Applying for a mortgage remains one of the most painful parts of buying a home, so large lenders are investing heavily in technology to simplify the process.
That’s left their smaller competitors on edge, worried that companies such as QuickenLoans or LoanDepot “are going to eat their lunch,” said Andy Taylor, former director of product at high-tech brokerage Redfin.
Taylor founded Approved to help these companies neutralize this threat. The platform, which has announced $1 million in pre-seed funding, lets small-to-medium size lenders and mortgage brokerages provide a seamless application and approval process to borrowers.
Through integrations with banks and companies like TurboTax, ADP and or Paychex online, Approved can automatically pull in documents needed to assess a borrower’s qualifications and verify their income and assets, such as bank statements, tax returns, pay stubs and W-2 forms.
Prospective borrowers can also upload documents on the go and collaborate with loan officers inside the platform on tasks such as reviewing the conditions that must be met before an interest rate can be locked.
The platform also offers digital document templates for all major loan types, including mortgages insured by Fannie Mae or Freddie Mac and the Federal Housing Administration.
“It’s like pulling teeth to get those documents from a lot of borrowers,” Taylor said about how the mortgage application normally works. “I’ve listened to loan officers spend a half hour on the phone with their clients troubleshooting pop-up [ad] blockers so they could get online statements.”
Approved eliminates much of this grunt work, saving time for both the borrower and loan officer.
Lenders who tested Approved for six months saw a 50 percent reduction in the time it took them to hoover up the necessary paperwork for a loan application, the company says.
Drawing on his experience at Redfin, Taylor also wants to build some features into Approved that can empower real estate agents.
When submitting a pre-approval letter with an offer, buyer’s agents want the amount that appears on the letter to mirror the offer. Otherwise, they might telegraph their client’s ability to pay more.
One feature that Approved is working on would allow real estate agents to generate new pre-approval letters on the fly, so long as the letter conformed to parameters set by the lender.
Approved’s funding round was led by Social Capital. Other investors who participated include Precursor Ventures, Bluesky Equities, Graph Ventures and angel investors who were previously real estate agents, Taylor said.
