A wave of innovation is sweeping across the mortgage industry, as big lenders invest heavily in technology and startups pop up left and right.
MortgageHippo, a provider of mortgage-origination software that’s backed by a real estate brokerage, exemplifies the second group.
It recently closed a seed funding round of $2.25 million, raising an additional $1.5 million on top of an initial investment by @properties, a Chicago-based real estate brokerage.
MortgageHippo says it delivers a “modern borrowing experience” that helps lenders convert more leads into closings.
The startup’s website says consumers today want “a seamless digital experience and support from a real human being when necessary” and that its software is “optimized for a multi-channel service that keeps things organized and running smoothly.”
“The mortgage process can be cumbersome, leading to decreased customer satisfaction, inefficiency and higher origination costs,” said Brian Kaas, managing director of CMFG Ventures, in a statement.
CMFG Ventures is the venture capital arm of CUNA Mutual Group, a provider of financial services to credit unions and cooperatives. The company led MortgageHippo’s seed funding round.
“Our investment in MortgageHippo will bring new innovation to the digital mortgage experience that can help credit unions deliver a superior online mortgage experience to their members in a way they prefer to engage in the process,” he added.
A confluence of forces have fueled innovation in the mortgage industry in the last couple years, according to MortgageHippo President Michael Salichs. They include:
- The entrance of millennials into the housing market
- Support by government sponsored enterprises (i.e., Fannie Mae and Freddie Mac) for loan-underwriting technology
- The launch and heavy marketing of digital mortgage platforms by some lenders.
QuickenLoans’ RocketMortgage and loanDepot’s mello feature prominently among the next-gen lending platforms rolled out by industry heavyweights.
LendingHome and Sindeo, meanwhile, typify the sort of startups that have fielded competing digital borrowing experiences.
MortgageHippo falls into a third group: mortgage technology providers.
Rather than originate loans, it provides systems for market incumbents to digitize their operations. Approved, which recently announced $1 million in funding, ranks among MortgageHippo’s direct competitors.