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How Blend fuels the trillion dollar mortgage market

With more than 25% of the market, Blend CEO looks at the untapped mortgage potential

This article was written for FinLedger, HW Media’s new fintech-focused news brand designed specifically for financial services professionals in banking, insurance and real estate. Stay tuned for updates.

If you’ve refinanced or purchased a home digitally lately, you may or may not have noticed the company powering the software behind it.

There’s a good chance it’s Blend. Founded in 2012, the startup (which was one of HousingWire’s 2020 Tech 100 winners) has steadily grown to be a powerhouse in the mortgage tech industry.  Blend’s white label technology is what powers mortgage applications on the site of banks such as Wells Fargo and U.S. Bank with the goal of making the process faster, simpler and more transparent. 

The San Francisco-based startup’s SaaS (software-as-a-service) platform currently processes over $3 billion in mortgages and consumer loans per day in partnership with over 250 financial institutions, up from nearly $2 billion and over 150 lender customers last June. Blend’s customer base accounts for more than 25% of the $2.1 trillion U.S. mortgage market by origination volume, according to HMDA data. In 2019, Blend processed a total of $538 billion in loans, more than double the $211 billion worth it processed in 2018.

Just as many others in the mortgage industry, the startup has seen a big jump in business since the COVID-19 pandemic began. Refinance applications for the second week in March were up more than 1600% compared to the prior year. In both April and May, refi apps were up more than 600%, according to the company.

And let’s not forget that former Fannie Mae CEO Tim Mayopoulos joined Blend as president in January of 2019, running all the administrative and go-to-market functions for the company

With so much going on in the mortgage industry, we thought it would be a good time to talk to its CEO, Nima Ghamsari, to hear more about what’s been happening at Blend and to get his thoughts on the fintech space as a whole.

HW: This broader macroenvironment of low interest rates is no doubt fueling demand in the mortgage industry. Do you see this as being a temporary thing?

NG: I believe this is all going to last a bit longer than people initially thought. It is estimated that there is $4.5 trillion worth of loans that should be refinanced given the current rate environment. Lenders may only get through $1.5 trillion of those over the next 12 months. That is a lot of dollars that consumers are leaving on the table. That’s money that should be back in their pockets, and it’s not. So we plan to keep investing over the next 12 to 18 months at least as we don’t imagine that consumers are suddenly going to be dealing with a turnaround or amazing, perfect economy in the very short term.

HW: Last June, Blend raised $130 million at a near-unicorn ($1 billion) valuation. Any plans to raise more venture capital?

NG: We are investing in the product so much right now so that’s something we are always considering.  As a company, we’ve grown a lot. But it’s important to keep investing if we want to continue on that path. As part of that, we plan to hire another 50 to 100 people by the end of the year on top of the 100 people we’ve onboarded since March 4.

HW: Can you share your thoughts on the overall fintech landscape (especially in light of Quicken’s recent S-1 filing and nCino’s plans to file for IPO)? 

NG: The remote world that we’re moving toward is accelerating the pace of fintech adoption, which will naturally benefit companies like Quicken and nCino, who are digitally powering things.

HW: How has Blend been navigating doing business amid a global pandemic?

NG:  We can help our customers take on more business than they otherwise would if doing everything manually. Blend was building out some things over the past three to nine months, and we’ve suddenly had a ton of accelerations, such as now offering digital closings. We rolled something out on that a couple of months ago, which was six to seven months ahead of schedule.

We have heard from loan teams and banks that they need better tools to qualify and quotes. So one of the things we’ve rolled out is the ability to pull soft credit pulls for loan teams. By starting out with a soft credit pull, they can get a sense of where they stand with a consumer. Plus, it won’t affect the consumer’s credit. It’s easier for the loan officer and cheaper for the lender since they won’t have to pay for a credit pull for someone who might not turn out to be a customer. They’re dealing with a ton of volume so anything that can help save time and money is welcome.

We’ve also worked to make sure our customers have access to an entire set of data metrics they can use to run their businesses. We can either transport their data to them or they can access it on our app. It helps them to quickly visualize things like changes from month to month, and where business may be dropping off.

HW: Where do you see Blend headed in the future? 

NG: We see additional opportunities in creating a new kind of home-buying journey that’s oriented toward consumers and their goals. We want to streamline the home-buying process with a suite of services that will assist a consumer through the whole process.

Are you a financial services professional hungry for better fintech news and info? HW Media is proud to introduce FinLedger, a fintech media brand that will cover the critical news impacting financial services professionals — from SaaS to big data, and cybersecurity to regtech. Want to be notified when we launch? Enter your email here and follow us on Twitter.

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