Case study: Confer fine-tunes online mortgage lending marketplace

Start-up founder seeking formal VC funding

Case study: Confer fine-tunes online mortgage lending marketplace

Confer Inc. is seeking venture capital to help support the development and growth of its planned online marketplace for US borrowers to facilitate mortgage lending.

The company has so far raised some early seed funding, and founder and CEO Yatin Karnik (pictured) confirmed that it is targeting a formal VC round.

As a sort of early teaser for what’s to come, the San Francisco-based early-stage fintech start-up launched a free app on April 1 that’s designed to help borrowers shop for, compare and customize a mortgage that suits their needs.

Confer Inc. is very much in the early stage. Launched in 2021, the company employs three full-time people in the US and 17 outside of the country. Including consultants, 38 people in all are working to finish building the platform as well as develop and improve the app, Karnik said.

Karnik spent 18 years at Wells Fargo Home Mortgage as a senior vice president. He describes his goal with the new endeavor in grand terms.

“Confer is on a mission to democratize finance, specifically lending, so that lending is accessible to all borrowers across the globe,” Karnik said.

Read more: launches mortgage marketplace

The marketplace is a work in progress, now in beta testing, but it is a virtual place, in part, designed to link borrowers and investors with technology including real-time analytics, artificial intelligence and continuous machine learning.

“The marketplace will be a place where borrows and investors will be brought onto the same platform and matched,” Karnik explained.

The process will ultimately be much simpler than the status quo, Confer and Karnik assert.

“Today, when a borrower looks for a mortgage, the money is dispensed by the lender, but eventually the lender sends that loan forward and gets paid for it and the money rotates, and fast forwarding all of that cycle, the money is coming from an investor,” Karnik said.

“That investor could be you with regards to your 401K and then [it would be invested in a mortgage-backed security (MBS)]. Or it could be an investor sitting in Japan buying US Treasury [bonds] and MBSs. That’s whose money it is.”

The platform seeks to make things more efficient, connecting the borrower and the investor in Japan who hypothetically bought the MBS, for example, while eliminating the middleman.

“In this way, the borrower will get a lower interest rate, the investor will get a higher interest rate because we have taken the middleman out,” Karnik said. “That’s how the marketplace will work for lending [and] other ancillary services that are needed to originate [mortgages] like insurance, inspection, title and escrow.”

Additionally, he said the marketplace will work similarly to the US Affordable Care Act system (also known as Obamacare), only that instead of looking for comparative health insurance prices and coverage, borrowers can also search for best options for mortgages and related services.

The user could go in and submit property address and loan amount, and then search for the best type of lender policy, for example.

Beta testing is ongoing, with a push to fine-tune and add new features through the 2023 spring season, Karnik said.

Confer is finalizing how its marketplace will integrate with various participants. The goal is to work with correspondent lenders, who have access to a wide variety of lenders themselves, such as mortgage brokers.

“So with a single integration, I have access to almost all the major lenders without having to integrate with them directly,” Karnik said.

According to Karnik, the process would take a matter of weeks assuming the party on the other end has signed off on the measure. Linking up APIs and other state-of-the art technology would be part of the process.

For now, the app

The app, meanwhile, is an initial milestone for the company, a tool that will eventually work in tandem with the marketplace platform, using artificial intelligence.

Downloadable for free from the Apple and Google Play stores, it lets borrowers compare, shop and customize their mortgage products to suit their needs, whether purchasing or refinancing.

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Borrowers can upload a picture of their loan estimate and then the app is designed to spot more affordable options. Additionally, it compares mortgage offers with different interest rates and monthly payments. It also considers points, origination charges and fees to find the best mortgage offering for a customer.

Karnik explained that borrowers can also upload more than one offer, and the app will ultimately pick the best one.

“The app will tell [you] which amongst the ones [you] have uploaded are better and why,” Karnik said. “It would also educate you to look out for certain fields in your geography that you need to be looking out for.”

Additionally, the app will alert the user if it finds a better market rate than the offers uploaded. With user permission, it will connect you to the lender or broker with the better offer “and get you an official loan estimate that you can compare” with and make a decision, Karnik said.

Other than users needing to download the app, there is no other integration required for them, he added.