One year after two securitization industry bankruptcies reinforced the need for strong collateral controls and timely information, especially in the age of digital lending, the Structured Finance Association is working with BNY and Snapdocs to create VeriCORE, a collateral registry to the consumer lending and securitization markets.
VeriCORE will support four core capabilities—authoritative records at origination, automated collateral validation, industrywide interoperability and automated portfolio surveillance, the SFA announced.
The industry group did not offer a timetable for the platform’s design, oversight and eventual rollout, according to the industry group, but the centralized document management infrastructure will initially focus on records related to auto loans and leases. VeriCORE’s commercial and fee model is also under development.
What’s driving the registry
The auto lending and securitization segment is “a large market with significant digital origination and an opportunity to improve connectivity, visibility and collateral controls,” according to a statement from the SFA.
It is also the segment where two major auto lenders, Tricolor Holdings and First Brands Group, filed for bankruptcy under fraud allegations that stunned large banks and led to major investor losses.
Over time, VeriCORE will support other consumer finance assets, including solar and equipment leasing, the SFA said.
VeriCORE aims to unify market participants and data onto a single registry as it tracks key events in the life cycle of those contracts, from origination through the secondary market and securitization, the SFA said.
Beginnig with oversight
An independent entity, responsible for designing, launching and maintaining the registry, will provide oversight to VeriCore. Also, industry participants will have a role in the centralized infrastructure’s creation, providing insight including potential use cases, data requirements, interoperability and market practices, the SFA said.
“We are always looking for opportunities to bring the industry together around solutions that make securitization markets stronger, more efficient and more transparent,” according to a statement from Structured Finance Association CEO Michael Bright.
“VeriCORE registry is an important example of that collaboration, creating shared infrastructure that can improve connectivity across the consumer lending ecosystem,” Bright said.
Future plans include enhancing transparency, data integrity and collateral visibility, to help bolster controls and help reduce and detect fraud, the SFA said.
“The ABS market needs certainty about who owns an asset and whether that ownership can be proven,” according to a statement from BNY global head of client coverage, corporate trust Kevin Weeks. “By bringing together registry infrastructure and digital collateral capabilities, VeriCORE can give market participants stronger tools to verify information that today may be difficult to see in one place.”
