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Asset Verification for MPL Secondary Markets and Securitizations

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VeriComply, headquartered in San Francisco, California, was founded by Roger Cohen in late 2015 with the goal to improve and scale the workflow processes around the documents a lender needs to assess. The company is focused on leveraging its proprietary technology to automate the entire chain of reading, extracting, and verifying data from financial documents. Cohen has 35 years of experience in the financial services industry as a consultant, a professional attorney, and a business owner. As a lawyer, he helped five companies go through the IPO process and understands the massive inefficiencies existing in the document management space.

In 2000, Cohen discovered Portford Solutions, founded by Nick and Bruce Bolton, a document management company. Its flagship product was DocuNECT, which was designed to connect business users with the information locked in documents. To achieve this, DocuNECT maps the document lifecycle to capture the document, extract the appropriate data, and distribute the data/document to third party business applications, and/or workflow and data specifications. This became the backbone of VeriComply. Cohen essentially took the underlying DocuNECT system and re-engineered it exclusively for use in the financial services industry.

Company Background

VeriComply used family and friends for the initial phase of funding. But in February 2017, it managed to raise an undisclosed amount in seed funding from private investors including John Barlow, founder of Eaglewood Capital, and John Maute, CEO of Helios AMC and Situs Holdings, a global real estate diligence firm, as well as a board member of Money360, a CRE marketplace lending platform.

The company was able to add impetus to its growth story when it brought on Roger Dickerson as President. Dickerson worked as VP of financial operations at Lending Club from 2012 to 2016. He was responsible for the entire investor operations process, which included order placement, treasury, and building out capabilities to sell to institutional investors, reporting, cash custody, loan documentation, and settlements. He oversaw funding of over $23 billion in loans during his tenure. After looking at the prototype, he knew Cohen had developed a document verification product that is better than anything available in the market.

Dickerson also brought in TJ Valenzuela as national sales manager for educating the client base and driving demand. The underlying idea was to provide verification throughout the life cycle of the loan, from creating an asset at origination level and verifying at POS for warehouse lenders and custodians to providing verification in the secondary market.

The VeriComply Process

Since its primary customers are trust companies, VeriComply acts as a sub-verification agent or document custodian. Basically, on getting the loan documents, it extracts data and compares it with loan/data tapes. Outcomes are then discussed with originators and trust company partners to remove any discrepancies. The report is then sent to the client notifying approval status. Loans are verified on various parameters and cover all characteristics of a loan: term, rates, state of origination, APR, etc. It also incorporates the borrower’s information for better analysis.

Considering this is an important cog in the selling of loans in secondary markets and securitization, automating the process gives credibility as well as integrity to the entire portfolio when it sells.

The state-of-art technology used to build the platform means it can quickly configure for multiple originators, loan types, documents, and various field verifications. Fees are charged for the configuration set up, per loan process, and for monthly storage.

Cloud Flexibility: The Difference Maker

VeriComply relies on Microsoft’s cloud offering, Azure, to provide a secured user interface that enables multiple users to work with documents. On top of that, its cloud-based deployment architecture enables users to scale quickly and undertake massive volumes of loan verifications in different verticals. By providing a secure and scalable configuration system, it responds faster to the emerging demands of the market. Moreover, it also enables the holder of the documents to redact data in documents.

VeriComply is on track to provide 100% automation, which is not currently available in the market. Its peers still rely on human-dependent sampling techniques.

Most of VeriComply’s sales are executed through its reseller partners. It has many trust companies on board and works with different originators. The company was able to process 19,000 loans in less than two and half hours for an Upstart securitization, which is a new benchmark for the industry. It is also working with mortgage diligence providers and legal firms. The firm is currently focused on the MPL industry since the concept is easier to sell, documents are more precise and clear, and set up is faster. However, it plans to branch out to other verticals and asset classes, though the point of entry will remain with markpetlace lending.

Riding the Industry Tailwind

Stringent regulations in the MPL industry coupled with longer credit cycles have led to greater scrutiny of underlying loans. Buyers in the secondary market want to make sure whatever they are buying have the least risk attached to it. Thus, there is an overwhelming need for top-of-the-line document verification.

Also in terms of storage of documents, there is a change in trend. Earlier companies used Excel spreadsheets to record transactions, but now people want to use data from the primary source so that there is no chance of manipulation. This is great news for VeriComply.

VeriComply’s Future Plans

Keeping an eye on the future, the company wants to incorporate blockchain technology for publishing legacy documents. It also wants to create a system to help lawyers create customized smart contracts. Though the industry is a long way from leveraging the full power of blockchain, the growing need to transmit information at a quicker pace is forcing companies to move toward the blockchain universe.

For now, the company wants to concentrate on creating demand for its product and raise capital to execute its plans. The company’s product has garnered a good response from the market and is on track to close with over 100 prospective client companies. VeriComply can reduce the time span of the financial services sales cycle and will help further grow the marketplace lending industry by streamlining the documentation process. Strategic funding can help it become the new standard bearer for this niche industry.


Written by Heena Dhir.


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