Figure offers fast-close home equity lines of credit and an iBuyer alternative to reverse mortgages.
Figure, a provider of open-ended home leasebacks and fast-close home equity lines of credit, is seeking to raise more than $100 million in additional funding at a valuation of $1 billion, Bloomberg reports.
The fundraising effort underlines the rapid growth of startups that are dreaming up new financing options for homeowners and buyers. Others include Point, which lets owner sell equity for cash, Unison, a provider of down payment assistance from for-profit investors, and Knock, an iBuyer that makes cash offers on behalf of homebuyers.
Figure’s flagship product is a home equity line of credit (HELOC) of up to $150,000 that borrowers can qualify for in under five minutes and close within five days.
Figure’s second product, “Figure Home Lease Back,” puts a new spin on the iBuyer model pioneered by Opendoor. Cast as an alternative to a reverse mortgage, it lets homeowners sell their home to Figure and then stay in place by renting the property from Figure indefinitely.
Homeowners pay for the service by selling their home at a discount to Figure, with the startup paying a maximum of 92 percent of market value, based on a third-party appraisal. In March, Figure spokeswoman Wendy Harrington told Inman that the startup was rolling out the product in Texas, Illinois and Nevada.
Figure can raise the rent on an annual basis for Home Lease Back customers, “but never by more than 5 percent,” Harrington said at the time.
Unlike a reverse mortgage, Figure Home Lease Back is available to borrowers of all ages.
It could be a good option for retirees to remain in place “without worrying about market conditions,” Figure’s website says. “For others, it’s a great way to lock in [home equity] gains now and put their money to work, enabling them to move when they’re ready,” Figure spokeswoman Wendy Harrington told Inman in March.
Figure’s main line of business, its HELOC product, is reportedly growing rapidly. Launched less than two years ago, the startup is on pace to make $80 million in loans this month, according to Bloomberg.
Figure is apparently seeking a valuation that’s more than double its valuation just six months ago. In a $65 million equity financing round that Figure announced in February, investors valued the firm at $380 million, according to PitchBook, Bloomberg reported.
Figure was founded by Mike Cagney, the founder of Social Finance, or SoFi, a well-funded online student loan provider that has since expanded into mortgages and other credit products. Cagney resigned from SoFi in 2017 over sexual harassment allegations.
Figure hasn’t closed the funding round reported by Bloomberg, meaning its valuation and size has not been finalized.