This Home Lending 2.0 Guide is intended to show the state of home lending in the U.S. It’ll offer some insight about lending trends and the role that fintechs play in driving those trends. It’ll also explore challenges facing traditional home lenders.
Additionally, this guide will dive into borrower expectations and preferences—especially in light of the red-hot housing market during COVID-19 and the potential correction beginning in 2022.
Important to note is the rise of fintech and marketplace lenders now addressing various home loan needs. In the last few years, most national banks have followed trends set by these alternative lenders by launching their own digital solutions (often powered by outside vendors). Today, credit unions can do the same by partnering with or leveraging fintechs to provide faster and more varied lending options.
Ultimately, this guide will help you find fintechs and CUSOs that can help you transform your home lending strategy. If you want your home lending products to meet your members’ needs and compete with fintechs, the companies in this list will help you reimagine your home lending ability.
Check out our new downloadable Credit Union Provider Guides here!
Home Lending Trends and Analysis
- The housing market is slowing down.
Since 2020, the housing market boomed. Interest rates plummeted, home prices rose, and buyers snapped them up faster than sellers could put them on the market. Often, houses sold for more than asking price within hours of hitting the market.
Yet, July 2022 increased mortgage rates to their highest level since 2008. Home sellers have been dropping their asking prices, and pending home sales are starting to fall. There will be fewer new mortgages to originate in 2023 and in the coming year.
- Home lending is a digital-first market. Other lenders are rapidly losing market share.
The mortgage and home improvement borrowing experience has been painful, historically. Hours-long applications and document hunts followed by periods of limited visibility about status and timelines were the status quo.
Then, Quicken Loans debuted Rocket Mortgage in 2015, and it allowed borrowers to complete applications in ~10 minutes. In less than 2 years, they were the leading mortgage provider in the country.
Today, the top home loan providers are digital. And, while the chart certainly shows a bias for national providers, it’s worth noting that all the listed national providers below now offer digital-first home loans to remain competitive against Quicken Loans.
Credit unions absolutely must leverage fintech solution to provide competitive home loans. Anything less at this stage is, by definition, substandard.
- Digital lending processes are faster and more efficient than paper-based ones.
It’s not just convenience that drives borrowers toward digital lenders. Shortly after Rocket Mortgage took the mantle of #1 mortgage lender, the Federal Reserve Bank of New York published a study that found that fintechs reduced average mortgage close time by 9 days and average refinance time by 12 days.
Importantly, the report showed that fintech lenders managed this feat while controlling for variables and without targeting marginal buyers or increasing default rates.
Especially in hot housing markets, the additional time to close from traditional lenders puts their borrowers at a competitive disadvantage. The conclusion of the study determined that digital and fintech lending has improved the efficiency and fairness of home lending.
That final finding is paramount, as it suggests that credit unions will significantly improve their member experience and financial health by providing digital fintech-powered home lending solutions.
CU 2.0’s rating methodology for our early guides is very simple. We measure the potential impact of working with each fintech on two variables: Potential ROI (resources required vs payoff) and Member Experience (ease of application, banking experience, etc.).
0: N/A or no impact. Competes with or disintermediates credit unions; doesn’t offer relevant services.
1: Minimal impact. Limited partnership opportunities; limited or narrow use cases for members.
2: Moderate impact. Partners with credit unions but may require more resources; meets at least one or several common member needs/desires.
3: Major impact. Partners well credit unions and doesn’t require much resource or investment; meets or exceeds most member needs/desires seamlessly.
Our impact ratings don’t necessarily correlate to the quality of a given solution. Fintechs with higher potential impact scores aren’t automatically better, or a better fit, for your credit union and members.
The following fintechs are listed alphabetically. These ratings correspond only to the two listed variables (Potential ROI and Member Experience). These aren’t ranking of quality, nor are they recommendations—they’re meant only to serve as a starting point in your research to improve your credit union’s home lending strategy.
Trusted solutions are highlighted with an asterisk—these are fintechs that CU 2.0 has vetted personally.
See more ways to evaluate fintech lending providers in our downloadable 2.0 Guide here.
