Expert: Construction lending prepares to meet its perfect storm

Trillion-dollar industry greatly underserved

As the mortgage industry seeks to revolutionize lending by bringing technology to the origination process, an expert pointed out one market has been severely overlooked – the construction lending market.

“This is a trillion-dollar industry in the United States that definitely affects our entire economy, and it’s been greatly underserved from a technology perspective,” Built Technologies CEO and co-founder Chase Gilbert said in an interview with HousingWire.

Built, a provider of construction lending automation software and a 2017 HW Tech100 honoree as one of the top technology companies in the housing industry, announced last week that it raised $21 million that it plans to use to “transform” the construction lending industry.

Gilbert explained construction loans are currently tracked through emails, phone calls or even fax.

“Traditionally managing risk is very difficult because all these loans are being tracked on spreadsheets and in emails, so it’s very difficult to do anything with the data, and by digitizing the process, we make that data much more readily available and accessible and usable,” he said.

Across the mortgage industry, experts recently pointed out that servicing has not received the same attention as technology on the front end. Fannie Mae’s CEO stated the GSE is now devoting more attention to mortgage servicing tech.

And the need is even greater in the construction lending space.

“I’m thrilled to be joining the board at Built and to be making this announcement today,” Index Ventures Investor Mark Goldberg told HousingWire. “We think it’s a great team and a huge market with very few competitors.”

“As we looked at the construction lending space we were just shocked to see how big the problem is,” Goldberg said. “There’s over a trillion dollars in loans being managed on paper and Excel spreadsheets and through phone calls and emails.”

And as with any disruption, sometimes the greatest obstacle is not technological, but psychological. 

“But the bigger thing we combat every single day is simply that people have gotten comfortable with the status quo, or they are unaware of the fact that there’s a better way, and that is what we’re most excited about,” Gilbert said. “Especially now, we have definitely woken up a large segment of the market, but there’s still a massive industry, so we’re excited with even more fuel on the fire with this capital raise, to accelerate the awareness factor.”

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