home mortgages Archives

Non-Bank Lender loanDepot Crosses $100 Billion in 7 Years

loanDepot is one of the leaders in non-bank lending and recently crossed a significant milestone.

February 9, 2017 By Ryan Lichtenwald 2 Comments

Since 2010 non-bank lenders have been slowly increasing their market share of mortgage originations. loanDepot is a company that has played a big role in this transition and announced last month they had originated $100 billion in mortgages.

This is a huge number and to do it in just seven years is quite impressive. According to a recent Inside Mortgage Finance report, loanDepot is the nation’s fifth largest retail mortgage lender. Familiar names such as Wells Fargo, Quicken Loans, Bank of America and JP Morgan Chase round out the top four slots which makes loanDepot the second largest nonbank lender in the United States.

The company started originating loans in 2010, growing on average by 70 percent annually since inception. Last year loanDepot funded $38 billion in loans, a 33 percent increase from 2015. One of the numbers that stuck out to me was that loanDepot acquires more than half a million potential borrowers every month which is up 25 percent from a year ago. From a marketing perspective this is huge feat and they have continued to grow this even off of a large base.

Anthony Hsieh, loanDepot’s CEO wrote a post on LinkedIn looking back at the last 7 years. I first heard Anthony speak at LendIt China 2016 and learned a lot about the US mortgage market. If you’re interested in learning more about loanDepot and the mortgage origination landscape in the US I recommend watching his speech “Startup to Stardom” from last year.

On the ability for loanDepot to grow at such a staggering rate, Anthony stated:

Unlike most lenders, loanDepot isn’t burdened with legacy issues that impede advancements in building proprietary technology, product delivery systems that bring greater efficiency to the lending process, or regulatory compliance. Our diversified origination platform is purpose built to pivot quickly in fast-changing market conditions. This philosophy empowers us to further penetrate purchase, refinance and consumer loans. This is an ideal time for loanDepot to gain greater market share as the leading solution to satisfy consumer demand for a highly efficient, tech-based lending experience that’s easy to navigate and supported by world class customer care.

Conclusion

I think what’s interesting about non-bank lenders such as loanDepot is that, in such a short amount of time, they have taken such a large share of the market from the incumbents. This represents a radical shift to how mortgage lending has been done in the past and it is certainly an area to keep an eye on. Other verticals of lending aren’t quite there yet but I think it proves that the major lenders of tomorrow won’t necessarily be the big banks. At LendIt coming up next month we’ll hear from loanDepot, Better Mortgage and others on the shifting mortgage origination landscape.

Buying, Selling and Financing Homes is Changing

We look at several companies who are changing the way real estate is transacted.

February 8, 2017 By Ryan Lichtenwald 2 Comments

Buying and selling a home is a process that is full of friction. For some buyers financing is a roadblock due to the 20% down payments most banks require. This is especially a problem in some of the most expensive cities in the US. For sellers the process is also frustrating. Even if you’re in a hot market, the process can be delayed by inspections, buyer financing, closing dates, sellers backing out of a deal etc. However there are several companies who are looking to improve the buying and selling process and have some fascinating business models. In this post we’ll share some of the innovations that are happening when it comes to buying, selling and financing homes.

Innovations in Financing a Home

SoFi

SoFi’s offering is straight forward. They are best known for their 10% down mortgage product, offering jumbo mortgages of up to $3 million with no PMI. They currently offer 30 and 15 year fixed rate mortgages as well as a 7/1 ARM. By halving the down payment, they have opened up home ownership to more of their members. SoFi recently announced they were licensed in New York and I imagine they will get a great deal of traction there. In a recent podcast CEO Mike Cagney said that they’ve had multiple educational meet ups on the new offering in New York and have been inundated with requests from individuals looking to learn more.

Unison

Unison’s offering is a bit more unique. Unison can provide up to 50% of the down payment to purchase a property. The money is an investment into the home itself as opposed to being a loan which means your monthly payment remains the same and you are not required to have PMI. The company hopes to share in the profit when homeowners sell the property and will make money if the home has increased in value. Homeowners also have the opportunity buy out Unison after three years. The company details how this works on their website and shares certain scenarios where a property has gained value, lost value or stayed the same when a homeowner decides to sell the property.

Unison also has a program called Unison HomeOwner which provides cash to current homeowners in exchange for equity in the home. Homeowners use the money to eliminate debt, remodel, pay for school, invest, or as a cash cushion for financial stability. Unison HomeOwner was the first program that Unison debuted in the home ownership investment category.

