HomeLight CEO Drew Uher said he was pleased to exit the mortgage business. Fathom CEO Marco Fregenal sees value in participating in loans “in a very selective way.”
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For real estate agents looking for a chance to win in the post-commission litigation era, getting into the mortgage business may seem like an attractive opportunity to generate additional revenue.
Agents and brokers attending Inman Connect Las Vegas learn about the pros and cons of researching a mortgage from multiple perspectives.
Those views include HomeLight founder and CEO Drew Uher, who has done this before, and Fathom Holdings CEO Marco Fregenal, who still sees value in getting into the mortgage business “in a very selective way.” . LoanDepot CEO Frank Martell urged Compass to think twice before expanding its lending business.
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Uher, a 2023 Best of Proptech Inman Award winner, launched HomeLight in 2012 as an agency matching site with support from Google Ventures and others. HomeLight entered the mortgage business in 2019 by acquiring digital mortgage company Eave, which was renamed HomeLight Home Loans.
HomeLight has since gotten out of the home loan business and has “a newfound respect for the mortgage industry,” Uher said.
“If we go back to 2021, [we had a] “We’re going to have billions of dollars in revenue going forward… from tremendous growth in mortgage lending,” he said.
HomeLight understands that mortgage lending is a “people-intensive business,” and Uher said he’s happy to leave it to “people who are really good at it and specialize in it.” Our unit economics now look more like software profits than they did a few years ago.
HomeLight Home Loans Inc. holds licenses in 34 states and Washington, D.C., and sponsored 13 mortgage loan originators at last count, according to records maintained by the National Mortgage Licensing System and Registry.
HomeLight continues to partner with mortgage lenders to provide power buyer and cash offer services, and expanded its services through the 2022 acquisition of Accept.inc.
“The way the buy-now-sell-later product worked, we used to take a mortgage on that transaction — that used to be how we monetized it,” Uh said. “By getting out of this and having the agent’s preferred lender do the mortgage, we no longer create friction between the agent and the lender. We can actually use the lender as a conduit.
Fathom, which provides real estate brokerage, mortgage, title and insurance services, entered the mortgage business in 2021 with the acquisition of E4:9 Holdings and its three operating subsidiaries, Encompass Lending Group, Dagley Insurance Agency and Real Results, for $26.75 million. Although Fathom ultimately sold Dagley back to its founders this year, it expanded its presence in the lending space with the acquisition of Washington, D.C.-based Cornerstone First Financial.
Fregenal said that while mortgages represent a small part of Fathom’s business, they can be a valuable tool in facilitating transactions.
“I think what’s unique about Fathom is we’re not trying to be everything to everyone,” he said. “Our aim is to facilitate transactions. We use mortgages in a very selective way.
Fregenal said Fathom focuses on helping its agents, while Encompass “helps close deals. But I agree you have to be hyper-focused on what you’re good at.”
LoanDepot President and CEO Frank Martell also warned real estate brokers and agents on Wednesday to “think carefully” before getting into the mortgage business, calling it “a very complex, highly regulated industry.”
Martell also serves on the board of directors of real estate agency Compass, and panel moderator Clelia Peters said he has been advising the company on its possible expansion into home loans.
“He told me backstage that he was really encouraging. [Compass to] Don’t think about this type of integration anymore,” Peters said Thursday.
Uher noted, “Zillow is very much leaning into [mortgage], I don’t understand it at all. Typically, the loan officer is the one paying for the premium agent subscription, so they’re kind of biting the hand they’re biting.
Fregenal said exposure to the mortgage industry’s pioneering work in artificial intelligence is helpful to Compass.
“The mortgage industry is doing a lot of work in artificial intelligence. [that] Made them really think about the process, right? He said. “Think about how they spend their money, how long it takes to get a mortgage. So for us, having a mortgage business also helps us understand that – how do we streamline that process?
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