The digital mortgage service provider Valon is targeting disruption to the industry with its Series A fundraiser.
The company received $ 50 million from a group of investors led by Andreessen Horowitz, Jefferies Financial Group, New Residential Investment Corporation, and 166 2nd LLC.
Along with Blend and Notarize, it is riding the wave of venture capital investments that are being pumped into mortgage fintechs. The Valon model uses vertical integration – direct connection to accounting and payment systems – to avoid the time and money of data validation between different companies.
In order to motivate lenders to use their platform – and to reduce the market share of traditional service providers – Valon has to show consistently higher margins and compliance with applicable laws and regulations to National Mortgage News, according to Andrew Wang, Valon co-founder and CEO.
Valon founders (from left to right): Jon Hsu, Andrew Wang and Eric Chiang. (Photo: Business Wire)
Fannie Mae just lit up Valon's technology in green. The company is now awaiting approval from Freddie Mac and plans to apply for FHA approval again this year.
"The largest mortgage services software controls over half of all US home loans, creating a monopoly in the market," Wang said in a press release regarding Black Knight's products. "That stranglehold has increased maintenance costs by nearly 250% over the past decade, and the fees are passed straight through to the borrower."
Black Knight has been on a shopping spree lately and last year bought out DocVerify, Optimal Blue, and Collateral Analytics.
"We created Valon as a challenger brand to meet the extreme need for an updated, technology-based alternative to better educate the borrower," said Wang. "We are facing a mortgage foreclosure crisis similar to 2008 and the majority of homeowners struggling to make their loan payments are unaware of their options."
The various weak points in maintenance are an open secret in the credit community. At the Digital Mortgage Conference 2020, Vishal Garg, CEO of Better.com stated, “Service is a black hole. All maintenance sucks. "
That overarching sentiment drove the development of Valon's platform, Wang said. The company's mission and structure were influenced by his own negative experiences with service providers, which he found inefficient and lacking in innovation.
Valon has 30 employees and hopes to expand to 100 by the end of 2021. The pipeline currently has $ 30 million in unpaid capital.