industry.

Company Background

VeriComply used family and friends for the initial phase of funding. But in February 2017, it managed to raise an undisclosed amount in seed funding from private investors including John Barlow, founder of Eaglewood Capital, and John Maute, CEO of Helios AMC and Situs Holdings, a global real estate diligence firm, as well as a board member of Money360, a CRE marketplace lending platform.

The company was able to add impetus to its growth story when it brought on Roger Dickerson as President. Dickerson worked as VP of financial operations at Lending Club from 2012 to 2016. He was responsible for the entire investor operations process, which included order placement, treasury, and building out capabilities to sell to institutional investors, reporting, cash custody, loan documentation, and settlements. He oversaw funding of over $23 billion in loans during his tenure. After looking at the prototype, he knew Cohen had developed a document verification product that is better than anything available in the market.

Dickerson also brought in TJ Valenzuela as national sales manager for educating the client base and driving demand. The underlying idea was to provide verification throughout the life cycle of the loan, from creating an asset at origination level and verifying at POS for warehouse lenders and custodians to providing verification in the secondary market.

The VeriComply Process

Since its primary customers are trust companies, VeriComply acts as a sub-verification agent or document custodian. Basically, on getting the loan documents, it extracts data and compares it with loan/data tapes. Outcomes are then discussed with originators and trust company partners to remove any discrepancies. The report is then sent to the client notifying approval status. Loans are verified on various parameters and cover all characteristics of a loan: term, rates, state of origination, APR, etc. It also incorporates the borrower’s information for better analysis.

Considering this is an important cog in the selling of loans in secondary markets and securitization, automating the process gives credibility as well as integrity to the entire portfolio when it sells.

The state-of-art technology used to build the platform means it can quickly configure for multiple originators, loan types, documents, and various field verifications. Fees are charged for the configuration set up, per loan process, and for monthly storage.

Cloud Flexibility: The Difference Maker

VeriComply relies on Microsoft’s cloud offering, Azure, to provide a secured user interface that enables multiple users to work with documents. On top of that, its cloud-based deployment architecture enables users to scale quickly and undertake massive volumes of loan verifications in different verticals. By providing a secure and scalable configuration system, it responds faster to the emerging demands of the market. Moreover, it also enables the holder of the documents to redact data in documents.

VeriComply is on track to provide 100% automation, which is not currently available in the market. Its peers still rely on human-dependent sampling techniques.

Most of VeriComply’s sales are executed through its reseller partners. It has many trust companies on board and works with different originators. The company was able to process 19,000 loans in less than two and half hours for an Upstart securitization, which is a new benchmark for the industry. It is also working with mortgage diligence providers and legal firms. The firm is currently focused on the MPL industry since the concept is easier to sell, documents are more precise and clear, and set up is faster. However, it plans to branch out to other verticals and asset classes, though the point of entry will remain with markpetlace lending.

Riding the Industry Tailwind

Stringent regulations in the MPL industry coupled with longer credit cycles have led to greater scrutiny of underlying loans. Buyers in the secondary market want to make sure whatever they are buying have the least risk attached to it. Thus, there is an overwhelming need for top-of-the-line document verification.

Also in terms of storage of documents, there is a change in trend. Earlier companies used Excel spreadsheets to record transactions, but now people want to use data from the primary source so that there is no chance of manipulation. This is great news for VeriComply.

VeriComply’s Future Plans

Keeping an eye on the future, the company wants to incorporate blockchain technology for publishing legacy documents. It also wants to create a system to help lawyers create customized smart contracts. Though the industry is a long way from leveraging the full power of blockchain, the growing need to transmit information at a quicker pace is forcing companies to move toward the blockchain universe.

For now, the company wants to concentrate on creating demand for its product and raise capital to execute its plans. The company’s product has garnered a good response from the market and is on track to close with over 100 prospective client companies. VeriComply can reduce the time span of the financial services sales cycle and will help further grow the marketplace lending industry by streamlining the documentation process. Strategic funding can help it become the new standard bearer for this niche industry.

Author:

Written by Heena Dhir.

Asset Verification for MPL Secondary Markets and Securitizations

VeriComply document verification

VeriComply, headquartered in San Francisco, California, was founded by Roger Cohen in late 2015 with the goal to improve and scale the workflow processes around the documents a lender needs to assess. The company is focused on leveraging its proprietary technology to automate the entire chain of reading, extracting, and verifying data from financial documents. […]

VeriComply document verification

VeriComply, headquartered in San Francisco, California, was founded by Roger Cohen in late 2015 with the goal to improve and scale the workflow processes around the documents a lender needs to assess. The company is focused on leveraging its proprietary technology to automate the entire chain of reading, extracting, and verifying data from financial documents. Cohen has 35 years of experience in the financial services industry as a consultant, a professional attorney, and a business owner. As a lawyer, he helped five companies go through the IPO process and understands the massive inefficiencies existing in the document management space.

