Just five months ago, Zillow Group announced it was officially entering the mortgage arena with the launch of Zillow Home Loans, a move made possible by its November 2018 acquisition of Mortgage Lenders of America.
Since then, the real estate giant has been working on the development of its own mortgage software, but it seems the platform’s creation is taking longer than expected.
On a call with investors on Thursday, Zillow CEO Rich Barton said the company plans to slow hiring for Zillow Home Loans until the software is officially up and running, GeekWire first reported.
“As we transition from (Mortgage Lenders of America) to Zillow Home Loans, we are building new proprietary technology to streamline and integrate home loans as our payments platform for Zillow Offers,” Barton said. “We’re already testing the initial version of our digital mortgage software, but the rollout is taking a bit longer than expected.”
Zillow’s second-quarter earnings revealed that the company’s new mortgage channel raked in $27 million in Q2, a 40% uptick from the year before.
But the pullback in hiring and delay in the software will dampen the channel’s near-term performance, as Zillow lowered its expectations for the division by about $10 million to $15 million for the remainder of the year.
On the call, Barton said the end-goal is to use Zillow Home Loans to finance transactions established through its burgeoning iBuyer division, Zillow Offers.
Through Zillow Offers, home sellers can request an instant, online offer for their home and sell it to the company within weeks (although they’ll pay slightly more for the convenience of a hassle-free sale).
By pairing the two, Zillow could potentially close thousands of mortgage loans a month, which would amount to exponential growth for its mortgage division.
“Loan originations are an essential part of our ability to deliver an integrated transaction experience for our customers,” Barton said. “We’re making solid progress and the long-term expectations for our Zillow Home Loans business.”