Fintech

Startup Orchard launches new mortgage product offering

Orchard also launched a title and escrow unit, dubbed Orchard Title, in the fall of 2018

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.

An increasing number of real estate startups want to offer a fully integrated platform, giving users the opportunity to search, buy, and close on a home in one place.

Orchard (formerly called Perch), which operates a home buying marketplace, is the latest. The company announced on Wednesday that it has branched out into the lending business.

Orchard started out with the mission of helping people buy homes before they’ve sold the ones they currently own by providing them with the needed cash.

It has since expanded its offerings.

Orchard launched a title and escrow unit, dubbed Orchard Title, in the fall of 2018. Earlier this year, the company began the initial pilot of its integrated mortgage offering in Texas markets.

And on Wednesday, it announced its formal launch of Orchard Home Loans.

CEO and co-founder Court Cunningham said Orchard had heard repeatedly from customers that they wished the company could help them with their mortgage as well.

Orchard’s goal is similar to that of many others in the space (think Zillow, Opendoor, Offerpad and Better.com) in that it wants to provide all the services a home buyer might need from beginning to end. Or in other words, it seeks to offer a fully integrated real estate platform. The company provides AI-powered home search and an all-digital mortgage and closing.

The way it works is Orchard asks a prospective customer some questions about their current home and goals via an online form. It then conducts a free home assessment to prepare a cash offer, and pairs a customer up with one of its advisors. That advisor then helps the customer to “tour any home” in their area. When they are ready, Orchard then uses its cash to make a contingency free offer. Upon closing, customers are able to move in when ready and won’t have to start paying a mortgage until their old home sells.

Once their old home sells, Orchard then transfers the new home into the customer’s name. The company charges a one-time 6% fee on the sale of the customer’s old home.

Before a customer starts shopping for homes, Orchard notes, they get pre-qualified for a mortgage to help them gauge what they can afford to buy. They can work with any lender of their choice, including Orchard Home Loans. Orchard will then use its cash to purchase and hold the new home for them until their old one sells. Once the sale of the old home is complete, the customer uses the mortgage, which they have pre-qualified for, to finalize the purchase of their new home.

Orchard’s headquarters are in New York City, and it offers its services in Colorado, Georgia and Texas.

In January, Orchard raised $36 million in a Series B round led by Navitas Capital. That financing took the company’s total known venture raised since it was founded in September 2017 to $66 million, according to Crunchbase. Orchard has also raised a total of $220 million in debt financing since its September 2017 inception.

At the time of its Series B raise in January, the company said it had seen “10x year-over-year revenue growth”  and that it had over 150 employees.

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