Thoughts on Disrupting the Mortgage Lending Industry from 500 Startups Alum Lenda

October 29, 2014

8:00 pm

“At Lenda, our sole mission is to bring back the American Dream. But, this time, to do it in a way that doesn’t end up like the American Nightmare.”

Jason van den Brand is the cofounder and CEO of Lenda, a startup that has made it its mission to change the way Americans think about and deal with mortgage lending. Formerly known as GoRefi, the San Francisco, California-based company offers consumers a new way to approach the refinance mortgage market by providing a platform that allows borrowers to complete the home loan process completely online and without the use of a loan officer acting as a middleman.

A Batch 9 graduate of 500 Startups, Lenda aims to be the “Turbo Tax for mortgage” according to van den Brand. Operating wholly online, customers can request an estimated quote for a refinancing loan from the platform simply by providing their email address, zip code, estimated property value, estimated credit score, and current mortgage. If and when borrowers do decide to use Lenda, the company not only allows borrowers to close their refinance loans three times more quickly than the industry average (at an average rage of 21 days versus the current industry standard of 64 days), but are also able to offer between one-eighth to one-quarter of a point less on interest and APR.

We got a chance to ask van den Brand some questions about Lenda and his thoughts on the mortgage industry, and we thought his responses warranted attention, so we’ve published them fully below:

What motivated or inspired you to create Lenda? Do you have a personal backstory having to deal with this industry or having to refinance yourself?

“Ultimately, after dealing with thousands of clients over the past 11 years, you quickly learn that they are tired of the telemarketing, the paperwork, the confusion, the expense, and the lengthy timeframe to get a loan done. So, we looked long and hard at those five things and realized that we could find solutions for all of them by building software to replace the very person that drives those processes: the loan officer. And this is just the beginning – there’s bloat, waste, and inefficiencies in each part of the process within the industry and we’re hell-bent on starting with the consumer’s experience on the front and automating through to the end.”

Do you have other competitors offering similar products? If so, what are the primary selling points of Lenda? Why should borrowers choose Lenda over anything/everything else?

“No other lender is doing it like us just yet, but I’m sure they’ll come if they haven’t already. We welcome it because ultimately there’s lots of room at this table as mortgage is [at] the epicenter of a $10 trillion vertical. And we’re also still in the middle of this massive consumer behavior change where people want online tools to help them through this process, but [Lenda] is not [yet] big enough for them to know about this better alternative. The best analogy I’ve heard is that Lenda is doing for [the mortgage industry] what Wealthfront did for financial advisory; essentially, it’s a far better experience at a fraction of the cost, thanks to technology.”

How are you able to offer a quicker turnaround time on refinancing than what’s currently available on the market?

“The largest delays in home loans come from not pre-underwriting the criteria of a loan enough before committing to getting it done. Our algorithms are constantly evolving to make sure that when you go through our site and complete the process (i.e. 1) rate quote, 2) application, 3) credit, 4) disclosures, and 5) document upload), that we’ve already done a lot of the heavy-lifting up-front and are 99 percent sure you’re qualified. This makes things move fast through the rest of the process.”

Why do you think the mortgage industry has been stuck or has remained unchanged? Do you really think that you can disrupt it to the point of, say, Uber and Lyft for the cab industry?

“Mortgage is stuck because every process and every decision is built around one thing: paper. And paper is slow, and paper is expensive; because to move paper you need people. But times have obviously changed and the industry is just too big and bloated to change quickly. So, you have to scrap it all and start from the beginning. We continue to ask ourselves: ‘If you were starting Fannie Mae today, how would you do it and why?’ We’re not the biggest fans of the word ‘disruption’ but look at the sea [of] changes taking place as an outright revolution. Anti-bank sentiment has never been higher and that makes complete sense. They’ve ripped us off and screwed us over for so long, and then to make matters worse – when the ship was sinking in 2008 – we the taxpayers had to foot the bill for their blatant disregard for right from wrong. It was disgusting and the American people are not going to forget that anytime in the near future. So yeah, disruption, revolution, whatever. It’s happening right before our eyes with Uber, AirBNB, and Tesla, and it’s about damn time.”

What are your goals for Lenda? What can we expect from the company in the near future?

“At Lenda, our sole mission is to bring back the American Dream. But, this time, to do it in a way that doesn’t end up like the American Nightmare. We’ve accomplished that by removing the very moral hazards that have given the industry a black eye: sub-prime, steering, red-lining, sexism, racism, inequality, etc. If you have good credit, you get the same deal as the next person with good credit. And I’ll be damned if we can’t make sure that that deal isn’t the best on the entire market. There are three things upcoming for us that we’re really excited about: 1) Automated approvals within seconds of uploading your documents. Like, real approvals, not that credit card offer in the mail crap. 2) Integrations with banks to make the document gathering process faster. Login to your accounts from our site and we’ll do the rest. And 3), more products, even lower rates, and even lower costs. Getting a mortgage should cost zero. Now only if we can convince the government to give a break on taxes – hmmm, someday.”

What motivates you to go to work each day?

“This one comes in two parts. First: helping people. A few years ago, my wife and I dumped our life savings into an around-the-world trip, with the goal to volunteer in every country we visited. While in the Philippines, we were volunteering at schools and hospitals and both found our callings: my wife went on to become a teacher, and I [decided] to head to med school; I wanted to help people, but when looking at the cost of med school and the lengthy life sacrifice, pragmatism quickly set in. I decided I could still help people in the industry I knew best, and here we are. Secondly: like most Americans, I’m pissed. I’m angry at the way home loans are now completed. I’m angry at the financial injustices (and all injustices for that matter) because of skin color, education levels, sexual orientation, etc. And our entire team is, too. There is a better way to do this. There is a better way, period. The revolution has just begun…”

Most recently, Lenda closed a $1.54 million seed round this month, which will help the company expand its services outside of California – with entries into Oregon and Washington next month. The company has closed over $13 million in loans since its launch.

Learn more about Lenda. 


Did you like this article?

Get more delivered to your inbox just like it!

Sorry about that. Try these articles instead!

Ronald Barba was the previous managing editor of Tech.Co. His primary story interests include industry trends, consumer-facing apps/products, the startup lifestyle, business ethics, diversity in tech, and what-is-this-bullsh*t things. Aside from writing about startups and entrepreneurship, Ronald is interested in 'Doctor Who', Murakami, 'The Mindy Project', and fried chicken. He is currently based in New York because he mistakenly studied philosophy in college and is now a "writer". Tweet @RonaldPBarba.

Leave a Reply

  • (will not be published)