Blend CEO Nima Ghamsari (right) speaking with an employee.
Blend, a San Francisco-based startup that partners with big banks to re-imagine the mortgage borrowing experience, today announced plans to open a marketplace for home finance innovation. Like an app store, the new Blend Marketplace invites companies that service the mortgage industry to sell digital tools--APIs--through its platform. For now the store is small, launching with two applications. If the model proves successful, however, partners say it has the potential to speed up the pace of change in an industry that still relies heavily on e-mailed PDFs and spreadsheets.
Founded in 2012 by three Palantir-alums, Blend sells white-label mortgage technology to banks and other lenders. By bringing the application process to the cloud and directly connecting to information sources Blend cuts down the time and the expense of originating a mortgage. (Industry wide it typically takes about six weeks and $8,000 for a lender to get out a loan.) Consumers, the thinking goes, benefit from a more pleasant application experience and will eventually see some of the time and cost savings as well. (For more on how Blend works read: Blend Wants To Bring The $2 Trillion Mortgage Market To The Modern Era.)
While instant, lower-cost mortgages may still be a ways off, Blend has established an impressive track record so far. The company has raised $160 million in venture capital funding giving it a half-billion dollar valuation. Customers include Wells Fargo and U.S. Bank, two of the largest mortgage providers in the nation. Overall, the roughly 75 lenders using Blend represent more than 25% of the total U.S. mortgage market and around $60 billion in mortgage applications flowed through their software last year. (According to the Urban Institute, $1.8 trillion worth of mortgage were originated in the U.S. in 2017.)
This latest update attempts to extend Blend's traction--which earned it a spot on the Forbes Fintech 50 for 2018--to the wider industry. As co-founder and chief financial officer Erin Collard put it in a recent blog post, "The future of lending is here, but it isn’t yet equally distributed."
The vision for the marketplace, explained CEO and co-founder Nima Ghamsari in a recent phone call, is to create an open ecosystem that supports innovation. The months and sometimes years it can take a big lender to evaluate and integrate new technologies can be deadly for startups. With the marketplace, lenders using Blend will in theory be able to add new functionality in a click, since the architecture to incorporate it with existing systems will already be in place.
Hundreds of vendors and services are needed to get a mortgage to completion. Ghamsari cites things like credit bureaus, e-signature technology and appraisers, none of which previously followed a set of digital standards. "We know we are not going to get there if we need to build every single piece of the puzzle," he says. "Adding more and more of these partners means we're not the only ones driving toward this end goal" of removing friction from the mortgage industry.
For instance: LendingTree--the $3.8 billion market cap lead generator LendingTree-- markets mortgages online from approximately 550 lenders. Of those, however, only 40 currently allow consumers to continue on to the application process online."They came to us digitally," says Sam Mischner, LendingTree's chief revenue officer and head of mortgage. "Why can't they transact digitally?" Through their Blend integration, lenders that use both services will be able to easily add an "apply online" button.
LendingTree is one of two launch partners on this project. The other is startup Total Expert,which makes customer relationship management software specifically for the mortgage industry and has raised $14 million in funding. Joe Welu, CEO of startup Total Expert, argues better integration will allow that different steps of the mortgage process--marketing and sales then transacting and servicing--to flow more seamlessly.
The industry had been "part wild west, part fast talking sales people," he says. "It’s really the first inning in digital transformation in this space."
Related from Forbes:
Blend Wants To Bring The $2 Trillion Mortgage Market To The Modern Era
Forbes Fintech 50 2018: The Future Of Real Estate Investment And Finance
Quicken Loans Overtakes Wells Fargo As America's Largest Mortgage Lender
