Latest news with #VishalGarg
Yahoo
23-05-2025
- Business
- Yahoo
How are HELOC and home equity loan rates determined?
Home equity rates are determined by both macroeconomic factors, like the Federal Reserve's monetary policy, and the borrower's financial profile. Home equity loan and HELOCs rates are based on a benchmark interest rate (the 'index'), plus an additional amount set by the lender (the 'margin'). Lenders evaluate a borrower's credit score, amount of home equity, loan amount, loan term, and type of property to determine their rate offer. A home equity loan works more like a traditional mortgage, with a fixed interest rate, while a HELOC has a variable rate that changes over time. If you're thinking about borrowing against your home with a HELOC or a home equity loan, your first question is probably: 'What will my interest rate be?' Followed up by a second: 'How is that rate determined?' The truth is, home equity rates are shaped by a couple of factors: some big-picture economic forces, along with your personal financial details. Understanding the influences that set your rate can help you make smarter borrowing decisions and potentially save you thousands of dollars over the life of your loan. So let's parse how HELOC and home equity loan rates are determined. Lenders don't just pluck interest rates out of thin air. Macroeconomic factors – what's going on in the economy and financial sector – heavily influence home equity rates. Chief among them: the Federal Reserve's actions. When the Fed raises or lowers the federal funds rate, the interest that banks charge each other for overnight loans, it creates a ripple effect among rates. It first impacts the prime rate, which is the benchmark most lenders use when setting interest rates for consumer products – like HELOCs (home equity lines of credit). You will typically see HELOC rates adjust a few weeks after the Fed moves interest rates. The actual interest rate on an individual HELOC is based on two things: an index and a margin. The index is usually tied to a widely used benchmark rate (like the aforementioned prime rate). The margin is an extra amount the lender adds onto the benchmark rate. 'The margin is predetermined by the lender and remains fixed, while the index can fluctuate with the broader economy,' says Vishal Garg, CEO of Better, an online lender headquartered in New York. 'This structure allows rates to adjust over time in response to market conditions.' For example: If the prime rate is 6.75% and the lender margin is 3%, your HELOC's interest rate would be 9.75%. If the prime rate rose .25%, your interest rate would rise to 10%; if it fell by that amount, your rate would also fall, to 9.5%. But your interest rate would always be 3 percentage points above the prime. As for home equity loan rates, they operate a bit differently. While the Fed funds rate may also influence them, home equity loans are primarily 'shaped by bond market yields and broader interest rate trends,' explains Garg. In particular, the yield on the 10-year Treasury bond serves as a benchmark for lenders when pricing fixed-rate loans. (Of course, the bond yields themselves are sensitive to various economic indicators, including the Fed's monetary policy and the pace of inflation.) On top of the benchmark rate, lenders then add an extra amount to compensate for their risk in providing credit. While broader economic trends influence general home equity rates, the individual rate you are offered is all about you. Lenders look at a number of your personal financial details to determine how risky it is to lend to you, and adjust the margin part of the interest rate accordingly. Simply put, the stronger your profile, the lower the rate and better terms you may receive. Here are some of the factors that lenders look at: Credit score and history: A high credit score and strong credit profile demonstrate your ability to manage your debts responsibly: You pay bills on time, don't exceed your credit card limits, etc. Debt-to-income (DTI) ratio: This metric measures what's going out each month vs. what's coming in. A low debt-to-income ratio shows lenders that less of your earnings are committed towards paying obligations, and that you have a greater amount of discretionary income to spend. Combined loan-to-value ratio (CLTV): This measure compares how much your home-based debt is against the overall worth of your home, which acts as collateral for the loan. A lower CLTV (total of your mortgage plus the new loan or credit line, divided by your home's value) indicates you are more financially stable, and represents less risk for the lender. However, your finances aren't the only factors that will influence the rate you are offered. Lenders will also evaluate the loan amount and the loan term. The type of property can also make a difference, as home equity lenders often view a primary residence as less risky than a second home or an investment property. 