He founded Portford Solutions in 2000 as a document management company. Its flagship product, DocuNECT was designed to connect business users with the information locked in documents. To achieve this, DocuNECT maps the document lifecycle to capture the document, extract the appropriate data, and distribute the data/document to third party business applications, and/or workflow and data specifications. This became the backbone of VeriComply. Cohen essentially took the underlying DocuNECT system and re-engineered it exclusively for use in the financial services industry.

Company Background

VeriComply used family and friends for the initial phase of funding. But in February 2017, it managed to raise an undisclosed amount in seed funding from private investors including John Barlow, founder of Eaglewood Capital, and John Maute, CEO of Helios AMC and Situs Holdings, a global real estate diligence firm, as well as a board member of Money360, a CRE marketplace lending platform.

The company was able to add impetus to its growth story when it brought on Roger Dickerson as President. Dickerson worked as VP of financial operations at Lending Club from 2012 to 2016. He was responsible for the entire investor operations process, which included order placement, treasury, and building out capabilities to sell to institutional investors, reporting, cash custody, loan documentation, and settlements. He oversaw funding of over $23 billion in loans during his tenure. After looking at the prototype, he knew Cohen had developed a document verification product that is better than anything available in the market.

Dickerson also brought in TJ Valenzuela as national sales manager for educating the client base and driving demand. The underlying idea was to provide verification throughout the life cycle of the loan, from creating an asset at origination level and verifying at POS for warehouse lenders and custodians to providing verification in the secondary market.

The VeriComply Process

Since its primary customers are trust companies, VeriComply acts as a sub-verification agent or document custodian. Basically, on getting the loan documents, it extracts data and compares it with loan/data tapes. Outcomes are then discussed with originators and trust company partners to remove any discrepancies. The report is then sent to the client notifying approval status. Loans are verified on various parameters and cover all characteristics of a loan: term, rates, state of origination, APR, etc. It also incorporates the borrower’s information for better analysis.

Considering this is an important cog in the selling of loans in secondary markets and securitization, automating the process gives credibility as well as integrity to the entire portfolio when it sells.

The state-of-art technology used to build the platform means it can quickly configure for multiple originators, loan types, documents, and various field verifications. Fees are charged for the configuration set up, per loan process, and for monthly storage.

Cloud Flexibility: The Difference Maker

VeriComply relies on Microsoft’s cloud offering, Azure, to provide a secured user interface that enables multiple users to work with documents. On top of that, its cloud-based deployment architecture enables users to scale quickly and undertake massive volumes of loan verifications in different verticals. By providing a secure and scalable configuration system, it responds faster to the emerging demands of the market. Moreover, it also enables the holder of the documents to redact data in documents.

VeriComply is on track to provide 100% automation, which is not currently available in the market. Its peers still rely on human-dependent sampling techniques.

Most of VeriComply’s sales are executed through its reseller partners. It has many trust companies on board and works with different originators. The company was able to process 19,000 loans in less than two and half hours for an Upstart securitization, which is a new benchmark for the industry. It is also working with mortgage diligence providers and legal firms. The firm is currently focused on the MPL industry since the concept is easier to sell, documents are more precise and clear, and set up is faster. However, it plans to branch out to other verticals and asset classes, though the point of entry will remain with markpetlace lending.

Riding the Industry Tailwind

Stringent regulations in the MPL industry coupled with longer credit cycles have led to greater scrutiny of underlying loans. Buyers in the secondary market want to make sure whatever they are buying have the least risk attached to it. Thus, there is an overwhelming need for top-of-the-line document verification.

Also in terms of storage of documents, there is a change in trend. Earlier companies used Excel spreadsheets to record transactions, but now people want to use data from the primary source so that there is no chance of manipulation. This is great news for VeriComply.

VeriComply’s Future Plans

Keeping an eye on the future, the company wants to incorporate blockchain technology for publishing legacy documents. It also wants to create a system to help lawyers create customized smart contracts. Though the industry is a long way from leveraging the full power of blockchain, the growing need to transmit information at a quicker pace is forcing companies to move toward the blockchain universe.

For now, the company wants to concentrate on creating demand for its product and raise capital to execute its plans. The company’s product has garnered a good response from the market and is on track to close with over 100 prospective client companies. VeriComply can reduce the time span of the financial services sales cycle and will help further grow the marketplace lending industry by streamlining the documentation process. Strategic funding can help it become the new standard bearer for this niche industry.

Author:

Written by Heena Dhir.

Mortgage Data Asset Verification

mortgage data asset verification

Modernizing banking infrastructure is no easy task, but one company has found an easy way to make it happen using the latest development techniques and tools. Borrowers expect easy-to-use solutions in this era of digitalization, but to deliver inclusive lending solutions for a broader set of borrowers, it’s very important to use data that is […]

mortgage data asset verification

Modernizing banking infrastructure is no easy task, but one company has found an easy way to make it happen using the latest development techniques and tools. Borrowers expect easy-to-use solutions in this era of digitalization, but to deliver inclusive lending solutions for a broader set of borrowers, it’s very important to use data that is reliable and timely. That’s where a technologically-based solution optimized for user experience comes in. Plaid gives traditional top-notch institutions a competitive advantage by giving them access to the latest technological advancements.

