The Mortgage Firehose: A Catalyst for Fintech

In 2021, we can track a friend’s Uber ride in real time and order just about anything online with a few clicks. In this context, customers are becoming less tolerant of a painful, 40 day process to finance their most significant personal and financial asset. Why is mortgage stuck in the past, and how might startups bring us to the future?

To answer this question, I’ve articulated the thesis around mortgage innovation in collaboration with portfolio company Ocrolus here.

TLDR: mortgage lenders in the U.S. originated approximately $4.4 trillion in 2020 alone — almost double the $2.4 trillion originated in 2019. Unprecedented demand in 2020 was driven by low rates, COVID-induced geographic mobility, and millennials coming off the sidelines as homebuyers. The confluence of these factors transformed the mortgage value chain into a firehose that lenders are struggling to drink from.

It’s clear we are still in the early innings of the digitization of mortgage, with 80% of homeowners agreeing that technology should improve the process. We see startups driving innovation along four key vectors:

- Data infrastructure to streamline and enhance underwriting
- Digitizing client interactions — from onboarding through appraisal, closing, and title
- D2C startups gaining share with better customer experiences
- Startups providing alternatives to mortgage debt

Whether you’re a lender, loan origination system, or a consumer facing startup — next generation infrastructure, underwriting and automation will be critical in the path to success. We hope to back the next set of innovators driving the industry forward.