'Together, these inputs influence pricing tiers and determine whether the borrower qualifies for promotional, standard or risk-adjusted rates,' says Garg. That means if you have a strong credit history, DTI and CLTV, you might be able to snag a promotional teaser rate, which can be around three percentage points below 'regular,' prevailing home equity rates. Some lenders may also offer small discounts for other things, like if you sign up for auto-payments and/or have another account with them. Read up on: HELOC and home equity loan requirements in 2025 One big difference between a HELOC and a home equity loan is how the interest is calculated. HELOCs usually have variable interest rates, which means your APR (annual percentage rate) can change over time. That rate is based on the prime rate. When that goes up or down, your HELOC rate and your monthly payment will follow suit. While HELOCs can give homeowners flexibility in drawing and repaying funds, the adjustable rate makes your monthly costs unpredictable, and they can easily rise over the HELOC's lifetime. On the other hand, a home equity loan works more like a traditional mortgage: You receive a lump sum upfront at a fixed interest rate. The loan is amortized over a set term, sometimes as long as 30 years, and you repay it in equal monthly installments. While not as flexible as HELOCs, home equity loans can be easier to budget for, since your payments stay constant each month. If you want the best rate on a HELOC or home equity loan, start by strengthening your financial profile. The more equity you've built up, and the more of your mortgage you've paid off, the better your chances of landing a lower rate. Also, make sure your credit report is clean and free of errors. Try to strengthen it by paying down balances and avoiding late payments. It also pays to shop around. Don't just sign up with your current bank or mortgage company, though it can be a good starting point. Compare offers from at least three institutions, including retail banks (national or regional), credit unions/thrifts and online lenders. Pay attention not just to the loan or credit line's interest rate, but to the APR (annual percentage rate), which will reflect all the fees and closing costs you'll pay. With HELOCs in particular, ask about introductory rates (and when they'll reset), annual fees, prepayment penalties and minimum draw requirements. All of this will affect how much the HELOC or home equity loan really costs you over time. Sign in to access your portfolio
Yahoo
14-05-2025
- Business
- Yahoo
Q1 2025 Better Home & Finance Holding Co Earnings Call
Tarek Afifi; Corporate Finance; Better Home & Finance Vishal Garg; Chief Executive Officer, Director; Better Home & Finance Holding Co Kevin Ryan; President, Chief Financial Officer; Better Home & Finance Holding Co Kartik Mehta; Analyst; Northcoast Research Brendan McCarthy; Analyst; Sidoti Eric Hagen; Analyst; BTIG Bose George; Analyst; KBW Operator Hello, and, welcome to the Better Home & Finance Holding Company first quarter 2025 results call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer session (Operator Instructions)I would now like to turn the conference over to Tarek Afifi, Corporate Finance. You may begin. Tarek Afifi Welcome to Better Home & Finance Holding Company's first quarter earnings conference call. My name is Tarek Afifi, Corporate Finance at me on today's call are Vishal Garg Founder & Chief Executive Officer of Better; and Kevin Ryan Chief Financial Officer of Better. In addition to this conference call, please direct your attention to our first quarter earnings release which is available on our Investor Relations website. Also, available on our website is an investor statements we make today may constitute forward-looking statements within the meaning of federal securities laws that are based on current expectations and assumptions. These expectations and assumptions are subject to risks uncertainties and other factors as discussed further in our SEC filings that could cause our actual results to differ materially from our historical results. We assume no responsibility to update forward-looking statements other than as required by today's discussion management will discuss certain non-GAAP financial measures, which we believe are relevant in assessing the company's financial performance. These non-GAAP financial replacements for and should be read together with our GAAP non-GAAP financial measures are reconciled to GAAP financial measures in today's earnings release and investor presentation, both of which are available on the Investor Relations section of Better's website, and when filed in our Quarterly Report on Form 10-Q filed with the described as of and for the quarter ended March 31st, 2025, represent a preliminary estimate as of the date of this earnings release and may be revised upon filing our quarterly report on the Form 10-Q with the SEC. More information as of and for the quarter ended March 31st, 2025, will be upon filing our quarterly report on Form 10-Q with the SEC.I will now turn the call over to Vishal. Vishal Garg Thank you, and welcome to our first quarter 2025 earnings call. We appreciate everyone joining us today and for your continued support as we advance our mission to make homeownership better, faster and easier for our customers by building a technology platform that revolutionizes the homeownership experience.I want to set the tone for today's discussion by reiterating that, while the mortgage industry and housing markets are facing challenges, this dynamic creates tremendous greenfield opportunity for us, because we are truly the first scaled-up AI platform built to empower consumers and now also empowering local mortgage brokers and banks with the technology to serve their mortgage industry is massive, estimated by the MDA to be $2.1 trillion