Fintech Lending Vendor Guide
|Fintech||Description||Potential ROI||Member Experience|
|ACES Quality Management||ACES Quality Management helps lenders review and audit loans more efficiently.||1||0|
|Agora Lending||Agora Lending is a digital mortgage and refinance lender with competitive rates.||0||2|
|Better.com||Better.com is a digital mortgage and refinance lender that offers insurance and other home products.||0||3|
|Blend||Blend is a digital mortgage, loan, and banking platform with extensive data partnerships||2||3|
|Calque*||Calque allows buyers to use the equity in their existing home to purchase a new one.||2||2|
|Cloudvirga||Cloudvirga is a digital mortgage platform that uses automation to decrease time and costs.||2||2|
|Divvy||Divvy is a digital real estate platform that facilitates rent to own home purchases.||0||1|
|Figure||Figure is a blockchain- and crypto-friendly mortgage and lending platform for borrowers and lenders.||2||3|
|FinLocker||FinLocker helps consumers prepare for mortgages and connects them with agents and lenders.||2||2|
|Floify||Floify helps lenders with a digital dashboard and automation in the mortgage process.||2||1|
|Flyhomes||Flyhomes helps buyers and sellers with cash offers, mortgage terms, and more.||0||2|
|HomeLight||HomeLight is a digital real estate platfrom that connects buyers, sellers, and real estate agents.||0||1|
|Hometap||Hometap allows homeowners to tap into their home equity to access a loan alternative.||1||1|
|Homeward||Homeward helps buyers make all-cash offers on homes to improve their purchase power.||0||2|
|Housetable*||Housetable allows lenders to offer fully-digital home improvement loans.||3||1|
|Kiavi||Kiavi offers fix-and-flip bridge loans and rental loans for real estate investors.||0||1|
|Lendsmart||Lendsmart accelerates and streamlines the lending process for credit unions with AI and automation.||2||3|
|LoanDepot||LoanDepot is the second largest non-bank lender in the country.||0||2|
|LoanNEX||LoanNEX offers a residential mortgage marketplace for buyers and helps originators automate workflows within it.||1||1|
|LoanStar Technologies||LoanStar Technologies allows lenders to diversify lending with point-of-sale and home improvement loans.||2||2|
|Momnt||Momnt allows lenders to offer automated point-of-sale loans through partnered businesses.||2||2|
|Morty||Morty is a digital mortgage broker that works with buyers through each step of the purchase process.||0||2|
|NestReady||NestReady keeps early-stage buyers in the credit union with their white-label app.||2||2|
|Opendoor||Opendoor buys homes for cash and then sells them, allowing sellers to skip the listings, showings, and stress.||0||3|
|Point||Point lets homeowners make Home Equity Investments, HELOCs, and SEED investments.||0||1|
|PowerPay*||PowerPay lets lenders offer point-of-sale consumer loans for home improvement and more.||3||3|
|Quicken Loans||Quicken Loans powers Rocket Mortgage and other subsidiaries, making them by far the largest mortgage lender in the country.||0||3|
|Reali Loans||Reali Loans is a digital mortgage and refinance lender.||0||2|
|Revival Homes*||Revival Homes streamlines the permitting, lending, and construction process for California ADUs.||1||1|
|RenoFi*||RenoFi lets lenders offer home improvement loans against the borrower’s post-renovation home value.||3||1|
|Roostify||Roostify’s point-of-sale platform helps lenders close loans faster and improve margins.||1||2|
|Senso*||Senso partners with credit unions to engage borrowers before their next home purchase or refinance.||2||2|
|The Servion Group||The Servion Group helps credit unions with mortgage, commercial, real estate, title, other other loans.||2||3|
|SoFi||SoFi is a neobank and lender that now offers mortgage and other home loans.||0||3|
|Staircase*||Staircase seamlessly connects all mortgage lending technologies on a single platform.||2||1|
|Teslar||Teslar helps lenders with audit and compliance.||1||0|
|Total Expert*||Total Expert offers credit union- and mortgage-specific CRM and marketing automation.||2||2|
|Turnkey Lender||Turnkey Lender offers an AI-powered loan origination and lending platform.||2||3|
|Wolters Kluwer||Wolters Kluwer offers a variety of lending and compliance solutions for lenders.||2||2|
Please note that these ratings are in their early stages and will be updated as we include more data and more complex variables. The ratings are not definite—your credit union could see a different level of impact than listed in this guide.
Did we miss a fintech? Please let us know at [email protected]
Choosing the right partners to leverage fintech lending capabilities and efficiencies will depend on your goals, budget, timeline, and other factors. CU 2.0 can help in the following ways:
- Join our Fintech Call Program. In quarterly 30-minute calls, we’ll discuss in depth new and innovative fintech solutions that fit your credit union’s needs. We can also help you review other solutions you’re looking at.
- Ask for an introduction. We maintain relationships with most or all of the vendors rated above. We would be happy to give you a warm introduction to any we can on the list.
- Book a consultation. CU 2.0 offers technology and fintech consultations and reviews to identify best-fit solutions for your credit union.