Mortgage fintech Reali to shut down

Bay Area real estate fintech Reali is shutting down, citing the waning housing market and a difficult venture capital outlook. 

The San Mateo, California-based firm will lay off most of its workforce Sept. 9, it announced Wednesday. Reali, founded in 2016, provides "buy before you sell" and cash-offer financing, and will close out active transactions through the end of the year with a small team. 

"We believed deeply in benefiting the consumer foremost in every transaction," said Amit Haller, Reali co-founder and chairman of the board, in a press release. "The six years Reali spent evolving the prop tech market in California helped elevate and transform the industry."

The company made its decision because of challenging financial market conditions and an "unfavorable capital-raising environment," it said. Loan applications are at a 22-year low, according to the Mortgage Bankers Association, while interest rates have almost doubled in the past 12 months with hikes from the Federal Reserve. 

Reali said it is in talks with companies interested in purchasing parts of its business including mortgage origination, title and escrow and power buying. The firm counted more than $300 million in funding as of last year and raised $250 million last August in a round led by Zeev Ventures. Other mortgage fintechs trimming payroll this year also cited pullbacks from venture capital resources. 

The fintech counts 277 employees on LinkedIn, and it's unclear how many will be terminated next month. Israeli business newspaper CalCalist reported Reali would lay off 140 employees including eight in Israel; the firm didn't respond to a request for comment Thursday morning.

The company offered loans in Arizona, California, Colorado, Texas and Washington, according to its site. It said last February it funded over $500 million in loans for over 1,500 borrowers, and in January made its first brokerage acquisition, Carlsbad, California-based TXR Homes.

It's one of a small but potentially growing number of mortgage companies that have closed this year amid the market's downswing. Plano, Texas-based First Guaranty Mortgage Corp. filed for bankruptcy in June, while East Meadow, New York-based Sprout Mortgage shut down in July, according to former employees and federal lawsuits.