in total origination volume for the full year of 2025, of which approximately $1.4 trillion is purchased and approximately $700 billion is even just a 1% share of this massive TAM would result in $14 billion of volume for Better, approximately 3 times from where we are today. We continue to drive progress towards our mission in which every customer can seamlessly buy, sell, refinance, insure, and improve their home digitally, online, instantly, and towards executing on our key objectives, which are One, to lean into growth and AI to drive increased volume and ongoing efficiency improvements driven by continuous advancements in our technology and the implementation of AI through our entire operating model and Three, diversification of our distribution channels and corporate cost the first quarter of 2025, on a year-over-year basis, we grew funded loan volume by 31% to $868 million and revenue by 46% to $33 million, driven by funding more loans both through our DTC and Tinman AI platform channels. Last month, we were very pleased to announce the retirement of Better's outstanding convertible debt and right-size the liability transaction is expected to create approximately $200 million of positive pre-tax equity value and create a path to long-term value creation for our equity shareholders. Removing this debt overhang is a monumental achievement and a key milestone to our capital structure, and Kevin will talk to this in more the meantime, we remain focused on driving towards profitability in the mid-term by continuing to lean into Tinman's technology and AI, with the Betsy AI Loan Assistant executing 127,000 consumer interactions in March, our AI underwriting growing from over 40% of lock loans to 75% in the near future, and increasing loan officer productivity in terms of loans per month to over 3 times the mortgage we look forward to the second half of 2025 and beyond, our strategic priorities remain focused on what lies in our control. Our first priority is to continue to thoughtfully propel growth. In the first quarter, year-over-year funded loan volume growth was driven by increases across all three of our main product categories, with Home Equity products and Refinance Loans being the largest growth HELOC and home equity loan volume increased 207%, refinance loan volume increased 64%, and purchase loan volume increased 9%. This growth is attributable to the strategic investments we've made in technology, product innovation, and distribution expansion, including the launch of Betsy voice-based AI loan officer, deployment of our Tinman AI platform strategy with the addition of Neo powered by Better, and efficient expansion of D2C. These strategic initiatives have positioned us to capitalize on market opportunities, enhance operational efficiency, and drive sustainable second priority is to continue to reduce expenses and improve operational efficiency with the goal of reaching profitability in the medium-term. While we expect loan origination expenses will increase as we lean into growth, as we further implement Betsy into the sales, processing and underwriting workflows, we expect continued operating leverage with revenue growth outpacing expense our Tinman AI platform, we have been able to automate time and labor-intensive components of the mortgage process and reduce our cost to originate by over 40% of the industry average. We believe our continued investments in AI with our product and engineering roadmaps well on track will significantly drive down cost further, resulting in improved operating efficiency and superior customer our third priority is to continue diversifying our product and platform distribution channels. We now have three ways of serving the customer using our technology: direct-to-consumer, Tinman AI as a platform, and Tinman AI as a our D2C business, we serve the consumer directly on Better was founded on revolutionizing the consumer experience for the home finance process, and as such, our D2C business has always been at the forefront of pushing the envelope on what technology can do in the mortgage industry at its the D2C channel, contribution margin or per loan profitability is increasing, as the operating cost to fund is decreasing due to implementation of AI in both the sales and operations we serve the consumer through our Tinman AI platform, powering loan officers across the United States locally, for which we are seeing rapid early growth. For context, over $1.2 trillion of mortgage volume in 2024 was originated by retail loan officers on antiquated technology and high operating are quickly disrupting traditional retail mortgage origination by onboarding loan officers and branches onto our Tinman AI platform, empowering them to do more loans than they've ever done before, removing friction from their fulfillment process, and expanding their capacity to help more loan officers keep the pricing they've been able to get historically based on the service level that they provide locally and within their communities and networks, all while compressing a staggering 80% of their back office costs using our we've discussed on recent earnings calls, NEO Powered by Better, our first and now proven traditional retail mortgage originator leveraging the Tinman AI platform is deeply benefiting from our AI technology and digital lead funnel, supercharging their loan officer teams who have demonstrated track