Led by financial services firm Cantor Fitzgerald who also served as initial purchaser of the bonds, the issuance is expected to help Knock deliver $900 million worth of additional originations of its bridge loan product. The deal closed on Aug. 14 and was 75% pre-funded, garnering strong demand from institutional investors operating in
"Accessing the bond market not only reinforces investor confidence in our model, but also opens up a new channel of capital we plan to continue tapping into as we expand capacity and make the Knock bridge loan available to more lenders nationwide," said the company's co-founder and CEO Sean Black in a press release.
Knock offers loans to homebuyers allowing them to draw from their current property's equity and make a non-contingent offer on a new purchase. Sometimes referred to as homeswap loans, the products' design eliminates significant impact on debt-to-income ratios and can be used to help cover costs associated with relocation, including down payments, lien payoff and initial new mortgage payments.
"The fact that this offering was oversubscribed is a powerful endorsement of the Knock bridge loan as a stable, reliable investment."
The securitization also led Knock to achieve profitability for the first time, it said.
The demand for bridge financing products
Knock is among a crop of fintechs that arrived over the past 10 years with various types of buy-before-you-sell products aimed to help buyers compete in hot housing markets where sellers were reluctant to accept contingencies. Some nonbank lenders later designed their own programs in response to surging home sales early this decade.
In June, nonbank lending giant Rocket joined the ranks of providers with the rollout of its own
While some of the newer firms folded or agreed to be acquired as home sales softened over the past three years, fintechs continuing to operate with buy-before-you-sell financing or
Founded in 2015 as a real estate startup, Atlanta-based Knock repositioned itself in recent years as a business-to-business loan platform that serves consumers exclusively through lenders and real estate agents. Knock's product is currently available through partners in 32 states and the District of Columbia.
The strategy helped lead to 126% year-over-year volume growth in July, the company said. With the securitization announcement, Knock also said it would increase the maximum loan amounts from $750,000 to $1 million.
The company has raised $138 million in capital funding over seven rounds, according to fintech data intelligence provider Tracxn. Its investors include Second Century Ventures and Foundry.
