SAN JOSE, Calif. — Getting a mortgage is a terrible experience. It is expensive and time-consuming, and a lot of work to gather documents and data. It makes sense that fintech startups are taking on mortgages, but the uptake has been slow — until today.
Yesterday, a few mortgage services took the stage here at Finovate, such as Ellie Mae, and Finicity, which aim to speed up and simplify the residential mortgage process, as well as Spacequant, which took on commercial mortgages.
Day 2 began and ended with mortgagetech, setting the tone for the rest of the day: Capsilon, which uses drag-and-drop functionality to attach documents to loan applications; Unison; BeSmartee, a home loan marketplace; Fuco & Solution, which offers loans on enhanced bank statements; Home Captain, which provides concierge service throughout the homebuying process; and Lender Price, which uses multiple data inputs for dynamic pricing.
Unison, which was one of the best of show winners, was of particular interest, though the service brings up more questions than answers. It was positioned as something entirely new in fintech, and as far as the U.S. goes, that is true. With the scheme, home buyers that need money for a down payment can get it from Unison. It is not a loan — Unison is a co-investor in the property, and benefits if it is sold for a profit, or suffers if it is sold for a loss.
There the questions begin — what happens to Unison’s share if the owner dies? How do lenders view Unison’s stake? Some things are clear — the homeowner is responsible for paying taxes and all associated costs with the house. Unison is not a roommate who will help pay the cable bill or fix the leaky roof. The model, though unique in the U.S., bears similarities to the U.K.’s “Help-to-Buy” program, and Islamic banking, where interest cannot be charged.
What credit score is needed to qualify? The company replied via Twitter, “Typically if the home buyer qualifies for the traditional mortgage loan they qualify with us.” And what about defaults? The company replied, “As partners we can help homeowners come current on their payments so there can be an orderly sale and protect their equity as well as ours.” The Unison model is certainly one worth exploring further, as it may have implications for other startups (or traditional lenders) in the future.
Ideas about car ownership are rapidly changing as young people put resources elsewhere. Innovation will need to arrive in the home ownership space quickly too. And maybe those ideas can roll student loan debt into the home loan too?Like This Post