Over the past few years, digital transformation has increasingly changed the way property and real estate transactions occur. A vertical which has seen a strong digital push is mortgages, with consumers, lenders and other agents increasingly using online tools and services to apply for and process home sales.
One company leading this charge is Morty, an online mortgage marketplace that matches customers with the right loan product for them, using technology to automate and manage the entire experience. The company has found success since its founding, doubling its size over the past year and processing over a billion dollars in loans to date.
Morty also recently raised a $25 million Series B from leading investors March Capital, Rethink Impact, Thrive Capital, Prudence and Lerer Hippeau.
FinLedger spoke with Morty co-founder Nora Apsel, who rose from engineer to COO and now CEO, about the company’s journey, overarching goals and plans moving forward.
Q: First off, can you just describe Morty and the services you offer?
A: Morty is an online mortgage marketplace, so we leverage great product and technology to first match customers with the right loan product for them. Then, we automate and manage the entire experience all the way through to closing, so we’re a full service platform. We take customers from the very beginning, figure out what they can afford, to the very end of closing on their loan.
Q: What would you say are the biggest challenges when it comes to bringing those two pieces together? Matching customers and partnering with lenders?
A: Taking a step back, my background historically is as an engineer. Part of the reason why Morty was so very interesting to me when we founded it was because it really presented this opportunity of overlap. How can we leverage technology to really do better for the consumer and promote their needs, as opposed to the traditional mortgage approach which is very much from the banks or the lender’s perspective.
Getting to what your actual question was, which is, ‘What’s the challenge in matching these two things?’ It’s really about the technology and the data flow. The reason why Morty is unique and is able to offer this access to customers in a way that traditional mortgage providers can’t is because we’re taking in all of this data from both consumers and from lenders. It’s our pricing engine that’s really identifying, ‘What is the best thing for this person right now?’ Everything changes every single day, so being able to take in all of those things and say today, what is the best thing to match customers in a really transparent user friendly type of way?
Q: Over the past couple years, what have you seen as far as technology demand growth along those lines? Are people still getting their feet in?
A: I think the progress over the past year has been quite measurable, but I still think we’re just at the beginning. If we were having this conversation five years ago, I would say the big challenge is getting people online. How do we figure out how to make sure customers know that they can get their mortgage online, and that it’s better, more transparent and secure?
That pendulum has swung a little bit more with the pandemic, and people are becoming more comfortable with real estate transactions online. You saw all that happen in 2020, and now mortgages are feeling that as well. We believe that’s a trend that doesn’t go backwards, so we’ll just continue. Customers will continue to make that migration online and it’s really the last financial transaction to be moved online.
Q: You said you have an engineering background. What have been the biggest challenges for you when it comes to learning about the mortgage industry? What has been the most eye opening thing that you’ve learned through the whole process?
A: I was an engineer for over a decade and then even before that, I worked in nonprofits for a while, so my interests are really around where technology and large scale social or financial impact intersect. I think the thing that continues to surprise me, even though I’ve been in this industry for so long, is the blackbox nature of mortgage. Customers give some information and they get out a number, or a bunch of documents that they need, and there’s no understanding of why or how to change that.
That’s the reason why you hear from customers that their mortgage was really confusing, the communication was bad and their cost was too high. It’s because everything is super blackbox and confusing, and I think even when we founded the company, I vastly underestimated the ‘blackbox-ness,’ if that is a word, of the industry.
Q: What do you think needs to be done to improve that transparency? Is it just on the technology, or is it in advocacy? Where do you see the biggest potential to educate people?
A: There are a couple of things, and one is definitely education. The content that customers want is that which puts the customer first, and gives and leads with transparency and information. The third is really building a broader ecosystem of real estate and fintech companies that are looking to help the customer, putting the customer first and making sure all of the those players in that ecosystem are connected in a really transparent way, so that the customer always knows what’s going on and what their options are.
Q: Looking at the ecosystem and your previous point about data, have you seen data driving this ecosystem forward? What have you seen data bring to the table as far as things coming together?
A: I think mortgage is a pretty big industry and I would break it into two parts around the consumer side, and then the servicing and secondary market side. I think it’s been pretty impressive to see some of the data providers and new tech startups coming to support the second part, like the servicing in the secondary markets. I think it’s the first time that the area has really seen that, which is pretty cool.
But on the consumer side, where Morty sits, it still operates largely in silos so the data share is not where it should be. We should be able to free flow, we should be able to share data when it’s beneficial for the customer, right? Whether it’s information about the transaction or the appraisal, or the homeowners insurance, numbers, that stuff should all be able to be gathered in one place so that the customer always knows what’s going on. What are their options, how much longer, what do they need to do?
Q: Do you see that happening, or is that just something that will take longer to break down. Is it even possible with regulation and things of that nature?
A: It’s possible. To be clear, I’m not looking to share personal identifying information (PII). I think it’s possible, but I think it’s gonna take time because what you need is data forward, typically startups, to grow in these areas, and then begin to work together in tandem for the customer.
Q: Can you talk about last year’s Series B, and how you’ve been using that funding?
