January,17 2008

Village Capital Taps Credit Management System to Increase its Applicants' Borrowing Power

N.J. based mortgage lender was able to boost borrowers' scores an average of 50-70 points using Funding Suite's credit proofreading tools.

In 2003, Village Capital & Investment was using a credit reporting system that did not offer rescoring capabilities. It began searching for a new system that would let it perform rescores and boost borrowers’ credit scores. 

The company, based in Mount Laurel , N.J. , is a mortgage lender with $228 million in annual mortgage originations.  Founded in 2003, employee-owned Village Capital & Investment, provides FHA, conforming, Alt-A, non-prime and commercial products to qualified applicants. 

Having worked with Cogent Road ’s Funding Suite credit management application at another lender, Kevin Glackin, director of credit services for Village Capital, knew he wanted to use the solution. It took the lender one day to implement Funding Suite across the entire company.

New Beginnings Financial Services is a division of Village Capital & Investment devoted to credit improvement.

“When we implemented Funding Suite, we were provided with a team of experts,” Glackin said. “We were able to keep records on anticipated score improvement and results. There was a lot of accountability on both ends, which is what our previous provider lacked.”

The company began using Funding Suite to run hundreds of custom rescoring plans for its borrowers. It was able to improve most of those borrowers’ credit scores on average by 50 to 70 points. 

“In running hundreds of rescoring plans, I can count the number of deficiencies and times we came up short on one hand,” Glackin said.

Inside the system

Funding Suite is used by more than 40,000 mortgage professionals nationwide. It’s designed to help clients qualify more applicants with its Intelligent Credit Report and protect applicant data via data suppression and computer access restrictions. For midsize and large clients, Funding Suite also offers user-level access controls and cost accounting.

Funding Suite provides credit scores from all three major credit bureaus: Experian, Equifax and Transunion. Dependent on the borrower’s needs. Village Capital will request two of the three scores or a tri-merge credit report, which uses all three repositories scores.

For one borrower, it was able to raise the credit score from a 564 and 582 to 702 and 713, an increase of more than 100 points. In this particular scenario, Funding Suite helped the lender uncover inaccuracies in the credit report and repair those errors.

The technology has also helped uncover inaccuracies in credit reports. Village Capital experiences inaccurately reported delinquency as well as stale data that may affect the borrower’s ability to qualify for a better loan. When such inaccuracies are uncovered and corrected with Funding Suite, they can result in an improvement on the borrower’s buying power, the company noted.

At the time of implementation, Village Capital began tracking Funding Suite’s accuracy levels. What the bank found was an 80 percent accuracy level on average. Because Funding Suite is based on algorithms that are constantly changing, 80 percent is generally regarded as the highest accuracy rate possible, according to Cogent Road .

“It is impossible to get 100 percent accuracy with algorithms because of the constant movement,” Glackin said. “If you get a rescoring plan that says 50 points, you can count on 40 points, and that is very accurate. What kept us using Funding Suite was the anticipated result of the software was more than 80 percent, and we were unable to find that with any other providers.

“Once we were able to find someone that could help us make the product more saleable, the end result was more sales,” he added. “The key to our success in using Funding Suite was being able to prove to borrowers that credit management software can be effective.”