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IPO / M&AMortgage

Figure and Homebridge cancel planned merger

Regulatory delays chiefly responsible for cancelation, but companies will maintain strategic partnership

Mike Cagney - HW+
Figure Technologies co-founder and CEO Mike Cagney

Fintech lender Figure Technologies and multichannel originator Homebridge Financial Services last August announced a merger that they claimed would usher in monumental change to the mortgage industry.

Figure, founded in 2018 by SoFi co-founder Mike Cagney, would bring a blockchain tech platform to the merged company, which would double the lender’s capacity to fulfill loans. Meanwhile, old school New-Jersey-based Homebridge, founded more than 30 years ago and led by Peter Norden, would add 150,000 customers, the companies announced. 

“We are bringing together the most robust, powerful and efficient technology ever seen in lending and pairing that with a $25 billion a year loan originator,” Cagney, co-founder and CEO of Figure, said in a statement during the announcement. 

But things did not happen as expected. The companies are canceling their proposed merger just 10 months after the announcement, as regulatory approval on the deal hasn’t occurred, and the demand for new technologies and products is too strong to wait. 

“Due to the delays in closing coupled with continued momentum in other parts of our lending, payments, and marketplace businesses, we have concluded with the Homebridge team that the merger will not go forward,” Cagney said in a message sent late Friday to Figure’s team. 

A spokesperson for Figure said the company had no additional comments beyond those posted on its website. Homebridge did not return a request for comment. 

The companies will keep an ongoing strategic partnership, collaborating to drive the advancement of the Figure’s proprietary platform, called Provenance Blockchain, Cagney said in the message. 

They will also work together to develop new products, such as a home equity line of credit (HELOC) and piggyback products. “We will work closely with Homebridge to identify and deploy new applications, including a version of the whitelabel HELOC product for the wholesale market,” Cagney said. “Homebridge will continue the integration plans with DART, our blockchain-based mortgage and eNote registry.” 

HousingWire reported in March that the delay in the deal’s approval was changing Figure’s strategy. In early April, the company launched a cryptocurrency-backed 30-year fixed-rate mortgage product for borrowers to use bitcoin and/or ether as collateral.  

The plan was to launch such a product only after completing the merger with Homebridge, but circumstances changed because of delays in completing the deal. 

Also, two other companies have announced the product since December, including Miami-based digital lender Milo and Toronto-based cryptocurrency lending platform Ledn

Cagney has said it is realistic to think Figure will reach between $500 million to $1 billion in origination volume in 2022. Figure will use its own cash to originate up to $100 million in loans. And while Figure has no plans to raise capital for the product, it can tap other sources of funding if needed.

Per Crunchbase, Figure has raised $1.6 billion in venture capital, including a $200 million Series D round in May with 10T Holdings and Morgan Creek Digital, as well as a $100 million funding facility from JPMorgan Chase in January 2021. 

In merging with Homebridge, Figure planned to partner with a lender that competes in multiple channels. According to Inside Mortgage Finance, Homebridge was the 36th-largest mortgage originator in 2021, originating about $23.5 billion in mortgages, a decrease of 11% compared to 2020.

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