Marketplace Lending’s New Dynamic Duo
Talk about a dynamic duo – real estate innovation, partnered with cutting edge technology.
The marketplace lending sector is fundamentally changing the way commercial and residential loans are offered, processed and delivered for customers and investors. The growth of online lending platforms continues to show just how broad and diversified this space is becoming and is opening the market up to innovations across the industry.
These online platforms are accelerating not only the lending process, but circulating those investments to innovative investors as well. A quick look at some of the platforms shows just how technology is driving this space today and for the foreseeable future.
- Better Mortgage made more than $525 million in loans its first year and originated more than $4 billion in mortgages. Social Finance (SoFi) moved into the mortgage space three years ago and made another push in January, acquiring Clara Lending, a mortgage start-up founded in 2014, according to Bloomberg. SoFi originated $12.9 billion in mortgage, student and unsecured personal loans in 2017. (https://www.bloomberg.com/news/articles/2018-01-26/sofi-buys-teams-from-mortgage-startup-clara-to-boost-offerings)
- LendingHome, founded in 2013, hit the $2 billion milestone in mortgage loans in December 2017. The pace also has accelerated, hitting $1 billion in its first 30 months, and the $2 billion mark just 12 months later. (https://www.mpamag.com/news/startup-firm-lendinghome-reaches-2-billion-origination-milestone-86954.aspx)
- Money360, launched in 2010, is a direct lender that sources, underwrites, closes, sells and services small- to mid-balance commercial real estate loans ranging in size from $1 million to $20 million. The firm topped $500 million in loans in 2017, and its founder and CEO Evan Gentry told Bankless Times that the firm should do $750 million to $800 million in 2018. (https://www.money360.com/resource-center/money360-to-build-on-origination-growth-in-2018)
- Patch of Land has handled $489.5 million in loan originations since it launched in 2014. It originates, underwrites and services loans, offering these back to accredited investors. (https://patchofland.com/statistics)
- RealtyMogul, launched in 2013, said that to date, investors have invested over $338 million on the platform, financing 350-plus properties valued at over $1.5 billion.(https://www.realtymogul.com/resource-center/faqs)
- Sharestates, which offers investors direct access to real estate investments online and claims typical net annualized returns of 8 to 12 percent, has funded $885 million in real estate loans since 2015.(https://goo.gl/kythwy)
Better Mortgage, Lending Home and Blend, recently made the Forbes Fintech 50 list. (https://www.forbes.com/sites/samanthasharf/2018/02/13/forbes-fintech-50-2018-the-future-of-real-estate-investment-and-finance/#19407cd667ed)
Blend, launched in 2012, with the aim of helping banks and lenders accelerate mortgage processing times announced a $100 million funding round and partnerships with Wells Fargo and US Bank in August 2017.
These are just a few examples of start-ups fundamentally changing the real estate lending sector not only as disruptors in the space but collaborators with established players as well. This has made the market extremely dynamic for investors and customers, opening opportunities in commercial and residential areas and expanding geographic limits as well.
Welcome to the new and evolving dynamic duo.
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