records and customer service excellence within the communities they Betsy, the for first AI voice-based loan assistant for the US mortgage industry is being individually branded for each loan officer at NEO and rolled out through their entire sales force. We are making great early progress with NEO Powered by Better, well ahead of our internal expectations and have high aspirations for the road beginning production in January 2025, we have onboarded approximately 115 NEO loan officers across 53 branches. Currently, NEO loan officers are doing three loans a month and we have the goal of tripling plus their capacity to 10 loans a month, thereby also increasing their earnings through yet and helping them serve even more families than they do January, we funded $2 million of loans for four families. In February, we funded $42 million for 104 families, and in March, we funded $119 million for 258 families, and this is during the slow season in mortgage is the first successful launch of taking an entire mortgage company off of their traditional mortgage industry software stack with Encompass and the other antiquated mortgage technology that NEO had been working with before and within 90 days getting them to exceed the loan volume they previously had, while dramatically increasing their efficiency, and as we have proven this out with NEO, with the entire mortgage industry watching, we have been inundated with other mortgage teams and companies wanting to move their business to the Tinman AI platform. We see massive opportunity in the road ahead to replicate the success of NEO powered by Better with other traditional mortgage lastly, we are serving the customer by powering banks that seek to license our Tinman AI software to become more efficient and customer-centric. We have built a highly fine-tuned platform for our own business and customers, and now there is demand from others in the industry to license our quarter, we are excited to sign an agreement with a bank partner to power their entire mortgage platform from a software perspective, from click to close, with their sales and operations people, across the full range of products that they offer, including non-QM and other niche products, entirely on you all know, banks have traditionally had to offer mortgages, but the cost to originate these loans to their customer base has been well over $10,000 per funded loan, making bank origination of mortgages largely unprofitable. To be clear, banks want to originate mortgages, but they know they need to invest in technology to make it a profitable business in any environment. That is a huge opportunity for Better and this will be the first implementation of Tinman as a direct competitor to the point-of-sale system, plus CRM system, plus pricing engine, plus document engine, plus loan origination software, plus underwriting calculation engine setup that the vast majority of the mortgage industry to eight systems, all by different vendors with different pricing, with different middleware integrations, mostly not talking to each other, with stale data, with the ability to have only one person logged in at a traditional way. We look forward to sharing more information about disrupting this entire software stack in the coming quarters ahead, as we believe a very large addressable market exists within the mortgage ecosystem for a holistic one-stop software solution powered by the industry's leading AI engine, put the opportunity into context, over 5 million mortgages were built on the Encompass platform in 2024. To the extent that we can achieve even 1% penetration of the Encompass customer base, we believe, based on our current pricing that could drive an incremental 50,000 new loans and $75 million of revenue to Better per unlike other traditional mortgage software, our SaaS platform does not charge on a per seat or a per application basis, rather, we are uniquely charging on a per funded loan basis, where the revenue event for the mortgage company is directly tied to the technology cost, which is a fundamentally disruptive model to the traditional software players in the industry and enables the full adoption of AI, because unlike those other players, we are paid on a per successful transaction basis, not by filling seats or filling the application sum it all up, while our D2C business has always been at the forefront of pushing the envelope of what technology can do in the mortgage industry at its core, we have started making great advancements in diversifying our product and platform distribution channels, notably through the Tinman AI platform, both empowering local loan officers and mortgage brokers and empowering banks with our ahead to the second half of 2025 and beyond, the opportunity ahead of us has never been more exciting. We remain focused on enhancing our go-to-market with growth being our North Star alongside continued expense management and channel will continue to invest in building the leading AI platform in the mortgage industry, Tinman, to improve the customer experience and further drive down labor costs, making our platform more efficient and scalable, ultimately driving the business to we are substantially broadening the use of Tinman through diversification on both Tinman AI as a platform for other mortgage originators and Tinman AI as a software service to solve for the mortgage industry's broken tech that, let me now