Residual Income Knowledge Index Archives

ATHENS, Ga. /ScoopCloud/ -- FormFree® today announced that Inclusive-Finance-as-a-Service platform GreenLyne has enhanced its ability to help lenders identify home financing opportunities for underserved consumers with its adoption of FormFree's Residual Income Knowledge Index™ (RIKI™).

GreenLyne technology enables mortgage lenders to finance borrowers who have the capacity to support a mortgage but typically would be deemed ineligible for home financing. FormFree's patent-pending RIKI (pronounced "RIH-kee") is a risk-analysis model that analyzes cash flow and residual income to ascertain a more complete picture of a borrower's creditworthiness than traditional credit scoring alone. By incorporating RIKI into its Automated Second-Look Engine, GreenLyne can more precisely and fairly predict a borrower's risk of default and thereby set appropriate loan terms that balance profitability for the lender and affordability for the homebuyer.

Because standard underwriting models are unable to assess default risk for borrowers who have thin credit files or FICO scores below 660, these borrowers are often excluded from housing finance. According to the Urban Institute, more than 39 million Americans have a credit score between 600-660 and are mortgage-ready, yet struggle to obtain a mortgage.

"Too many consumers who have a steady income and dutifully pay their bills on time are being excluded from homeownership because mortgage lenders haven't had tools to assess their ability to pay. In effect, these consumers are being punished for an industry's weakness, which is profoundly unfair," said FormFree Founder and CEO Brent Chandler. "We are proud to provide GreenLyne with RIKI's residual income analytics so it can pave a more inclusive path to homeownership for a large cohort of Americans."

"GreenLyne's fair lending credit underwriting innovation provides a precise path to safely and soundly expand homeownership for a large, unfairly underserved segment of Americans," said GreenLyne CEO Syeed Mansur. "We are delighted to forge a deep partnership with FormFree, which couples a new era of consumer financial data with breakthrough advances in high accuracy credit risk prediction and fair underwriting that optimally balance affordability for borrowers and profitability for lenders."

About FormFree®

FormFree helps lenders understand credit risk like never before with its patented Passport® product, which opens doors to more inclusive credit decisioning by revealing each customer's true ability to pay (ATP®), and patent-pending Residual Knowledge Income Index™ (RIKI™), an innovative method for evaluating consumer creditworthiness based on residual income analysis. For more information, visit https://www.formfree.com/ or follow FormFree on LinkedIn.

FormFree® today announced that Inclusive-Finance-as-a-Service platform GreenLyne has enhanced its ability to help lenders identify home financing opportunities for underserved consumers with its adoption of FormFree's Residual Income Knowledge Index™ (RIKI™).

Related link: https://www.formfree.com/

ATHENS, Ga. /ScoopCloud/ -- FormFree® today announced the general availability of its Residual Income Knowledge Index™, or RIKI™. RIKI is an innovative method for measuring consumers' Ability-to-Pay (ATP®) for mortgages and other loans based on monthly income and spending. When paired with traditional credit scoring models, RIKI offers lenders a more complete understanding of consumers' creditworthiness and creates homeownership opportunities for those with little to no credit history.

RIKI's knowledge-engineered rules are informed by human financial experts and are designed to help lenders mitigate risk through a more nuanced understanding of borrowers' spending habits and ability to save. With a borrower's consent, FormFree calculates residual income and RIKI by analyzing bank and credit card transaction statements procured directly from the source financial institutions. By giving lenders a better understanding of a borrower's discretionary funds after mandatory monthly expenses (e.g., rent, utilities, loan payments), RIKI helps lenders extend credit more inclusively and confidently.

In July, San Diego-based Guild Mortgage (NYSE: GHLD) became the first lender to pilot RIKI with its launch of Complete Rate, a program that provides a more inclusive path to homeownership by allowing consumers with no credit score or credit history to opt in to RIKI's assessment of their financial data for a chance to qualify for a lower interest rate, lower fees or both.

"Our Complete Rate program, powered by FormFree's RIKI, helps remove a key obstacle faced by many first-time homebuyers and has allowed Guild to better serve consumers in a challenging interest-rate environment," said David Battany, Guild Mortgage's EVP of capital markets. "By supplementing consumers' credit scores with analysis of their real transaction data, our groundbreaking approach democratizes the credit decisioning process for those who need it most - historically underserved racial and ethnic groups, consumers with thin credit files and people without traditional full-time jobs."

RIKI is now available to banks, credit unions and independent mortgage banks (IMBs) across the United States. The rule-based algorithms driving the now-public feature have been painstakingly engineered without blackbox machine learning and tested to ensure RIKI cannot develop unintended prejudices. FormFree's cash flow analysis also automatically identifies and disregards outliers in a consumer's income and spending history to ensure that occasional windfalls, money transfers or large purchases do not affect ATP estimates.

"Traditional credit scoring systems are designed to reward a very specific type of borrower: one with a W-2, a strong credit history and a good debt-to-income ratio. Unfortunately, these risk determination methods bar countless mortgage-ready Americans from affordable homeownership," said Brent Chandler, founder and CEO of FormFree. "RIKI rewards something more basic and uncontroversial than credit history: simply making ends meet. When considered with a credit score, insight into consumers' ability to pay and save adds an extra layer of certainty when determining borrower risk."

To learn more about RIKI and request a personalized demo, visit https://www.formfree.com/residual-income-knowledge-index/

About FormFree®

As the industry's go-to provider for direct-source VOA and VOI/E data, FormFree helps lenders understand credit risk like never before. Our patented AccountChek® and Passport® products open doors to more inclusive credit decisioning by revealing each customer's true ability to pay (ATP®). We have completed over $3 trillion in loan verifications that help lenders lower operating costs while improving the borrower experience. For more information, visit https://www.formfree.com/ or follow FormFree on LinkedIn.

FormFree today announced the general availability of its Residual Income Knowledge Index, or RIKI. RIKI is an innovative method for measuring consumers' Ability-to-Pay (ATP) for mortgages and other loans based on monthly income and spending. When paired with traditional credit scoring models, RIKI offers lenders a more complete understanding of consumers' creditworthiness and creates homeownership opportunities for those with little to no credit history.

Related link: https://www.formfree.com/

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Tag Archives: Residual Income Knowledge Index

GreenLyne adopts FormFree’s Residual Income Knowledge Index to unlock greater inclusivity in mortgage lending

FormFree releases Residual Income Knowledge Index, an intelligent new system for assessing borrowers’ Ability to Pay, to lenders nationwide