Recently, Better Home & Finance Holding Company (or simply “Better”) said it executed two agreements that it believes will materially increase its monthly home loan lending volume.
To facilitate the expected boost in loan origination, it is increasing its warehouse line capacity via a $75-million dollar stock sale.
This will allow it to significantly increase its business from approximately $500 million per month to as much as $2 billion per month.
If it’s able to 4X its growth, it could become one of the largest mortgage lenders in the country, which has long been its goal since inception.
The big question though is who are these partners and when will they reveal them?
Better Is Becoming a Mortgage Partner for a Major Personal Finance Platform
Let’s talk about these partnerships in detail and see if we can ascertain who they might be, since Better is staying mum for now.
The first is a partnership with one of the top five U.S. personal financial services platforms, which serves 50+ million customers.
Under the arrangement, the company will offer mortgage products to its customer base via Better’s Tinman® AI platform.
So this company isn’t a loan originator themselves, but in the financial space.
As for who it could be, I did some research and ran the question through an LLM and the best I could come up with was Credit Karma.
They don’t seem to have an exclusive mortgage partnership place, like Robinhood does with Sage Mortgage, for example.
Of course, there are lots of other companies out there, such as Betterment or Wealthfront. So the possibilities are endless.
I could be completely wrong, but that was my best guess based on it being one of the larger personal finance platforms w/o an existing mortgage relationship.
They Will Also Power Second Mortgage Lending for a Top-5 Nonbank
The second agreement pairs it with one of the top five nonbank mortgage originators in the U.S. to originate HELOCs and home equity loans (HELOANs).
This includes serving that lender’s customer base and, perhaps importantly with regard to whom it might be, its mortgage servicing rights (MSR) portfolio.
Again guessing here, could it be CrossCountry Mortgage, which recently told HousingWire it was looking to grow rapidly via MSR acquisitions?
Seems like a pretty decent guess if we’re focused on the MSR piece, though there are other big nonbank lenders such as Guaranteed Rate and Fairway Home Mortgage as well.
Wouldn’t surprise me if it was one of those names, though it could be anyone.
Do you have a guess? If so, chime in.
Better originated just $2.1B in home loans last year, making them a relatively small player industry-wide.
But per the SEC filing, they claim to be funding $500M per month now, or $6B annually.
If these deals come to fruition as they expect, they could jump back into the top-25, and even the top-10, becoming a household name in the process.
Maxing out their agreements would result in $2B per month in fundings, and if done consistently would give them $24B in annual loan volume, enough to grab the sixth spot overall based on 2024 numbers.
Better said it expects to provide additional details about these upcoming partnerships following their commercial launch, whenever that takes place.
So stay tuned. I’ll update once we find out more!
(photo: @ondasderuido)
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.