How one company is addressing digital VOA shortcomings for lenders

Lenders are growing frustrated with digital Verification of Asset (VOA) services that don’t always work — and Athens, Georgia-based FormFree is listening. Now, the company is taking the data retrieval issues behind those frustrations head-on.

“There are a couple of reasons why digital VOA has a less-than-perfect success rate,” explained FormFree Founder and CEO Brent Chandler.

“The first has to do with failure points that are generally viewed as an unavoidable part of the data aggregation process, such as consumers supplying incorrect banking credentials or bank server capacity issues causing timeouts,” he said. “The second is that certain financial institutions are reluctant to share consumer financial data over which they believe they have an ownership claim. We believe both issues are solvable, and FormFree is leading that charge.”

Data aggregators like MX, Quovo/Plaid and Yodlee/Envestnet use API integrations to collect consumer-permissioned account data, including account information, balances and historical transactions, from financial institutions on behalf of fintech companies like FormFree.

While FormFree reports a high overall success rate when it comes to retrieving consumer financial data, sometimes there are hiccups in the process. Consumers don’t always provide the correct login credentials or they may fail to complete multi-factor authentication steps required by their bank.

Other problems stem not from consumer error, but from financial institutions themselves.

Not all financial institutions offer direct-source API access, which forces VOA providers to rely on screen scraping — a method that uses a computer script to navigate through their online banking site much as a human would, accessing relevant data and sending it back to the aggregator for processing. Any changes to the financial institution’s user interface can “break” the screen scraper, preventing successful data retrieval.

According to Chandler, many of these challenges could be resolved with wider access to direct-source API connections and broader financial institution acceptance of token-based account access.

Modeled on open standards like OAuth (used by Amazon, Google, Facebook, Microsoft and Twitter), token-based access lets consumers grant provisioners access to their data without sharing their passwords.

Chandler also pointed to the need for global, industry-wide standards for the sharing of consumer financial data. Groups like the Financial Data Exchange (FDX), of which FormFree is a member, are working to establish baseline minimums for API data payloads, which would greatly improve the quality and consistency of aggregated data.

Finally, Chandler said, lenders and other companies that rely on consumer financial data to make informed business decisions must encourage financial institutions to relinquish access to that data.

“Banks don’t own consumer data — consumers do,” Chandler said. “Just as financial institutions are obligated to protect consumer data, they should also share that data with third parties upon a consumer’s request. This level of consumer financial self-determination is the future of our industry and will democratize lending.”

FormFree’s Passport is the first product designed to do just that — democratize lending. A standalone offering that mortgage lenders can use no matter their existing tech stack, Passport is mobile-first technology that collects asset, employment, income, credit, identity and liens-and-judgments data — the building blocks of what FormFree calls “Financial DNA” — through a conversational interaction that takes just minutes.

Consumers maintain complete control over their Passport and can use it to instantaneously share financial data with lenders and other trusted sources.

FormFree is best known to lenders as the maker of AccountChek, the mortgage industry’s original digital asset verification solution. For more than a decade, AccountChek has offered borrowers an alternative to submitting paper or PDF bank statements when qualifying for a loan.

Instead, with the borrower’s permission, AccountChek retrieves asset data straight from the source financial institution in a process that takes only minutes.

That data is used not only to verify the applicant’s assets themselves, but also their employment and income — three essential elements of qualifying a borrower for a product, determining their ability to repay and evaluating their creditworthiness.

As a paperless solution that draws data straight from the source and presents it in an underwriting-friendly format, AccountChek has been proven to reduce delays, manual errors and fraud risk in lending.

The product is available with a 30-, 60- or 90-day refresh period, during which time lenders may update the asset report and add additional banks or accounts to the order as needed. Each report comes with a unique reference ID so lenders and quality control vendors can retrieve reports for post-closing audit purposes.

AccountChek and its imitators, once seen only at the most cutting-edge of lenders, experienced a surge in popularity in the second half of the last decade following the rollout of government sponsored enterprise initiatives like Fannie Mae’s Day 1 Certainty and Freddie Mac’s Loan Product Advisor AIM (Asset and Income Modeler), both of which encourage lenders to leverage paperwork-reducing digital capabilities.

Today, AccountChek is an integrated service available in more than 100 loan origination systems, point-of-sale solutions and reseller platforms. More than 3,000 lenders have placed nearly 4 million AccountChek orders, reporting time savings of up to 20 days per loan.

More information about financial data aggregation is available in a white paper published this month by FormFree.

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