Mortgage

House mortgage fintech raises $ 2 million in seed funding

Button Finance, a New York-based fintech focused on home equity financing, announced Monday that it has closed $ 2 million in initial seed funding.

Using an underwriting platform powered by artificial intelligence, the mortgage lender plans to partner with traditionally underserved borrowers and give them greater financial independence by unlocking the value of their homes. It aims to make funding decisions in less than five days.

"American homeowners now have more unused equity than ever in the face of the recent home price rally," said Jason Harris, CEO of Button Finance, in a press release -Interest debt and making value-add renovations to their homes. "

Homeowners with sub-ideal credit seeking consumer credit have often been limited to high-yielding credit cards or peer-to-peer loan programs, where interest rates could go as high as 36%, Harris observed.

"It was really amazing how many people were getting larger consumer credit at rates that were utterly absurd compared to a mortgage rate," he said in an interview with National Mortgage News.

Although the model carries higher risk than more traditional products, it is meant for a customer base that banks overlook, Harris said.

"We think if the Lending Club gives someone an unsecured consumer line, we are ready to give them a much lower mortgage as they leverage their house," he said.

Hildene Capital Management, a structured loan asset management firm, led the financing round, along with L&L Capital Partners and angel investors who work in New York fintech. With the financing, Button Finance intends to further develop its proprietary technology and make strategic new hires as it expands.

"Traditional players in the mortgage industry have been slow to adopt new technology and innovative underwriting," said Dushyant Mehra, co-chief investment officer of Hildene Capital Management, which specializes in distressed and event-driven credit opportunities. "The Button Finance team identified a niche in the market and developed a robust underwriting model to address it, resulting in higher risk-adjusted returns."

In connection with the capital increase, the company also announced the appointment of Josh Hager as head of mortgage business. An industry veteran of over two decades, Hager previously held leadership positions at fintech mortgage lenders, including Better.com, Homeward, and Divvy Homes. Early in his career, he worked in the credit departments of Wells Fargo and Bank of America in underwriting and mortgage lending.

According to Harris, Button Finance, which was founded in 2019, plans to expand to other products in the next two years.

“We'll probably expand into other mortgages and unsecured consumers first, but that really depends on the market. It just seems like there is such a wide open playing field with home equity today, ”said Harris.

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