Six months after raising capital, digital mortgage startup Maxwell announced Tuesday the launch of a trading platform to provide community lenders access to the secondary market, connecting these loan sellers to buyers.
The initiative attempts to reduce the volume of loans in small and midsize lenders’ balance sheets, so they can capture the volume of new loans available in the market and compete with the industry’s largest players.
The new solution, called Maxwell Capital, is intended for lenders who originate loans on the Maxwell platform and have an average total volume between $200 million and $2 billion a year.
Maxwell will provide the platform service for sellers and attract buyers. (The company said it has already gone through the process of getting four investors onboard.)
Also, the startup will use its own capital to buy loans from community lenders. Part of the money for the solution came from $16.3 million raised in a Series B funding round in March, led by Fin VC and TTV Capital.
Other investors included Rotor Capital, The Mortgage Collaborative Emerging Technology Fund, Prudence Holdings, and existing investors, including Anthemis Group, Route 66 Ventures, and Sovereign’s Capital.
The industry veteran Sadie Gurley will lead Maxwell Capital. The executive joined the startup early this year after a career at Goldman Sachs, Fortress, and Marathon.
“Our goal is to make the process better, faster, and more replicable. Also, we want to use our balance sheet because we may have more capital than some of our clients,” she said.
According to the executive, the company will not own the loans but sell to investors, gaining the spread in the transactions. However, as buying and selling mortgages is a capital-intensive business, Maxwell will probably need to raise more capital if the platform grows.
John Paasonen, Maxwell co-founder and CEO, said in a statement that the new platform is giving local and regional lenders a financial edge to compete.
“Lenders serving communities across the country face an enormous challenge in competing against the largest lenders who have the technology and the scale to generate higher margins that deliver competitive rates to borrowers,” he said.
Founded in 2016, Maxwell looks to digitize the entire mortgage transaction with fulfillment, payments, and due diligence solutions. The company uses artificial intelligence to streamline and accelerate the mortgage process for community lenders, a group that represents roughly half of $4 trillion U.S. mortgage market.
The company claims it has 250 lenders and facilitated over $60 billion in loan volume last year. Also, it says that its clients close 20% more loans per month and save over 13 days to close deals compared to the market.