The online discount real estate startup Redfin wants to get into the lending business.
The property broker is planning to offer buyers using its services mortgages on their homes, with the aim of easing one of the most onerous parts of the home-buying process, the Wall Street Journal reported.
The move to vertically integrate is unusual for a brokerage in a business long dominated by banks that can offer low rates to borrowers because of their lower borrowing costs.
Redfin’s online business, however, lowers its costs of finding mortgage customers. Like most mortgage lenders, Redfin plans to sell the mortgages it underwrites to Fannie Mae and Freddie Mac, the Journal reported.
“That integration can make the whole system more efficient,” Glenn Kelman, Redfin’s chief executive, told the Journal on Thursday.
The company, which charges sellers 1.5 percent to sell a home, launched in 2004, backed by investors including Greylock Partners and Paul Allen’s Vulcan Capital.
Following big settlements in the tens of billions of dollars related to troubled mortgages made during the housing boom, big banks have withdrawn from the lending sector, opening the door for alternative lenders that are subject to less regulation and are willing to take risks. [WSJ] — Gabrielle Paluch