Advancing AI In Mortgage Lending

VeriFast was launched in 2019 with the mission to simultaneously empower consumers to obtain the services they want and streamline back-office processes for the businesses delivering them. Today, VeriFast automates decision making for mortgage pre-approvals and underwriting, tenant screening, title companies and other verticals. We talked to the company’s Chief Revenue Officer Rob Strickland about all things mortgage lending and here’s what he said:

Q: How did you get into the mortgage business?

ROB STRICKLAND: After getting my MBA, I targeted working in the fast-paced technology sector.  I first spent five years working at AT&T in sales and marketing delivering solutions for Fortune 500 clients.   I moved to New Jersey in the late 90’s to cut my teeth in the software business working at a small but innovative boutique software firm named PCSI.  We had some great successes but the parent company mismanaged the finances and after my third year we actually went bankrupt.  This unfortunate event opened the door for 10-20 PCSI employees to move to Palisades Technology Partners, an upstart mortgage LOS dedicated to building the first web-based, rules based, digital loan fulfillment platform. 

Because of the high technology costs in the early 2000’s, our target market was top 25 lenders, so I got great experience solutioning for complex multi-channel lenders, and our team dynamic was all about out-thinking the competition and exceeding customer expectations. 

Fast forward almost 20 years, and I joined VeriFast to continue the digital workflow journey from a different angle.  VeriFast is a Fintech on a mission delivering the only full suite of digital verification analytics that plug into a lender’s systems with a single API.  Our solution collects and enriches direct source borrower financial profile data in minutes to streamline workflow for all parties involved.

Q: How has the mortgage business changed since you first entered the space?

ROB STRICKLAND: For hundreds of lenders, the core mission has remained the same as new challenges continually surface.  The bottom line is digital data driven workflow is foundational to driving efficiencies in and costs out.  Many lenders are still complicit in their adverse relationship with paper-based manual processes where “check the checker” still rules. 

What I mean is, senior leadership at lenders must recognize the value of digitization if they are to survive and thrive.  Digitization is the panacea to addressing ever emerging compliance requirements, adapting to fluctuating interest rates, and managing the onslaught of integrations necessary to connect to high-value partners.

Post 2008-2009 two key changes happened fairly quickly in sequence.  First, the mortgage meltdown forced regulators to take action adding key rules to protect consumers from abuse.  These changes were hard to implement with monolithic brittle platforms.  The follow-on second movement was the emergence of digital technologies and “Fintechs” to streamline the consumer experience, and increase time to market.  While the majority of investment was spent on customer facing apps, firms like Palisades understood the mortgage fulfillment ecosystem was a more complex set of inter-connected processes represented by interdependent teams in the front, middle and back office.  Connecting these teams through real-time digital data and transparent event-based workflow continues to be the “home run” lenders should be seeking.

So, while regulatory rule changes, interest rate hikes and even pandemic events are inevitable, the ongoing mission should always be to use digitization to seamlessly connect disparate pieces of the mortgage ecosystem to streamline operations.    

Q: There is a lot of discussion about Consumer Permissioned Data, can you explain what that is and how it relates to the industry?

ROB STRICKLAND: This key theme of digital data is powerful.  With the advent of open finance as  a global movement where thousands of banks modernize their back office systems with secure open APIs, allowing consumers to share their financial health in real time, to secure the services they want and need.  The significance of this movement cannot be overstated. 

Empowered consumers who give permission to view and analyze their financial data in real time can be approved for credit cards, car loans and mortgages in short order.  Further, the byproduct for lenders, GSEs and investors is streamlined workflow, automated compliance, digital audit trails and massively reduced labor costs. 

In essence by allowing consumers to share their financial picture in minutes, the entire approval ecosystem starts with digital data at the outset leading to data driven workflow across the interdependent stakeholders and processes. 

Q: How can Verification Analytics help the lending ecosystem right now?

ROB STRICKLAND: Borrowers who choose to take control and share specific banking, payroll, digital KYC data with lenders and landlords can quickly secure the home of their dreams.  

Open finance opens the door to what we term “Precision Decisioning” where borrowers transparently share their full financial picture with all income streams “detected” and categorized to maximize their ability to pay in the eyes of lenders.  Digital verification analytics delivers serious benefits for the mortgage industry.

