Noah raises $ 150 million for home loans
A startup that gives cash loans to homeowners in exchange for a stake has raised $ 150 million to meet growing demand from cash-strapped homeowners.
San Francisco-based Noah said the money came from anonymous institutional investors, including pension funds.
The funding follows Union Square Ventures’ $ 5 million Series A in September 2019. Other investors include Breega Capital and Techstars Ventures.
In a statement, Noah said he would use the cash injection to increase his lending power and continue to grow nationwide.
Founded in 2016 as Patch Homes, Noah is one of several alternative finance startups to appear in recent years. The company pre-qualifies the loans by asking homeowners to provide their address, credit rating, and home debt balance. He charges $ 2,000 or 3% of the loan amount, whichever is greater, and shares the future value of the home, whether it goes up or down.
Designed as a way to help homeowners access their home equity in expensive housing markets, the company said it saw a slight increase during the pandemic in homeowners needing cash.
Big banks including JPMorgan Chase, Wells Fargo and US Bank have stepped up borrowing standards on home loans.
In recent weeks, Noah said interest in his product had increased, with inquiries on his website rising 600%. His data shows that 7% of homeowners have delayed or suspended their mortgage payments while waiting for stimulus checks or other financial relief.
Currently, Noah operates in California, Utah, Washington and Colorado. He targets Washington, DC, Virginia, New York and Massachusetts in the second half of the year.
“We have had owners who came to see us when they had nowhere to turn,” co-founder Sahil Gupta said in a statement. “In this state of financial uncertainty, we are encouraged by our latest capital investment as it strengthens our ability to continue to work in partnership with owners and help them access immediate funds.
Noah also allows investors to gain a foothold in the residential market.
In 2018, investors such as Starwood Capital and Blackstone Group-led Invitation Homes bought a fifth of all start-up single-family homes, according to CoreLogic. In hot markets, investors bought nearly 50 percent of the starter houses.
This fueled investments in companies like Noah and competitors like Unison and Hometap, which raised $ 100 million Series B in December. Last year, Point, another home loan startup, raised $ 122 million.