Point

Point’s product is similar to the Unison HomeOwner product and is an alternative to the Home Equity Line of Credit (HELOC). It is targeted at individuals who have equity in their home but would like to unlock some of the capital tied up in the home. Homeowners sell small fractions of equity in their home but must retain at least 20% of the equity after the investment. After a pre-qualification Point will make an offer, which is typically between 5% and 10% of the home’s value. From there an appraiser will come out to ensure the property is valued correctly. Point is paid back in one of three ways: when you sell your home, at the end of the term or at a time when you choose to buy back the value of the home. Similar to Unison there are different scenarios depending on what has happened to the value of the home. [Read more…]

Peter Thiel Backed Blend is Simplifying the Mortgage Process

Blend aims to benefit prospective homeowners while also lowering the cost of funding for lenders.

May 2, 2016 By Ryan Lichtenwald 1 Comment

One of the main advantages that marketplace lenders tout is that technology powered lending takes many of the pain points out of the loan origination process. Probably the most cumbersome and complicated process in lending that consumers will face in their life comes when they apply for a mortgage. It’s a process that should be more efficient. Blend was founded in 2012 and hopes to improve the mortgage process for both lenders and borrowers by providing an experience far better than the decades old technologies that are currently in place.

Blend is well funded, having raised a $40 million Series C round in January 2016, led by Founders Fund (Peter Thiel’s investment company), Lightspeed and Formation 8. Other notable investors include Andreessen Horowitz, Max Levchin and Hans Morris.

On the consumer side, they aim to simplify and automate the application pre-approval process. This includes the use of electronic statements, the ability to take pictures of documents such as W-2s and a soft credit pull earlier in the process. This process isn’t new in the unsecured lending space with companies such as Lending Club and Prosper among many others who were pioneers in getting a loan online, but this trend is just starting to take hold in the mortgage market. The result is a much better borrower experience. [Read more…]

SoFi Raises $1 Billion and Continues to Shake up the Industry

SoFi's growth has been impressive to date, but this latest round puts them in a league of their own when it comes to raising capital.

September 30, 2015 By Ryan Lichtenwald Leave a Comment

The SoFi story continues as today they announced a staggering $1 billion financing round led by SoftBank. This equity round is the largest funding round ever by a fintech company – larger even than what Lending Club raised in their IPO late last year. SoFi currently offers mortgages, student loan refinancing and unsecured personal loans. Although the round itself is big news, it is what is going on behind the scenes that is most interesting. Peter and I had the chance to talk with Mike Cagney, CEO of SoFi to learn more about what this money means for the company.

While Mike acknowledged that this is a large round, he stated that he is not racing to raise the most money. In fact, when they were looking for equity financing earlier this year, they were intending to raise much less than $1 billion. They spoke to SoftBank and their team was interested in putting in quite a bit more as they believe the opportunity is vast and think SoFi can move even faster. Mike Cagney agrees. This capital also gives SoFi the luxury to wait to do an IPO, but Mike mentioned that the decision to IPO will still depend on the market at the time. It’s important to note that SoFi has already been operating as a profitable company since 2014.

[Read more…]

SoFi Tops $1 Billion, Expands into Home Mortgages and Announces an IPO

October 8, 2014 By Peter Renton 14 Comments

This week SoFi announced they have crossed $1 billion in total loans issued, a milestone they achieved in just over two years after issuing their first loan. This makes SoFi the fastest marketplace lending platform to achieve that milestone.

While that is a significant achievement, what is more impressive is the fact they have done this with no borrower defaults. Zero. They have issued 13,500 refinancing loans and every single one of these loans has either been paid off or is still in good standing. That is a record that no other online platform can come close to matching.

I chatted with SoFi CEO Mike Cagney earlier today to discuss this milestone and more. He told me that SoFi has been growing rapidly this year. Last month SoFi did $132 million in student loans and when you add in their new real estate and personal loans the total was up to around $150 million.

Home Loans Available from SoFi in Five States Today

Cagney discussed at length the home mortgage loans that SoFi is launching in several states this week. Initially SoFi will be available to mortgage borrowers in five states: California, New Jersey, North Carolina, Pennsylvania and Texas as well as Washington D.C. Massachusetts and New York should be added by the end of the year.

These loans are very different to what you will see on real estate platforms like Realty Mogul in that these are traditional home mortgages. These are not short fix-n-flip loans; these are long-term mortgages because people who are applying for loans on SoFi are intending to live in the home they buy.