turn it over to Kevin Ryan, our Chief Financial Officer, who will discuss the quarterly performance and our financial strategy. Kevin? Kevin Ryan Thank you, Vishal. As we've discussed on prior calls, even through a continued challenging market environment and now heightened macro volatility, we continue to make great progress towards our goals of increased volume and revenue balanced with ongoing expense management and improved efficiency. In the first quarter of 2025, on a year-over-year basis, we grew funded loan volume by 31% to $868 million and revenue by 46% to $33 million driven by funding more loans built through our D2C channel and Tinman AI had an adjusted EBITDA loss of $40.4 million and total GAAP net loss of approximately $50.6 million. By channel, first quarter funded loan volume was 71% generated through direct to consumer and 29% generated through Tinman AI platform, along with B2B home equity, and 15% a sequential quarter-over-quarter basis versus Q4 2024, Q1 funded loan volume was down approximately 7%. As Q1 is always seasonally the slowest quarter in the D2C business, and this compares quite favorably to our prior guidance of down 10% to 15%. We are pleased that despite the sequential quarter-over-quarter decline in volume, revenue was up approximately 30%.Revenue grew in the quarter despite the expected decline in volume due to volume from NEO coming on board with higher gain on sale margins, our continued push towards increased pricing, and a tailwind from the loan loss to expenses during the quarter. When excluding one-time costs related to clean-up items from the SPAC transaction, total expenses decreased approximately 11% in Q1 compared with Q4 of 2024, and we reduced the adjusted EBITDA loss on a month-over-month basis during the origination expenses were down in Q1 on a sequential basis versus Q4 2024. While these loan volume-related expenses will increase as we further lean into growth, operating leverage will rise as revenue growth outpaces expense to our balance sheet and capital structure. Last month, we announced the retirement of approximately $530 million of convertible notes, creating approximately $200 million of positive pre-tax equity value to continue expanding our AI mortgage are very pleased to reduce the debt overhang and improve our balance sheet positioning and strategic optionality. With the completion of the debt restructuring, our priorities squarely remain growth and continue building out our Tinman AI platform and Tinman software channels, lean into productivity-driven savings through AI deployment across the mortgage business, and drive costs down further in our corporate functions. We are excited about using AI to drive the business towards growth and profitability, similar to the advances we experienced in 2016 to 2021, when we grew originations by over 100 now to our outlook. We remain focused on managing towards profitability in the mid-term, and we expect to drive growth through efficiency from Tinman AI, distribution channel diversification, and optimized marketing, while balancing these growth expenses with further corporate cost the second quarter of 2025, we expect funded loan volume to be up compared to the first quarter of 2025, driven by efficiencies in our Tinman AI platform. We are particularly excited that the Tinman AI platform loan volume is pacing well ahead of our internal plan in March and April, despite the heightened macro volatility, and we expect over $450 million of NEO originations in Q2, which is growth of over 250% versus for the second quarter, we expect core expenses, including compensation and benefits, to be down relative to the first quarter. For the full year of 2025, we expect funded loan volume growth to increase year-over-year, driven by tailwinds from the growth initiatives, including NEO Powered by Better, offset by continued macro pressure and the loss of the Ally business, a roughly $1 billion expect growth to come particularly in the second and third quarter of the year, at which point, we expect NEO Powered by Better to be more fully ramped and to benefit from improved seasonal tailwinds. We also expect further improvements to our adjusted EBITDA losses in 2025 as compared to 2024 due to a combination of efficiency gains and continued corporate cost we continue to undergo efforts to exit our non-core UK assets, while focused on growing Birmingham Bank. We expect to more than double UK bank originations again in 2025, as we deploy AI with the goal of building the leading AI-driven specialist mortgage bank in The United Kingdom. We expect the exiting of three smaller non-core UK businesses to start being a benefit to our adjusted EBITDA losses in the second half of 2025 as a result of their that, I'll now turn it back to the operator for Q&A. Operator (Operator Instructions)Kartik Mehta from Northcoast Research. Kartik Mehta Good morning, Vishal and Kevin. Vishal, you talked about the NEO platform and obviously how much success you're having with it. As you've looked early stages, I know you talked about 90 days, but what do you think is a fair number of time before the loan officer really can have a feels the impact of that model, and how do you expect that to trend over the next 12 months? Vishal Garg I think they start to see the impact within 30 days, and that starts with taking out a huge chunk of the sales-related tasks that the loan