NEW YORK (Reuters) – Figure Technologies Inc, the startup founded by online student lender Social Finance Inc’s (SoFi) former chief executive, Mike Cagney, said on Tuesday it has launched a digitally processed home equity loan that can cut approval time to five minutes.
FILE PHOTO – Mike Cagney, then CEO, Chairman and co-founder of SoFi, speaks during the TechCrunch Disrupt event in New York City, U.S., May 16, 2017. REUTERS/Brendan McDermid
San Francisco-based Figure said the fixed-interest home equity loans of between $15,000 and $100,000 are its first product. The five-minute approval time, and five days to receive the funding, via the digitized process compares with the 45 days it usually takes to secure a home equity loan, it said.
Cagney, one of the most well-known figures in fintech, stepped down from SoFi’s helm in September 2017 after former employees alleged he presided over a hostile work environment for women that enabled senior executives to harass female employees.
A spokesman for Cagney declined to comment. In a blog post to SoFi employees before he resigned, Cagney said the allegations were “being thoroughly investigated by outside attorneys we have engaged.”
Cagney had been the driving force behind SoFi’s fast growth, pushing it into mortgages, personal loans, wealth management services and life insurance.
He co-founded Figure in February and the company raised $50 million from investors including venture capital firms Ribbit Capital and DCM. Arthur Levitt, former chairman of the U.S. Securities and Exchange Commission, is an adviser to Figure.
Figure said home equity loans typically carry lower interest rates and monthly payments than do personal loans, but because the home equity process is traditionally more cumbersome, people tend to opt for the more expensive option.
“You have a lot of documentation to upload, a lot of expenses and trips to the notary, and so people avoid it and just prefer to take out a personal loan or credit card loan,” Wendy Harrington, chief marketing officer at Figure, said in an interview.
Figure said it will use blockchain technology to record and track information on the loans. Blockchain is the database software that first emerged as the system powering cryptocurrency bitcoin.
For now, Figure will hold the loans on its balance sheet, but has plans to sell or securitize them, Harrington said.
Annual percentage rates with Figure will start at 5.99 percent and borrowers will be able to repay in five, seven, 10 or 15 years.
The company will charge an origination fee ranging from 1 percent to 3 percent of the initial drawn amount. The product is currently available in 25 U.S. states.
For its second product, Figure plans to launch an alternative to reverse mortgages for empty nesters and retirees, under which homeowners sell and lease back their property.
Reporting by Anna Irrera; Editing by Leslie Adler