A: For us, the Series B was really about being able to expand out our marketplace. Our vision is to really be a single point of access into the home financing market, for anybody and everybody. But when we closed our Series B, we were focused on purchase and primary homes. We’ve used the money to hire and grow the team really with the notion of wanting to be able to expand out this marketplace, and to be able to be that single point of access for all consumers.
Q: Can you just talk about secondary versus primary and what the biggest points of differentiation are when looking at how you deal with them?
A: There’s different eligibility and pricing guidelines associated with every different home type. For us, we care a lot about making sure every product that we offer on our site is done in a transparent, accurate way and is very user friendly. So that the customer can self-operate, which is a big part of how our sight of our product works. The expansion was really about, “okay, we nailed primary homes, now let’s make sure we’re offering that same level of service and accuracy at secondary homes,” then jumbos and investment homes as we continue to expand out.
Q: That leads to my next question. What are your big goals for 2022, and what are some things you’re excited to tackle?
A: It’s largely the same answer in that it’s all about being this single point of access. That’s the power of a marketplace, right? It’s this one-stop shop that anybody can go to, to really find the right thing. I think the stuff I’m especially excited about, in addition, is expanding to all sorts of loan types. I’m excited to expand out to other home financing solutions and partner with great companies that are doing that now. You know, a mortgage is not the right option for everybody. For some people it might be a rent-to-own solution. For some people, it might be all-cash first and then a mortgage. There are some really great startups and more established companies that are doing those types of things. We’re excited as a marketplace to partner with those people, so that we can direct customers to what is the best thing for them.
Q: Looking around at these other startups, are there any that excite you or that you’d like to partner with?
A: There are some very cool things happening in proptech and fintech. If we can talk about me personally as opposed to Morty, I think one of the cool things in proptech is the ability to build your home completely online, and really making it totally modular and universal. I think that’s super exciting and really reflects innovation in a couple of different areas, including things like construction, that I know nothing about.
I think for us, again, we are continuously going back to this concept of access, and wanting to make sure that customers are getting all the different types of access to the right type of thing. One thing that we’re interested in is the intersection of mortgage and crypto. How do we make sure that people who have invested heavily in crypto are able to leverage those types of assets? We haven’t done anything on that, but I think it’s really interesting. It all goes back to the fact people should be able to know how to get the right mortgage for them, and should be able to go to one single point of access to find that.
Q: Does it come back to, like you said with data silos, the fact a lot of people just aren’t applicable for certain things because their data isn’t shown in a typical FICO score?
A: I would say the inability to underwrite a mortgage with crypto is not the biggest problem, but it could be it. I believe it will increasingly become more challenging, because more people will continue to invest in it and it will be a more dominant asset type.
For the questions that you’re talking about around FICO. We all know that FICO is not equitable. I think that there are a lot of interesting products out there for consumers in a variety of different situations, but very often, those customers have no idea that they can get a mortgage or how to get one. Similarly, many times the companies that are offering those types of products don’t know how to connect with the right customer. That really shows, and that’s really where the value of the marketplace comes in. It’s this matchmaking experience.
Q: You went from co-founding the company as an engineer, then went on to act as COO and now CEO. What has that journey been like, and what have you learned along the way?
A: The journey has consistently been challenging, and that’s startups, right? I think for me, I have approached every single challenge very much from an engineering mindset. So there is a problem. Let’s identify what the potential solutions are, let’s create a process around that solution, let’s implement it and then let’s test it. That paradigm has served me very well, because it allows you to create structure and a lot of transparency with your team. I think as you’re building a company, you know, we are really fortunate to have some people who have been with Morty for you know, three or four or five years. That comes from really being able to build transparency around, ‘Where are we going?’ and ‘How are we going to get there?’ and ‘How are we doing?’
Q: What do you look for when searching for talent?
A: You’re hitting on engineering, because it’s definitely the talk of the startup world, but for us in general, when hiring people I think we do have a quite specific culture here. Everybody believes in what we’re building and is working towards that vision. I think being bought into the mission and the vision of the company is really important, because what we’re doing is very hard and it’s going to take a long time. It’s not get the startup up and just run it for a couple of years. There’s a lot of investment in that and that has been really important.
Even getting back to engineering, we run a really tight engineering hiring process, and a big part of it is just finding the right people. For engineers the challenge that we have is really centered around data transparency and efficiency, and those are super interesting problems. It’s really about finding the right people that are excited about solving those problems and being part of a mission-driven company.
Q: Through this whole journey, what has been your biggest win or milestone you’ve been the most excited about?
A: It’s a really challenging question, because startups are actually just a bunch of really small wins, but I have two. One was when we got our license in New York. New York is notoriously the hardest state to get your mortgage license in, and we spent a lot of time making sure what we submitted was perfect. We were really proud when we got that license, because it opened up a ton of opportunity for us and helped us take a big step further on our on our pursuit of 50-state coverage. That was a really big thing.
And then I think the other thing that was a pretty big milestone for us was when we were able to begin to see customers come through our product and go all the way to locking in their loans, or locking in their interest rate, without phone calls. Recognizing that this can be done in an automated, digital way and that customers do want to self-transact in this type of way … was real validation for us.
Q: You brought up the 50-state coverage. How many are you in now, and what are your expansion plans?
A: We are in 43 states right now, and our goal is to be in all 50 states by the end of the year.