Anyone who has taken out a mortgage knows it can be an exhaustive and time consuming process. The average time between applying for and closing a mortgage is nearly 40 days.
Blend wants to help lenders and big banks process mortgages faster. Its pitch is that it can complete the process in a matter of minutes, not weeks. The company, which launched in 2012, goes up against the traditional mortgage process, which evaluates loans via paperwork and traditional methods.
But for many large lenders, processing and creating mortgages costs a lot of money, explained Blend CEO Nima Ghamsari. In fact, he estimated that banks spend $7,000 per loan on labor cost and other details.
Blend's software provides a more data driven approach for lenders by integrating data from digitized pay stubs, tax forms, and bank statements. The company has also developed proprietary algorithms to process things like credit score, risk, and more.
By putting the process online, Blend's mortgages can be approved in minutes. Furthermore, the online process is more friendly for customers, illustrated by nearly 30% of applicants at one lender using mobile devices to fill out their applications.
Speed is what caught the attention of a number of Silicon Valley investors, including Ken Howery and Peter Thiel at Founders Fund, a firm that has backed Palantir, SpaceX, and Airbnb. On Wednesday, Blend announced that Founders Fund, along with existing backers Lightspeed and Formation 8, invested $40 million into the company.
“This is a technology challenge that lenders are not positioned to solve on their own,” said Thiel. “Blend’s engineers and data scientists are making the highstakes mortgage transaction better for lenders and borrowers. They are changing the way the entire industry operates.”
For more on mortgages, watch:
Blend said a number of large lenders have been using its software, but it declined to name them. Blend charges these lenders to use its software.
Blend said that the company's software helped issue $6 billion in loan volume in the fourth quarter of 2015. The company expects that number of increase significantly this year, explained Ghamsari.
"We want to be the TurboTax for mortgages," Ghamsari said.