- After a challenging year for Better and for mortgages, the company unveils a new product.
- With the help of data wiz Palantir, Better brings enhanced mortgage software to the industry.
- CEO Vishal Garg said the software will help lenders collect more data to make loans.
Before Better and CEO Vishal Garg faced widespread disdain for massive layoffs at Zoom last December, the fintech was heralded as one of the most promising mortgage startups in the world. Now, after months of battling its demons, the fintech is reviving itself by offering its mortgage-making software to the industry at large, having built what it believes is a better mousetrap for lending. .
Better on Wednesday announces a partnership with Palantir Technologies, the big data company co-founded by tech entrepreneur Peter Thiel to improve its underwriting platform, Tinman, to bring it to market to mortgage investors and competitive mortgage lenders. Palantir is also known for working with government agencies and many larger companies, including IBM and AWS.
As for Garg, the bet on Palantir is his latest attempt to stabilize the struggling business as the mortgage market is expected to fall more than 40% this year. The largest mortgage lenders such as Wells Fargo and JPMorgan have already made significant cuts in their businesses, and smaller ones with less access to liquidity – such as Sprout Mortgage – have simply closed shop.
In the first quarter of 2022, Better’s sales fell by half compared to the same period a year ago.
The product is also launching as Better has a late September deadline for closing its SPAC deal with Aurora Acquisition Corp, for which Garg said “all options are on the table.” Whatever the outcome, cash isn’t the issue, said the CEO, whose portrayal was supported by filings with the Securities and Exchange Commission.
The goal, according to Garg, is to create a lending platform that takes a more “holistic” look than standard underwriting, taking into account the type of property being purchased, the buyer’s credit score, loan-to-value ratio, and the location of the Company Asset.
Instead, the platform will use dozens of additional data to make underwriting decisions that help more borrowers qualify for a loan. This means that lenders would be able to measure freelance income, the borrower’s ability to pay rent on time, and the impact of their student loan or medical debt on loan writing, and other variables that affect more accurately assess a borrower’s ability to pay.
“We created Bloomberg for loans together,” Garg told Insider, referring to how Michael Bloomberg revolutionized the way financial institutions obtain and use their data with an all-in-one platform known as the Bloomberg. Terminal.
By hiring Palantir, Better has leapfrogged its own plan to build a model in 5-10 years. This new model, Garg said, was ready in just three months.
It is not clear whether the new platform is truly transformational. Year after year, lenders claim innovative technologies. At least one other lender, the Blackstone-backed Finance of America Mortgage, has also told Insider it has expanded its underwriting policy to attract non-traditional income borrowers who would have been rejected by traditional underwriting models.
Garg said the company has already started testing the platform with the 32 investors that make up its own pool of capital.
The platform could also be helpful for mortgage lenders trying to qualify more borrowers of color, or those buying homes with special features, such as solar panels. The goal is hopeful in an industry with documented racial inequalities that are still perpetuated by some major lenders, and Garg claims Better has already facilitated social welfare by providing $15 billion in loans to people of color and families whose loans meet the standards. guidelines of the Community Reinvestment Act.
To drive Tinman adoption, Better will require customers to use the platform to manage those types of loans, Garg said.
Palantir COO Shyam Sankar told Insider the company was attracted by the opportunity to create loans that will appeal to investors seeking to fulfill asset purchase mandates related to good environmental, social and governance practices, or ESG. .