Merger between Stavvy and Brace announced

Digital software provider Stavvy has agreed to acquire fellow mortgage technology startup Brace in a deal that will boost servicing capabilities the Boston-based fintech can provide.

The deal, which was announced on Tuesday, brings together two alums of Flagstar Bank's MortgageTech Accelerator program. Financial terms of the deal were not disclosed. 

The merger with Brace, which has offices in New York and Los Angeles, will add further capabilities to better facilitate Stavvy's goal to offer an end-to-end digital loss-mitigation process through self-serve borrower options and are expected to expedite request and review. Brace's platform also is able to produce a digital asset report based on document verifications.  

Stavvy, whose products are aimed at reducing friction and paperwork in real estate transactions through processes such as electronic signatures and remote online notarization, already offered services aimed to address potential borrower defaults. Among the transactions the fintech's tools can currently support are digital loan modifications, in addition to technology-backed loan closings and title settlements on the origination side.

"Stavvy and Brace's unified services are set to deliver an unparalleled solution, encompassing every critical stage of default servicing — from the initial homeowner inquiry to the ultimate resolution," Stavvy Founder and CEO Kosta Ligris said in a press release. "Our unified team of industry experts combined with research and investments in generative AI and customizable workflows positions Stavvy to independently reduce the need for antiquated mortgage processes."

With the acquisition, both servicers and borrowers will have access to a platform they can utilize when and where needed "on their terms," Stavvy claimed.

"Stavvy's vision of streamlining real estate transactions aligns seamlessly with Brace's unwavering dedication to tackle the inefficiencies and foster transparency within the mortgage industry," said Brace CEO Eric Rachmel.

Both Stavvy and Brace are previous participants in Flagstar Bank's accelerator program, which mentors emerging home lending fintechs working across the spectrum of mortgage services. Brace was selected to be part of the inaugural class of startups in 2019, while Stavvy took part in the program one year later. 

Flagstar has also served as one of Stavvy's clients, using the company's digital servicing solutions to execute remote loan modifications.

To date, the two companies have raised a combined total of $130 million in capital to develop new mortgage technology, according to a Stavvy spokesperson.

The deal between the two companies arrives after the release of a recent report from servicing technology firm Black Knight that found a high degree of willingness among over 300,000 borrowers to use its self-service tool offered by some of its clients to address their loan situations during the COVID-19 pandemic. Homeowners took advantage of self-service for everything from forbearance requests to final loan modification. 

Many housing experts think the development of tools borrowers can access themselves will help to ease anxiety among struggling homeowners and help lenders identify potential financial distress early, preventing small problems from turning into foreclosures.