First, borrowers can qualify for pre-approvals in minutes at lower risk to lenders.  By simply inputting their bank or payroll credentials or uploading bank statements, they activate the process with results in minutes and reduce aggravation and labor costs in the process.

Second, lenders can verify multiple financial data elements using rules-based calculations and workflow, eliminating paper and low value manual labor throughout.  Costs go down as customer satisfaction goes up.

Third, risk is eliminated as “ground truth” direct source data is used to accurately capture all relevant income streams to qualify borrowers against pre-defined thresholds and guidelines.  Manual errors and consumer fraud are extricated from the equation.

Lastly, with up to 40% of the U.S. population garnering side hustle incomes, it is crucial to assure this revenue is counted in their favor.  The combination of open finance APIs and advanced AI data detection technology is foundational to creating greater inclusivity while spurring industry loan volume growth.  It levels the playing field for so called “invisible consumers” who may lack traditional W2 income pay. 

Q: How should Fintech’s help lenders thrive in any market cycle going forward? 

ROB STRICKLAND: We think a Fintech’s missions should focus on adding value where gaps and pain exists within the loan manufacturing process.  Fintech’s have the luxury of thinking “outside the box” to continually challenge the status quo, and that is uniquely important during this down market period.  Specifically, we work with clients to clearly document process flows to transparently uncover points of friction and then solve for them. 

Our technology approach is to deliver “plug n play” modular API-based solutions that automate cumbersome processes, integrate quickly into existing platforms and deliver a high Return on Investment.  As an example, we addressed the challenge of user adoption by simplifying the user experience and offering live support for customers at key “moments of truth” to complete the transaction successfully. 

Lastly, Fintech’s should be delivering new solutions in 15-30 day sprints helping clients inject more innovation and automation into their enterprise operations more quickly. 

Describe the value proposition behind the services at VeriFast?

ROB STRICKLAND: VeriFast offers a holistic digital verification analytics platform with multiple layered direct data sources for banking, payroll and tax plus digital biometric KYC validation to combat fraud.  Our multi-source approach assures superior coverage and data accuracy delivered from a single partner and one API.  We are the only provider including live support to help customers complete the process. Our clients are enjoying 90% completion rates digitizing data and calculations, while activating seamless downstream workflow.   Additionally, to maximize inclusion, we provide a bank statement upload capability with numerous QA innovations to assure data is ingested and classified correctly and quickly. 

Most recently we launched our Underwriter Transaction Module in support of self-employed borrower lending, which automatically generates an accurate cashflow using up to 12 months of bank statement or direct source data.  This solution saves between 10 – 20 hours of valuable processing and underwriting time and compresses the closing cycle by eliminating the back and forth “paper chase” between lender and borrower. 

In short,  unified platform bundles all verification analytics in one customer journey and a single API to build a complete borrower profile in as little as five minutes.  Working with VeriFast, lenders can eliminate significant costs and risks associated with multiple integrations, while focusing limited resources on continual innovation across new use cases.  

Q: What advances can we expect from VeriFast going forward? What’s next for the company?

ROB STRICKLAND: VeriFast has a lot of exciting things in the works. In 2023, we will continue to expand our list of data sources supporting new use cases across various verticals. Currently, we deliver for numerous mortgage and proptech customers  in the U.S. and Canada, but we are onboarding new customers from small balance and commercial lending, as well as title settlement and large scale marketplaces in need of anti-fraud measures.      

We also expect to work with government entities focused on moving to cashflow underwriting to drive inclusivity for underserved markets.  We are actively integrating with various LOS/POS providers and plan to accelerate that trajectory.  And lastly, we believe that our unique approach has a global appeal as we are engaging prospects in Europe, Asia and Australia.  There’s a lot to look forward to, and we’re just getting started.

INSIDER PROFILE

Rob Strickland is the Chief Revenue Officer of VeriFast, the AI-powered “One Stop Shop” Verification platform that automates financial analysis, employment verification and digital ID with a single integration. With more than 20 years of experience in the mortgage and fintech industries, Strickland’s knowledge runs deep on topics related to: business strategy, optimization and development, market differentiation and API capabilities. As CRO, he leads company Go-To-Market strategy, defining key competitive landscapes, analyzing value creation levers and positioning differentiated market messaging. Strickland oversees adding more digital validation data sources, improving user experiences, expanding API capabilities and delivering the industry’s only underwriter transaction validation module. He continues to execute against an extensive product roadmap, focused on delivering market leading outcomes.