California lender New American Funding has partnered with EasyKnock, a New York startup that buys homes and rents them back to sellers, allowing clients to access their home equity through non-traditional means.
About a quarter of American homeowners are unable to access the equity in their homes because of strict lending standards, and EasyKnock said the partnership will “improve housing stability for our mutual customers, providing them liquidity, flexibility and control in their finances.”
Homeowners can convert their equity to cash by selling their homes to EasyKnock and staying on as renters.
“EasyKnock makes money from fees and rent,” Kessler said in a written email response about their business model. In a typical sale-leaseback transaction, EasyKnock receives a processing fee from the initial home sale and then receives monthly rent after the customer becomes a tenant, he said.
The majority of its revenue comes from rents, set at market rates by using third-party data.
Under its Sell & Stay program, which charges an annual option fee, clients have the right to repurchase the home or to direct a third-party sale at any time. If the home value appreciates, customers get to keep the difference.
EasyKnock, which was founded in 2016, operates in 50 states with more than 120 employees and targets middle-class homeowners.
Broker Solutions, doing business as New American Funding, was ranked as the 32nd-largest mortgage lender, according to Inside Finance Mortgage. The lender originated $14.9 billion in volume in 2022, a decline of more than 50% from its 2021 production of $30.5 billion, mortgage data platform Modex showed.
Founded in 2003 by Rick Arvielo and his wife Patty Arvielo, the lender offers conventional, government, adjustable-rate and non-qualified mortgages. Licensed in Washington, D.C. and 50 states, Broker Solutions has 156 active branches across the country and 1,621 sponsored loan officers, according to the NMLS.
The company added more than 4,000 employees in 2020 and 2021 when rates were record-low levels. It eliminated at least 940 positions in 2022 in multiple rounds of layoffs in an effort to right-size the company.
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Connie Kim