News , Home Equity

Button Finance Raises 2 Million Dollars To Spur Home Equity Growth

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 2 minute read

Button Finance, a New York-based fintech startup specializing in home equity loans, announced the close of a $2 million seed round on Monday.

The mortgage firm intends to work with traditionally underrepresented borrowers to help them achieve more financial independence through the use of an artificial intelligence-powered underwriting platform. It anticipates making financial decisions within the next five days.

“As a result of the current home price boom, American homeowners today have more untapped equity than ever before,” Button Finance CEO Jason Harris noted in a press release. “Button Finance’s solutions enable homeowners to tap into their equity, consolidate high-interest debt, and undertake value-adding home upgrades.”

When homeowners with less-than-perfect credit seek a consumer loan, they are sometimes limited to high-interest credit cards or peer-to-peer lending programs, where interest rates can reach as high as 36%, Harris added.

“It was pretty remarkable to see how many people were acquiring larger consumer loans at interest rates that were absolutely absurd in comparison to mortgage rates,” he told National Mortgage News in an interview.

While the notion is riskier than more conventional offerings, Harris believes it is customized to a client base that banks are overlooking.

“We feel that if Lending Club is willing to provide someone with an unsecured consumer line of credit, we are willing to provide them with a far deeper mortgage,” he explained.

The funding round was led by Hildene Capital Management and included L&L Capital Partners and angel investors active in New York fintech. Button Finance intends to use the financing to enhance its proprietary technology and strategically hire new employees as the company grows.

“Traditional mortgage lenders have been slow to adopt innovative technology and underwriting practices,” said Dushyant Mehra, co-chief investment officer of Hildene Capital Management, a credit business focused on distressed and event-driven credit opportunities. “The Button Finance team discovered a market opportunity and built a comprehensive underwriting model to take advantage of it, resulting in higher risk-adjusted yields.”

Additionally, in line with the capital increase, the company announced the appointment of Josh Hager as head of mortgage operations. Hager has over two decades of experience in the business and formerly held leadership positions with fintech mortgage originators such as, Homeward, and Divvy Homes. Earlier in his career, he had underwriting and mortgage operations roles at Wells Fargo and Bank of America.

Button Finance was launched in 2019 and plans to expand into new products over the next two years, according to Harris.

“We’re likely to expand first into other mortgages and subsequently into unsecured consumer loans, but it is contingent on current market conditions.” It appears as though there is a fair playing field for home equity today,” Harris remarked.

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