“Strategic partnership” is a win for mortgage tech and title insurance provider Blend, which has cut its workforce by about 25 percent this year and racked up an accumulated $995 million deficit.

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Beleaguered mortgage tech and title insurance provider Blend Labs Inc. has scored a win, announcing a strategic partnership Tuesday with PNC Bank to “digitally optimize” the bank’s online mortgage application process.

Using Blend’s technology, PNC customers can digitally apply for a mortgage and import bank or payroll information directly into their application, and then review and electronically sign loan documentation through a portal that also tracks their loan status and outstanding tasks.

Peter McCarthy

“Over the last few years, we’ve seen first-hand the growing customer demand for simplified, digital-first interactions,” said PNC’s head of mortgage Peter McCarthy, in a statement. “Through our partnership with Blend, we’re now able to deliver a state-of-the-art experience that provides an ideal combination of digital self-service technology and support for our customers as they navigate one of the biggest and most important purchases in their lifetimes.”

Blend, which raised $360 million in a 2021 initial public offering, has cut its workforce by about 25 percent this year, as rising mortgage rates take a toll on the number of orders the company handles for clients. After posting a $477 million second-quarter net loss, Blend’s accumulated deficit has grown to $995.1 million.

But Blend executives say the company’s $422 million acquisition of national title insurance and settlement services provider Title365 will enable it to deliver vertically integrated mortgage and home equity solutions. As Blend migrates more of its Title365 business to the software-enabled Blend Title solution, Blend co-founder and head Nima Ghamsari sees potential for growth from both new and existing clients that will eventually translate into profits for Blend.

Consumer banking is also an opportunity for Blend. While the Blend platform handled 20 percent fewer mortgage banking transactions during the first half of 2022 than it did the year before, consumer banking transactions more than tripled to 375,000.

Growth in Blend clients slows

Source: Blend regulatory filings

Blend has also continued to sign new clients this year, although not as quickly as it did during the pandemic-driven mortgage refinancing boom. Blend grew its client base by three companies during the second quarter, compared to 13 during the same quarter a year ago.

Erik Wrobel

“As an organization, our goal is to continue to partner with companies across the country to build the digital-first future of financial services,” said Blend’s Head of Product Erik Wrobel in a statement on the partnership with PNC. “We’re proud to work alongside PNC as they introduce a leading-edge, self-serve digital mortgage application solution — making the overall user experience easier and quicker for their customers and employees.”

Rising mortgage rates have prompted a number of well-known lenders to downsize as their refinancing business dries up.

But some smaller lenders who are focused on providing purchase loans to homebuyers have been turning to tech tools and local connections to grow their business.

Atlanta-based Silverton Mortgage, which offers hybrid e-closings using Remote Online Notarization (RON) capabilities provided by the digital closing platform Snapdocs, has been expanding its national footprint, most recently adding new branches in the Carolinas, Arkansas and Missouri.

SimpleNexus client Hometown Lenders of Huntsville, Alabama has opened 18 new branches this year as it continues to pursue a strategic national expansion. But the nation’s big mortgage lenders are also looking to do more business with homebuyers by offering their technology to others.

The nation’s largest mortgage lender Rocket Mortgage makes its mortgage origination technology available to financial institutions as an end-to-end “mortgage as service” through the SalesForce Financial Services Cloud.

Banks and credit unions also have the option to “launch, replace, or augment” their lineup of home loans by integrating Rocket Mortgage’s digital mortgage application inside an online banking platform developed by Q2 Holdings Inc.

The nation’s biggest wholesale lender United Wholesale Mortgage, launched an “aggressive pricing strategy” in June that, along with its technology offerings, is aimed at encouraging retail loan officers to defect to mortgage brokers. UWM announced a new service for mortgage brokers in June, Boost, that serves as a marketplace for them to purchase leads, stay in touch with past clients, connect with real estate agents and opt-in to receive live call transfers.

Retail mortgage loan originators “have always known it’s hard for them to compete on price and rates with brokers and with service and technology support brokers have today,” UWM CEO Mat Ishbia said on an August call with investment analysts.

But some banks have thrown in the towel on mortgages altogether, opting to simply become lead generators for lenders.

Santander Bank announced on Aug. 5 that it’s sending customers who are looking to buy homes to Rocket Mortgage, after signing a deal making Rocket the exclusive preferred mortgage provider for the bank’s nearly 2 million customers.

In March, Ally Home, the residential mortgage lending arm of Ally Bank, announced that it would offer home loans to customers nationwide through a partnership with Better Mortgage. Under a pilot program in nine states last year, Ally originated $10.4 billion in mortgages through its “powered by Better” direct-to-consumer channel.

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Email Matt Carter

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