officer has to do other than speaking to the consumer. So, they immediately start getting back hours of their day that they were spending either putting data into the system, getting data out of the system, following up from the system, following up with processors, underwriters on where loan files are at, where customer files are at, all of that is done automatically by the they immediately start getting time back. Then from there, they start getting productivity back because the customers that they've locked, they're not having to chase them up for the documents, the engine is doing it there's some problem with the documents, the engine is doing it directly for them, and then they encounter the AI underwriter, where if a loan file needs to get restructured and I'm really excited about the AI underwriter, because it captures the logic across all 35 of our investors' guidelines, right? We're talking almost like 40,000 pages of guidelines and pricing that's updated 3 times a capturing all of that, and it basically gives like the loan officer the means of addressing the customer's question. Hey, how do I get a lower rate? Hey, how can I qualify for a bigger mortgage? Hey, what do I need to do to get this loan approved, if this new thing came up, or I want to also buy a car, or my dad doesn't want to cosign anymore, but my mom does?All of that, it's just totally does it instantly. Something that would have taken a human underwriter three to 10 hours to resolve, it's getting back answers in three to five seconds. So people are seeing it immediately, and that's why we're seeing the traffic come in from these other loan officers. We already have. On top of the Neo 2.5 billion we're talking about, we already have inbound on another 50 billion of loan officers who are funding loans today, who are excited and interested in the all 50 billion is not going to pan out, people are going to have things in their cycle, people are going to want to figure it out, but we have created a mechanism, by which, if you're a successful retail mortgage loan officer or retail mortgage team or retail mortgage company, you can get full transparency, you can get total control and you have to share a much smaller percentage of your profits with our platform and get massive productivity what we're promising the retail loan officer is, we're going to help you make 3x more money and cut your cost in half, and that's a pretty compelling value proposition. Kartik Mehta Yeah, so, thank you for that. And just as a follow-up, maybe how many more loan officers in 2025 would you like to onboard? I don't know, if there's a capacity or if there's a way that you wanted to kind of scale that in terms of adding to the platform? Vishal Garg Yeah, so, to be honest, like, in 2021, we had 5,000 loan officers. Here we are onboarding 150 of them on the retail channel, right? So the other thing that the platform provides is effectively infinite capacity to any loan officer team, and so, I think we'd like to grow. I think we'd like to triple or quadruple the NEO channel. We're already going to dull it this coming quarter as Kevin mentioned in terms of production. So I think there's a lot of capacity you very much. Kartik Mehta I appreciate it. Operator Brendan McCarthy with Sidoti. Brendan McCarthy Great. Good morning, everyone. Thanks for taking my questions here. Just wanted to start off looking at the unit economics. Just curious as to how unit economics at the loan level trended year-over-year, and I guess really aiming to get an idea of how do you quantify the AI functionality, and really you mentioned operating leverage is kind of positioned to improve looking forward. Are you able to quantify maybe how much you expect that to improve looking ahead? Vishal Garg Yeah, Kevin, do you want to get that question and I can fill in. Kevin Ryan Yeah, Let me start. So I think, Brendan, there's a couple of things here. So the unit economics have improved. If I just take Q1, February was better than January, March was materially better than February, and when you look at our actual aggregate losses, March was came in about $7 million, so materially lower, and the mortgage company essentially was breakeven in March, and so, the unit economics is a direct result of the AI improvements are coming fast and there's always a market cyclicality to it, as it relates to purchase season, purchase season kind of deferred a little bit here given some of the macro. So, it's not going to be linear, but to date, it's been pretty linear to date, but I wouldn't assume that's going to be true month-over month-over-month. Where are you going to see the savings?And so, I'll kind of maybe just guide you through the income statement. So the majority of the savings you're going to see through the continued technology improvements are going to be in the compensation and benefits number is going to go up, as we onboard the loan officer that Vishal just talked about, right? As we add LOs, comp, and then is going to go up, but it's going to go up slower than revenue, and it's continued to improve, continue to get better and that's always been one of our other place you'll see it is in loan origination expense. We will that will continue to come down. So, basically, think of that as non-comp expenses on a per loan basis. We're safely below $1,000 a loan and going even lower on that line item and that is really as a