Marketplace lending is transforming many aspects of the lending industry. The technology platforms on which these marketplaces operate affect both the origination and the secondary market into which these loans are sold and increasingly securitized. Intuitive webpages collect borrower data, algorithms automate underwriting, providing borrowers with lower rates, better user experience and faster closings. Investors can select digital assets with filters and apply their own algorithms to earn higher returns than other asset classes.
While this first wave of Fin Tech has accelerated asset velocity, it has not created trust in the accuracy of these financial assets. The traditional approach to this challenge is to verify the accuracy of the key loan data tape elements and loan file completeness. This service is typically performed by the Document Custodian who when onboarding the documents into its system acts as the Verification Agent. The Verification Agent Certificate is issued to the warehouse lender, securitization trustee or other “economic buyer” and attests to the accuracy of the loan pool.
While this approach worked well in the paper world, several trends require a new approach which can deal with each of the following:
- Velocity. Marketplace asset velocity requires an automated solution that can keep pace.
- Flexibility. Investors want to diversify their portfolio across multiple Marketplace Lenders and asset classes, so the solution must be flexible.
- Downstream Reliance. As these assets move from warehouse lender to securitization or sale, each economic buyer needs certainty of their ownership in the asset and the accuracy of each asset.
- Cost. The costs of verifying the assets adversely impacts expense ratios of investment funds and securitization expenses.
In response to these trends, VeriComply has developed a solution that achieves these four objectives. As depicted in the diagram, here is how it works:
- Multiple Marketplace Lending Platforms Connected– VeriComply automatically pulls the data and document package from the platform
- Multiple Asset Classes Configured– VeriComply configures a Process Flow for each asset type
- Automated Processing– loan file is auto classified, validated, data compared and then QA as needed
- Certificate Issued– Certificate issued with schedules validating loan data accuracy and file completeness
Benefits. This solution offers benefits to the entire marketplace ecosphere:
- Marketplace Platforms– greater demand for assets as investors have increased trust
- Warehouse Lenders– easy integration with operations for rapid execution and reduced risk
- Investors– reduced risk, reduced costs and greater liquidity for the assets
- Underwriters– reduced diligence risks and costs and accelerated closings of deals
- Rating Agencies– reduced compliance risks and costs for reviewing assets
- Regulators– complete audit history of each asset in a securitization pool
If you want more information then complete the form on our Contact Us page and one of our sales representatives will contact you.