If you have ever applied for a mortgage, you know that it is one of the most painful processes. Keeping up with payments and dealing with customer service during a loan is not a picnic.
So it is no surprise that big bucks are being put into space with the goal of making this process easier, more digital and more transparent.
As a result, Vallon, A tech-enabled mortgage servant, announced this morning that it had raised $ 50 million in a series of funding rounds – one even larger than today’s standards.
Andreessen Horowitz (A16Z) led the round for the New York-based company, formerly known as Peach Street. Returning Jefferies Financial Group, New Residential Investment Corporation – an affiliate of Fortress Investment Group LLC – and 166 2 LLC also participated in the financing.
Valon first raised $ 3.2 million from seed investors such as series entrepreneur Kevin Ryan’s Glee Corp, Soros, Kairos and Zig Capital.
Andrew Wang, Eric Chiang and John Hsu saw Valon’s establishment in June 2019 with “the largest mortgage servicing software company” (software giant Black Knight) controlling half of what it sees as a “monopoly in the market”. Of all US residential loans.
“We’ve had a mortgage foreclosure crisis comparable to 2008, and the majority of homeowners struggling to make their debt payments are unaware of their options,” said Valon CEO Wang. “This Struggle has raised servicing costs by about 250% over the past decade, and the fees are paid directly to the borrower.”
With the increase, Wallon recently received the green light from Fannie Mae to service government sponsored home loans. (For the most part, servicing debt means doing things like collecting payments on behalf of the lender). According to Wang the approval will only continue to promote Wallon’s rapid growth.
“We did not go through a $ 10 billion contract of mortgages committed to service in a year,” said TechCrunch.
Wallon operates in 49 states, and hopes to add New York this year.
As a former investor in the mortgage servicing space, Wang was disappointed by the “lack of service” provided by other servants. So he teamed up with Chiang and Hu, who already had product and engineering experience at Google and Twilio to launch Velon.
The company’s cloud-native platform aims to describe it as a borrower-oriented experience. Lenders can request access to real-time API data feeds to view their borrowers’ performance and aggregate transaction data.
Unlike mortgage promoters, who lend money to the borrower, a mortgage servicer interferes with the borrower for the duration of their loan – and it can be anywhere from 15 to 30 years.
“This includes things like collecting payments on behalf of the lender and providing assistance and guidance to the borrower in moments of stress,” Wang said. “Traditional mortgage officers use athletic technology and provide poor service to borrowers. Wallon wants to change that dynamic by providing transparency and full self-service capabilities to homeownerss.“
The company also claims that its technology has the potential to reduce mortgage servicing costs by up to 50% by integrating the entire process. The company said that its platform is built on the Google Cloud as a “first-principles”, with features such as default encryption and intrusion detection.
Millions of americans Stopped paying their mortgage Due to the economic stress of the coronovirus epidemic in 2020. This led to requests for forbearance (postponement of payments) and withholding of foreclosure.
“The epidemic exposed tensions in the market and intensified the need for a new-age mortgage servant,” Wang said. “Householders faced a great deal of financial stress and had difficulty getting the right options and assistance from existing employees, because of their ancient technology and inability to process requests … In 2021 we will see that foreboding and foreclosure leniency will end And this need will be even faster. “
Angela Strange, A general partner of Andreessen Horowitz, who joined Wallon’s board in mid-2020, says Wallon has built a mobile-first mortgage servicer from the ground up.
“Householders face clumsy websites, call centers and often misinformation,” she said in a written statement. “At Wallon, they have a reliable software-driven consultant who can provide clear, transparent, regulatory compliance information in good and bad times – without picking up the phone.”
He said that Fannie Mei approval only serves as a validation of the platform that the team has built.
Valon plans to use its new capital to acquire more Mortgage Servicing Rights (MSR) contracts by the end of the 100 years about triple headcount to be serviced as well.