Tomo, a fintech mortgage startup run by former Zillow executives, is expanding its presence, announcing this week that it will now serve borrowers in Florida, Connecticut and Colorado. And they’re looking to capitalize on higher home prices and the market for jumbo mortgages.
Founded in October 2020 by former Zillow executives Greg Schwartz and Carey Armstrong, the Connecticut-based company, first launched its platform in Seattle, Washington and Austin, Texas.
Schwartz in a statement said that this expansion “is proof that there’s tremendous appetite for what we’ve built – a digital experience, designed from the ground up to meet the needs of homebuyers today.”
“The mortgage is the catastrophe of the real estate transaction,” added Schwartz. “For too long, homebuyers have been forced to accept an outdated process that’s painful, cumbersome and expensive.”
According to the company, jumbo loans will be available for both 15-and-30-year cycles. For qualifying buyers, loans can be distributed in amounts up to $3 million
Currently, the fintech’s product portfolio includes conventional 15- and- 30-year fixed rate loans but the lender does not offer FHA or VA loans. Refinancing is also not an option.
The home lending industry has a massive opportunity to digitalize to create efficiencies and to deliver a simpler end-to-end user experience that would benefit both borrowers and servicers.
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Last year, the company, which pegs itself as a disrupter of the mortgage market, had a $70 million seed round, one of the largest ever raised in the U.S., the fintech company said.
Ribbit Capital led the financing, which also included participation from partners of DST Global, NFX and Zigg Capital.
Meanwhile, in October 2020, Tomo picked up $40 million in a seed round led by the same investors.
Tomo noted that its purchase-only business operation stand in “stark contrast to the vast majority of lenders that cyclically chase the refinance market.”
“Today, many of those mortgage originators find themselves scrambling to contend with new economic and operational realities as refinancings dry up,” the company said in a statement. Tomo does not do refinancings; it will only originate purchase mortgages, and it’s specifically targeting areas with especially fast-rising home prices and high demand among millennials, who are generally disadvantaged in today’s housing market.
The digital mortgage lender advertises that it creates pre-approvals for its customer within hours, not days, charges no lender fees, and ensures on-time closings 100% of the time.
Tomo claims its platform is different from its competitors, which range from traditional mortgage companies and banks, all the way to power buyers and hybrid brokerages like Redfin.
Its digital mortgage product focuses on data, automation and third-party API integrations, and Tomo claims it will offer the lowest mortgage rates in the industry by matching competitors’ rates. If an appraisal doesn’t come in on time or closing documents don’t make the deadline, Tomo executives say they will still close on schedule.