Mortgage rates have hit historic lows with demand for housing surging as a result of the pandemic. Nonbank mortgage lenders issued 68.1% of all mortgages originated in 2020, up from 58% the year earlier. With so many options for consumers, navigating the process can be arduous. Morty is an online mortgage marketplace that brings all mortgage options for borrowers into a centralized platform where they can manage all facets of the mortgage process from origination to closing. Purchasing a home is often the biggest financial decision for consumers and ensuring that you are getting a competitive rate has tremendous financial ramifications – a small difference in rate can translate to thousands of dollars in payments or savings. During the pandemic, revenue grew 800% year-over-year with the platform processing more than $500M in new loans. Morty is licensed to operate in 36 states and the District of Columbia.
AlleyWatch caught up with CEO and Cofounder Nora Apsel to learn more about the experience of building a digitally-native mortgage marketplace, the company’s strategic plans, latest round of funding, which brings the total equity funding raised to $38.4M, and much, much more.
Who were your investors and how much did you raise?
March Capital led the $25M Series B round and was joined by new investor Rethink Impact as well as existing investors Thrive Capital, Lerer Hippeau, Prudence Holdings, MetaProp, and FJ Labs.
Tell us about the product or service that Morty offers.
Morty is an online mortgage marketplace that provides homebuyers a place to evaluate competitive offers from multiple lenders, then lock and close their loans through an automated platform.
What inspired the start of Morty?
Change in the mortgage industry is long overdue. My cofounders and I believed that there should be a better way for homebuyers to navigate what is often the most important financial decision of their lives. We decided to build a marketplace to democratize access to home financing solutions and provide consumers greater choice, more competitive pricing, and ensure a better customer experience.
How is Morty different?
The Morty marketplace provides access to the universe of loan products, which makes it inherently price competitive and robust in terms of options. It also means that Morty is lender agnostic. Our incentives are always aligned with the homebuyer, and we focus on making sure they get the best price and experience, regardless of the lender. At Morty, we believe the marketplace model is simply the better model for consumers, lenders, and anyone involved in the financing transaction.
What market does Morty target and how big is it?
Morty’s goal is to support all home buyers across the U.S., regardless of the type of home financing they are seeking. Currently, we are licensed in 36 states and the District of Columbia, and we offer financing options for conventional purchase loans. Today, our average loan amount is $325,000, and about half of our customers are first-time homebuyers. However, we find that experienced home buyers are some of our biggest fans, as they have gone through the traditional mortgage process and are actively looking for an alternative.
What’s your business model?
Morty is free to use for home buyers. We charge an origination fee to our lending partners at the time the loan closes. Because we are a marketplace and not a direct lender, we don’t have heavy capital requirements in order to operate and grow. We see ourselves as the connective tissue in the real estate ecosystem, a marketplace that brings together everyone involved in a transaction, from homebuyers to lenders, but also title, appraisal, HOI, and anyone else who benefits from making sure the home financing process goes smoothly.
How has COVID-19 impacted the business??
The active pandemic era housing market created a lot of positive momentum toward digitizing the real estate industry, which has lagged behind other sectors in terms of shifting the home buying experience online. We were able to capitalize on the heightened activity in the housing market, and our marketplace was also a critical backstop to homebuyers whose original lenders fell through during the early days of COVID-19 when a few lenders ceased operations temporarily.
What was the funding process like?
We knew we were coming into the raise with impressive numbers so focused our efforts on seeking out investors that could really bring a value-add to our cap table. We are so lucky to have connected early in the process with Julia Klein from March Capital, a firm that really understands marketplaces, as well as Jenny Abramson from Rethink Impact, who believes in our greater mission of financial equity and access.
What are the biggest challenges that you faced while raising capital?
I’m sure all founders say this, but fundraising is a full-time job, so shifting your attention to focus on the raise while also running the business is a big challenge. Luckily, we have a great leadership team at Morty who gave me the space I needed to commit to the round.
What factors about your business led your investors to write the check?
Our marketplace model and vision for the role we believe we can play in the real estate ecosystem was top of mind. We are also a product and engineering-led team, which is somewhat unique to see in this industry.
Our marketplace model and vision for the role we believe we can play in the real estate ecosystem was top of mind. We are also a product and engineering-led team, which is somewhat unique to see in this industry.
What are the milestones you plan to achieve in the next six months?
We’d like to get to all 50 states by the end of 2021 and expand our product coverage in other ways. Hiring, R&D, and marketing are all really important to the business in this period.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Keep at it. There is no ideal time frame for when a fundraise “should” happen. Do what’s best for your business and nail your model before you rush to secure capital.
Where do you see the company going now over the near term?
We really see ourselves as the homebuyer’s advocate in the mortgage process. I’m excited to explore not just how this point of view informs our product development but also how we can express this intention more as a brand. Watch this space.
What’s your favorite outdoor dining restaurant in NYC
La Superior – Williamsburg.
