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Flagstar Backs Mortgage Fintechs That May Help Address Capacity Issues


Feb 22, 2021 by Jeff Piltch
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Flagstar Bank (NYSE: FBC) recently finished up its mortgage accelerator’s second cohort. The bank says that this is the first startup accelerator to focus exclusively on mortgage technology, a subvertical of proptech.

The bank opened up applications back in September. Flagstar encouraged startups focusing on compliance, credit and quality, marketing, origination, processing, sales, servicing, and underwriting to apply. The bank ended up choosing three companies.

The MortgageTech Accelerator Program

Flagstar is the sixth largest bank mortgage originator in the country -- a worthy candidate to initiate a program such as this one.

The bank indicated at the outset that it was looking "for companies working on breakthroughs in all facets of the mortgage business, including mortgage origination, processing, marketing, servicing, compliance, sales, underwriting, credit, and quality assessment. Among the criteria for selection were company progress and prospects for growth."

Flagstar’s head of default mortgage and the sponsor of the program, Courtney Thompson, added, "With the pandemic accelerating innovation in the mortgage industry, the timing could not be better for a program that introduces new paradigms and tech solutions for old processes...The outcomes of this program make our industry stronger and position Flagstar to continue to provide technology-enabled products to our customers."

What’s in it for the startups?

Startups accepted to the program gain access to mentors with deep industry and technical experience. Flagstar also gives companies in the cohort the ability to test their products in a real-world controlled environment. The bank opens up its wide network of potential customers and investors as well.

The three companies

Three companies were accepted to this most recent cohort.

Stavvy is a fully-integrated, digital mortgage-vendor platform that allows mortgage banking professionals to seamlessly and securely communicate and access vendor data and deliverables without fragmentation or exposure to unnecessary risk. Started by veteran banking, security, and legal professionals familiar with the challenges faced by the mortgage industry, Stavvy’s mission is to create efficiency and security in the consumer/mortgage lending life cycle.

Home Lending Pal advertises itself as "your personal AI-powered mortgage advisor." What does that actually mean? The company helps first-time homebuyers through the home research and buying process. According to a Flagstar press release, Home Lending Pal’s "business model differs from that of typical marketplaces in that it connects to trusted digital sources to validate underwriting information earlier in the process for potential borrowers."

RealKey is building a cloud-based platform to help streamline the mortgage processing experience for borrowers. The company is doing this by automating the document collection, verification, and review processes.

The Millionacres bottom line

If you’re a homeowner or a landlord, you’re rooting for companies like the ones in this cohort to be successful. Adoption from legacy industry players like Flagstar will help accelerate technology adoption in the mortgage industry, which will be good for them because it can help increase capacity. This will also help put downward pricing pressure on the overall cost of the mortgage experience for borrowers, which is good for everyone involved.

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The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.