Valon announced that it had successfully closed a $50m Series A fundraising round. The funding round was led by Andreessen Horowitz, and Jefferies Financial Group was one of the participants. The company’s money so far is more than $53 million.
This money will be used to pay for the company’s rapid growth by hiring new employees and growing its current operations in preparation for buying more Mortgage Servicing Rights (MSR).
The investment news came after Fannie Mae permitted the company to handle government-backed mortgages. Valon also announced that Tim Mayopoulos, president of Blend and former CEO of Fannie Mae, and Angela Strange, a general partner at Andreessen Horowitz, would join the company’s board of directors.
The Goal of Valon Company
Andrew Wang, Eric Chiang, and Jon Hsu started Valon Mortgage in 2019, intending to become homeowners’ most trusted partners regarding their money. Wang, who used to invest in this type of asset, was unhappy with how few options there were and how servicers didn’t help.
The combined knowledge of Chiang, Hsu, and Andrew, who has worked in the industry for many years and has a deep understanding of its nuances, led to the creation of the Valon platform, which poses a generational threat to the current status quo.
Valon Mortgage is a Fannie Mae-approved mortgage servicer that uses technology to help people with home loans. The company says its goal is to be the partner homeowners trust most with their homes and financial futures. Valon is now allowed to do business in 49 states. Later this year, New York State will be added.
Andrew Wang, Co-Founder and CEO of Valon, said, “We are on the edge of a mortgage foreclosure disaster that will be as bad as 2008.” “Most homeowners having trouble making their loan payments don’t know their options.”
The biggest software company handles more than half of all home loans in the U.S., giving it a monopoly in the field. Since the servicing industry has a monopoly, fees have increased by about 250% over the last ten years.
The Federal Reserve Bank of New York says that consumer debt rose by $87 billion in the third quarter of 2020, bringing the total to $14.35 trillion. Nearly $85 billion of the rise in debt is because people left the city for the suburbs and rural areas during the epidemic, which caused their mortgage payments to go up.
Since the pandemic’s start, unemployment rates have gone through the roof. This has caused both the number of delinquent loans and the number of loans in forbearance.
Moody’s Analytics thinks that by 2020, the pandemic will have hurt the economy so much that 30 percent of Americans with home loans, or about 15 million families, will no longer be able to pay their mortgages. The government’s stop on foreclosures and its help for people in hard times will end later this year.
The payment service
The mortgage servicer gets the principal, interest, taxes, and insurance payments. The lender decides on the mortgage insurance premiums, which can change many times over the life of a loan. By using software to do these manual, repetitive tasks, the lender may save money and make it less likely that they won’t follow the rules. This helps the servicers because it locks them into long-term contracts but hurts the borrower.
In reality, servicers get bonuses and are allowed to change fees without the borrowers’ permission or knowledge.
Modernizing the current system won’t help servicers much, if at all. On average, it could take a big bank up to 18 months to switch to different software. Changing software providers is risky from a legal standpoint and hard to organize.
Valon solves these problems by giving borrowers and lenders instant access to information about their loans through a fully integrated stack. Borrowers can expect Valon’s software platform to have an easy-to-use interface, easy access to information, and helpful support.
Valon uses the platform’s features to keep a secure audit trail of everything a homeowner or servicer does. A privacy-by-design digital infrastructure that connects loan originators, servicers, lenders, and payers makes it possible to automate mortgage servicing tasks like disclosures, escrow, loss mitigation, and payback.