FormFree and its technology that uses digital data to verify a loan applicant’s credit risk has been around for 15 years. The mortgage industry changes slowly, however, and it was cautious to embrace the fintech’s new approach, noted Brian Francis, FormFree’s chief technology officer.
“It takes a long time for the mortgage industry to change, [but] what we knew is that once digital data was integrated into the process, the lenders would never go back,” Francis said. “We always knew that… it was going to take time for lenders to be able to adapt.”
FormFree, based in Georgia, debuted in 2007 and currently employs 47 people. Founded by CEO Brent Chandler, the company has grown without venture capital, bootstrapped with contributions from friends and family. Its largest clients are mostly independent mortgage brokers, though there are also some depository lenders. More than 3,500 direct lenders are clients, including United Wholesale Mortgage, loanDepot, Citi and USAA, Francis said.
Francis describes the technology as a tool that helps leverage data to evaluate more fairly a potential mortgage client’s credit risk. There is no paper involved, and it reduces loan origination times by offering automated analysis and standardized delivery to lenders and investors.
“The technology that FormFree brings to the mortgage market is the leverage of direct source digital data to verify the assets, income, employment [and], in essence, the credit risk of the consumer that’s participating in the mortgage lending process,” Francis said.
FormFree delivers its technology as Software as a Service (SaaS), hosting and operating its cloud-based technology and then working with lender partners to deliver that service to their clients. Its use kicks in when the lender places a request for verification, and then borrowers grant permission to FormFree to access their financial accounts and pursue the process. FormFree acts as a third-party verification provider.
The company has recently reached some key business milestones. In February, it announced that its AccountChek product would support a first-time effort from Freddie Mac that lets mortgage lenders assess a homebuyer’s income using direct deposit data. Its source asset data provided to Fannie Mae will also be the basis of a new partnership between Fannie Mae and the Federal Housing Finance Authority meant to benefit first-time homebuyers.
Over time, FormFree has built up integrations across loan origination system points of sale and credit reseller platforms. The company also developed custom platforms that span over 150 different integrations. That means a new lender client doesn’t have to do much to integrate FormFree’s technology into its systems, Francis said.
“When we’re engaging with a lender, we evaluate, look at the systems that they currently have in place, understand if we have an existing integration for that, and then our integration team works to provision that new client with the integration,” Francis explained.
He added that the steps are “very, very simple,” focused on getting the client set up within their system and then working with them to configure a connection to the integration, as many would use existing templates.
“Most integrations are set up where [clients] can very easily add their… lender credentials for the FormFree system into the integration, and then [it] will function as it was implemented,” Francis said.
In this scenario, the software can be up and running in a matter of hours. If a new client seeks or needs a fresh integration process, the timetable can change considerably.
Assuming a lender wants to use the service and is not linking to a platform that FormFree has already integrated with, FormFree engages with the client’s platform provider to begin an integration process. API connections are key.
Sometimes, the platform provider may have to build something from scratch, though FormFree offers a standalone version as well.
“It leverages what we call our verifier portal, and allows the lender to come in, place the request for the account check verification… then that is then communicated to the consumer,” Francis said. “Once the consumer completes that, the lender is able to access the results of that verification as well as the token that gets transmitted to the underwriting systems for their analysis.”
Building an integration from scratch can be done in “a matter of weeks,” Francis said.
FormFree’s technology has been updated over time, particularly its API interfaces to allow clients to add new functionality as they choose or continue with the older option. The company has also added to its analytics in order to provide more detailed credit risk information about a consumer, which has helped democratize lending, Francis said.
“By utilizing these additional analytics about a consumer’s ability to pay,” Francis said, “we’re working with leading lenders to support a much more inclusive lending environment.”