At FormFree, we want to be wherever lenders need us, whenever they need us. In a high-rate environment like we are seeing today, lenders are counting on our revolutionary platform to protect margins by expanding credit accessibility and reducing costs to manufacture to historically underserved racial and ethnic communities. Our Founder and CEO Brent Chandler consistently emphasizes the importance of expanding the way that our industry assesses borrowers’ ability to pay (ATP) as a way to drive inclusion and equity in homeownership — and government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac are on board as well.
Drawing on feedback to the FHFA’s industry-wide request for information (RFI) released in September 2021, which outlined the enterprises’ intended actions to address the widening racial homeownership gap, both Fannie Mae and Freddie Mac have released their 3-year housing equity plans. The plans outline how each of the enterprises intends to use and promote more inclusive lending practices to make the wealth-building benefits of homeownership more accessible to underserved markets.
FormFree’s ability to assess direct-source consumer data in innovative new ways has already been adopted by the enterprises to power inclusive enhancements to the mortgage process. As one of the earliest approved report providers for both enterprises, our AccountChek® verification of assets, income and employment (VOA/VOIE) solution supports several groundbreaking initiatives, such as Fannie Mae’s positive 12-month rent payment history, Freddie Mac’s 10-day pre-closing verification and more.
Unsurprisingly, FormFree is already supporting actions that are outlined in these 3-year equitable housing plans. Here are just a couple of the ways we are able to support the enterprises and participating lenders as they tackle the racial homeownership gap:
Expanding access to sustainable credit
Making credit simpler and safer to access for everyone has been our philosophy since our founding. To accomplish this goal, we’ve continuously enhanced our groundbreaking AccountChek solution to democratize and streamline the credit decisioning process via industry-leading data retrieval, analysis and reporting. In doing so, we are helping lenders understand credit risk like never before by empowering consumers with their own data, helping lenders better understand consumer risk.
Many first-time minority homebuyers share the misconception that, to qualify for a mortgage, you must have a traditional W-2 job, an excellent credit score and a 20% down payment in hand. Enterprises already count on consumer-permissioned, direct-source VOA and VOI/E data from AccountChek to overcome these common misconceptions — allowing lenders to serve mortgage-ready minority borrowers that may have never even realized they could qualify for a mortgage. The housing equity plans indicate even more ways FormFree can get involved.
For example, Freddie Mac’s plan introduces efforts aimed at improving access to credit for diverse multifamily developers to increase wealth-building and enhance peoples’ ability to invest in and grow their communities. One of the specific 2022 actions the enterprise outlines for this goal is investigating the use of cash-flow metrics to support more nuanced evaluations of a borrower’s ability to repay. This is something FormFree has already been exploring, leveraging rule-based algorithms to analyze spending trends in consumers’ bank statements.
Reducing costs to manufacture
By enabling on-demand access to consumers’ ATP data — including asset, employment, identity, income, rent payments, credit and public records data retrieved directly from financial institutions and other authoritative sources — AccountChek has been optimized to enable speedier mortgage underwriting while improving access to credit for low-to-middle income (LMI) families and people of color. Creating a more streamlined and inclusive underwriting process is a goal for both enterprises, and FormFree is the perfect solution for lenders to get on board.
Our fully-digital underwriting solutions empower lenders to take on more inclusive lending practices by reducing the cost it takes to manufacture loans. AccountChek eliminates the need to request and re-request physical bank statements and cuts down on closing times while giving loan officers more time to do what they do best — get borrowers into homes. With the extra time and money on their hands, lenders can offer greater financial education to minority and first-time homebuyers, who generally lack the same level of financial mobility and experience as white borrowers.
FormFree products have long been democratizing the lending experience for all, and we will continue to challenge convention into the future. Lenders that want to enjoy the financial and social incentives of adopting the inclusive lending objectives outlined in the enterprises’ 3-year housing equity plans can leverage FormFree’s digital solutions to simplify the process. We have been doing this for years, and we’re just getting started!