Online mortgage lender Better Mortgage grew from the ashes of founder Vishal Garg’s previous online lending company, MyRichUncle, which ran aground in the aftermath of the financial crisis, according to an article in The Wall Street Journal by Peter Rudegeair.
While MyRichUncle struggled to attract investors, resulting in it having to use its own equity to fund the loans, which hastened its demise, Better Mortgage built off the branding and trust it gained by buying a California mortgage lender called Avex Funding.
From the piece:
The fact that Better Mortgage had Avex’s licenses and customers helped convince venture-capital firm IA Ventures to invest in Better Mortgage alongside Goldman last year, said Jesse Beyroutey, an IA Ventures partner who handles the investment.
Better Mortgage sells its loans to far more institutions than MyRichUncle did. Buyers include banks such as JPMorgan Chase and nonbanks such as Nationstar Mortgage Holdings Inc. The firm also mostly sticks to established products.
Better Mortgage is still in the early stages of life, but according to the article, Garg expects the roughly 75-employee company to be profitable in 2017.
From the piece:
In his new lender, Garg aimed to re-create the features of the MyRichUncle model that worked—easy online access, quick approvals—while spending less time looking for alternative credit attributes to find the perfect borrowers.
By the end of this year, he plans to extend $100 million a month in mortgages—or a $1.2 billion annual pace. By comparison, the smallest company on the list of top 40 mortgage lenders maintained by industry publication Inside Mortgage Finance made over $8 billion in home loans in 2015.
Despite the freshness of the company, it’s already made quite the name for itself.
Earlier this year, Goldman Sachs held a one-day Housing Finance conference, where some of the top names in the business were invited to speak on the state of their respective part of the market. Better Mortgage was included in this, speaking on a panel with top industry lenders Quicken Loans, loanDepot and SoFi.
Their topic to speak about: mortgage innovation, a subject in the industry that faces significant challenges.