About Plaid

Plaid was co-founded by Zachary Perret and William Hockey, ambitious innovators who felt that something had to be done to make financial transactions simpler and quicker, in 2012. They developed Plaid into a platform whose suite of APIs can absorb huge volumes of unstructured data and transform it into something usable.

Based in San Francisco, Plaid acts as a bridge between users’ bank accounts, banks, and third-party applications. Initially, Plaid aimed at helping borrowers access necessary information that would help them determine the right lending institution based on their qualifications and the lending institution’s requirements. The platform made borrowing easy and fast since all information was processed in real time. However, with time, Plaid started getting attention from other financial industry players, including mortgage providers, that needed real-time data verification.

To date, Plaid has raised $60 million. The latest funding round, a Series B, pulled in $44 million led by Goldman Sachs. That was in the spring 2016.

Partnership with Fannie Mae

Recently, Plaid partnered with Fannie Mae to help automate asset verification, which has been a time-consuming and tedious step in the mortgage lending process. In collaboration with Fannie Mae’s validation service, Plaid will offer a quick, simple, and more reliable way for mortgage providers to vouch and verify borrowers’ assets.

This partnership will allow Fannie Mae’s lenders access to borrowers’ financial information directly and in real time through the Plaid platform. The integration will eliminate the manual document collection and review steps from the mortgage lending process. The collaboration will also alleviate risk through Fannie Mae’s Day1 Certainty program.

According to Kate Adamson, the head of the mortgage department at Plaid, the introduction of automated asset verification in the mortgage process is a huge step from what was traditionally handled through enormous paperwork. She said Plaid are excited to have finally simplified and streamlined the mortgage application process. “Working with Fannie Mae to smooth the mortgage application process is a great example of Plaid’s mission in innovating and simplifying how consumers experience financial services,’’ she said.

Mortgage processing is one of the major components of fintech but has not yet been fully exploited. The founders of Plaid have a broader mission whereby they want to change how consumers experience financial services by using new technology to shift focus from compliance optimization to consumer operations and user experience optimization.

The Plaid platform differs from other platforms in that it focuses on helping lenders from relying on banks solely to gather and verify information. Foundations such as Freddie Mac and Fannie Mae always have to verify assets in the process of buying mortgages. Normally, the verification process involves the submission of bank statements for every account a borrower has, and in cases where there are more than one party involved, all parties must submit bank statements. The process takes from hours to a couple of days, but Plaid has reduced it to mere seconds.

To eliminate the process of uploading and downloading statements, Plaid has synced all necessary information by building relationships with over 10,000 financial institutions thus helping borrowers verify their information within seconds.

Advantages of using APIs for data verification

  • Standardized data: The relationship with over 10,000 institutions helps lenders to get standardized data that is complete and accurate. Data retrieved through APIs is also authentic and reduced the rate of fraud.
  • Automation: Since all data is synched with the platform, the process of retrieving and verifying data is automated reducing processing time. Automation also helps to reduce paperwork, which is costly in both effort and time.
  • High document integrity: Data retrieved through APIs is acquired from the source and can thereforebe trusted. Every institution wants to make decisions using updated and accurate data, which has been made possible through APIs in real-time.
  • Conversion: Initially, mortgage processing took days and was also a tiring factor that made many potential customers abandon the process in the middle. Now, the application process requires minimal effort, which leads to an increase in conversion rate.

Plaid’s key differentiators

  • An all-purpose enterprise: Most companies are dedicated to mortgage asset verification only, but Plaid is different since it offers cross-industry asset verification to ensure optimal consumer experience and satisfaction.
  • The unique drop-in module: The Plaid Link feature has boosted customer experience in many ways including ease of use, a factor that has led to the attraction of a huge number of consumers to the platform and increased conversion rate.
  • Ease of integration: Plaid is designed for developers, which makes it user-friendly. Developers can easily get started and integrate their applications without any trouble.
  • Quality integration: Having built relationships with over 10,000 banks, the quality of data processed through the platform can be deemed high quality regarding completeness and accuracy as it is updated real time.

The Future of Plaid

The company has started seeing overwhelming results with an increase in conversion rate for mortgage applications, more banks integrating with the platform, and other financial institutions planning to launch with them soon. The enterprise is also improving the technology front end and back end to facilitate efficiency from an operational point of view. Plaid is streamlining and tokenizing data as well as increasing resources, to include human resources, to sustain growth, improve efficiency, and meet market demand. The main aim of the platform is to improve customer experience by making all operations as simple and fast as possible.

Authors:

Written with Ibrahim Kihugu.

Allen Taylor