Streamlining Fair Lending: A new set of APIs

My name is Ari Pollack and I’m a Product Manager on the COS.Lending (Arix) team. I’m excited to announce the release of our newest set of APIs, Cos.Lending.PreApproval. At this first stage, you can send application data to Cross River for all applications (originated, approved-not-accepted, denied, withdrawn, rejected, incomplete, and if applicable, in progress).

Why is this necessary?

Regulatory agencies across the industry recognize how unique our business model is, and have been scrutinizing FinTech lending activities as it relates to Fair Lending. As a partner, expect an annual examination as regards fair lending, in addition to regular examinations. The bank’s prudential regulator, the FDIC, expects us to evidence collaborative data management practices between Cross River and its partners.

Validation of Data on submission

Until recently, only approved and ready to fund loans were sent via API to Arix. All other application information was sent daily, as files via sftp. Partners often received feedback from regulators, months and even years after the data was sent in which led to burdensome research to fix old data.

With the new Application API, we validate each field on submission, and return instant feedback in the response of the API call. Required fields are enforced so that an application can be recorded.

For example, the Approve API in the image below where an application is being sent in and marked as Approved.


Application Approval with Data Validation Feedback

In the API response you can see immediate feedback. The borrower had an illegal email address and the postal code was also not valid. Now, the submitter will know what needs to be fixed much earlier on in the process.

Denial API

For Fair Lending purposes, we are not only required to collect information about approved loans, but also for denied, rejected, or undecided applications. Below is an example of an application submission to the API with a decision of Denied. As you can see in the image, there is a list of denial reasons in the body of the API call along with the application itself.


Submit denied application API, along with denial reasons, as required by the regulator.

Long Term Benefit

Ultimately, this API strengthens data governance and regulatory exam management processes.

While it will take some level of effort to integrate, the benefits of the API process include:

  • Eliminates or minimizes data errors
  • Enables an automated, real-time process to correct data errors and avoid burdensome research/correction of errors after the fact
  • Facilitates proactive identification and management of compliance and fair lending risks
  • Allows more timely responses and adequate preparation for regulatory examinations
  • Ensures adherence to record retention and technical compliance requirements

The FDIC expects to receive complete and accurate data in a timely manner during the regulatory examination process. The API process will go a long way in meeting those expectations and minimizing potential scrutiny by the examiners, which helps everyone involved.