Former SoFi CEO's startup unveils digital home equity loans

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Figure Technologies — a startup whose calling card had been its high-profile co-founder, former SoFI chief Mike Cagney — now has its first product: an online system that approves home equity loans in minutes and delivers funding in as little as five days.

The San Francisco-based firm claims the product is an industry first, as it uses a combination of artificial intelligence and blockchain technology to hasten what is typically a 45-day process, and reduce the fees, high interest rates and paperwork associated with home equity loans.

This area "was ripe for innovation,” Wendy Harrington, chief marketing officer for Figure, told American Banker in an interview. “No one has touched this [paper-based] process for decades.”

Cagney, who left SoFi amid claims that he fostered a hostile work environment for women, has kept a relatively low profile at Figure since his involvement was announced in April.

Figure in April secured a $50 million funding round led by Ribbit Capital and DCM Ventures, the latter of which had also invested in SoFi. The home equity loan product represents its first consumer offering since the company emerged from a stealth mode of sorts earlier this year.

The speed at which Figure’s home equity loan is approved addresses an area traditional financial institutions have struggled to solve in the face of rising fintech competition and demanding consumer expectations: serving consumers as quickly and simply as a Google search.

Home equity loan applicants enter a variety of high-level financial information through Figure, such as the property address, property type, financing purpose and annual household income.

It then uses a combination of several factors to determine the loan amount, Harrington said. It does what it calls a soft credit check on the applicant and an automated valuation of the property, calculating the final loan amount based on that value.

Applicants can borrow between $15,000 to $100,000 with annual percentage rates as low as 5.99%. Loan terms are available for five, seven, 10 and 15 years.

Harrington touted Figure’s ability to charge no appraisal, title, and late fees or prepayment penalties. The company charges a loan origination fee that ranges between 1% to 3%.

“Interest rates are rising, and when consumers are in a bit of a bind, they still need access to funds” for areas such as home improvement projects, Harrington said.

Users verify their identity via a webcam photo or by uploading an approved ID such as a driver’s license or passport. Applicants also provide bank account information to receive the approved loan.

Figure then uses its own notaries based in Nevada and Texas that guide applicants through an electronic signature process to complete the application. Customers communicate with notaries via webcam. Figure uses blockchain-based technology on the back end to help it record and track information on the loans it processes.

Figure’s service is available in 25 states and should be live throughout the U.S. by the end of the year, according to Harrington. If Figure can deliver on Cagney's promises, it would approve loans and deliver proceeds faster than rivals such as Point Digital and Unisom Home Ownership.

Figure’s product hits the market at a time when homeowners are seeking to make renovations to their properties, at least according to one study. A survey by Houzz, a website that specializes in home design ideas, found that 51% of homeowners had planned to begin or continue property renovations in 2018.

Harrington believes Figure is better positioned to help homeowners meet those project goals not only based on the speed at which it approves loans, but the ability to give consumers a better way to finance home improvement projects.

“It’s critically important that people make good financial decisions,” Harrington said. “We’re seeing that people are funding these projects through credit cards that typically have [much higher] APRs than Figure’s rate.”

Figure already is planning to release two more products, one of which is scheduled to debut in the next couple of months, according to Harrington.

Figure plans to offer a sell-and-lease-back program the company said is an alternative to reverse mortgages. It will also eventually offer a wealth management product. Potential users can join a waiting list for both products now and will receive an email from Figure when they are available.

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Home equity loans Digital mortgages Refinance Fintech Start-up funding Blockchain Artificial intelligence SoFi