direct result of being able to deprecate vendors, renegotiate vendors, drive better deals, and use our technology to really lower the expense, the non-comp expense cost of manufacturing a loan. So those are the principal areas you will stay at. Brendan McCarthy Great, Kevin. I appreciate your insight. Vishal Garg Yeah, I think the North Star is getting the total cost of production of a loan down to $1,500 a loan, $500 of sales labor, $500 of ops labor and $500 of credit bureau, income verification and all of those other sort of external vendor costs, and we're driving hard towards that. And if we are able to do that, we're going to be 6x cheaper than the industry's cost to mortgage originator today outside of sales expenses spending $7,500 a loan to basically get a loan all the way funded through the books. So we think that there's certainly a lot more to gains coming out of the AI. We're starting to actually see it in the numbers with, as Kevin mentioned, the mortgage company becoming profitable this quarter, which is it hasn't been in many quarters, and we're going to now be able to like continue to important thing is that, as mortgage is a scale business, and so, what we did this quarter with the addition of two additional methods of addressing of reaching the market, one surely on a software basis and the second on a platform basis is going to drive substantially more volume through the entire going to enable us to get a better pricing across our vendor contracts, get better execution on hiring and deploying labor and really get the benefits of scale that Plus the AI can bring. Brendan McCarthy That makes sense. I really appreciate the insight, looking ahead. And then wanted to talk on the balance sheet. First of all, congratulations on the convertible retirement. I think that's a big piece of the story. But just curious as to maybe longer-term, what kind of leverage level makes sense for the business, and kind of how do you think about the balance sheet at this point versus where you'd like to be? Kevin Ryan Sure. So, I'll start, Vishal may want to supplement. I'll make a few comments as you think about our balance sheet and leverage. The first is, to date, we have always sold servicing released. So, we run a very capital-light business don't really we're on a $1 billion balance sheet, but half of that will be loans held for sale and those loans are recycling quite quickly, right, particularly post the SoftBank transaction, because I think as we talked about in the 8-K when we did the deal, we didn't use much cash at all to actually do that deal, but we did sell loans held for sale that were unencumbered that we chose not to pledge to warehouse lines in order to fund that from a leverage perspective, they don't really think about it as debt-to-equity per se, like where a lot of other companies may because they run a big servicing asset on the balance sheet that they presumablythat they presumably for most lever through a financing facility against the MSR. But what I will say, the $155 million of new debt we've put on it does not mature to the end of 2028. It's fully picked. Until we're profitable, we've informed our partner, our lender, that we will be picking the interest, and so that will accrue, but we will not cash pay so, we're quite comfortable with $155 million of debt due at the end of 2028. And I think the combination of market improvement and all the self-help we're doing and the work we're doing around technology, we think refinancing that three years from now, should be well within our purview. So we feel quite comfortable with our current leverage. Brendan McCarthy Great. Thanks for the insight there, Kevin. And one more question from me. Yes, this is constantly a point of growth here is the B2B partnerships. What other opportunities are you seeing for B2B partnerships? And maybe you could talk about the pipeline there? Kevin Ryan You want to start that one, Vishal? Vishal Garg Yeah, So I think there's we've so I'll give you some context on the bank that we signed up with respect to the I think there's basically two flavors of B2B partnerships going forward. First, is a software-only partnership? There, what we saw with Ally leading the business and all the banks sort of that we've pitched for Ally-like deals over the past couple of years, is that a lot of the systems and the processes that these banks have, I think, they're all in downsizing mode for their mortgage quite frankly, they're not keen to outsource the bulk of the front office and back office like a full package, like what Al was doing to us. So, now with the ability for these banks to utilize our software and basically then, also scale up and down on the if they need a marginal processor or marginal underwriter, they can use us, but if they don't, they don't have to, but they can just use the software and get the efficiencies out of the software for their loan officers and their processors and underwriters, we think that's a much better go-to-market strategy, and we think we're going to be able to scale that up pretty rapidly. We have a whole host of fintechs and banks waiting as we deploy this one bank across and get it across the finish give you some context, for a typical bank to deploy the traditional mortgage industry stack, we're talking $1 million to $5 million in integration implementation costs and nine months. For this one bank client, we had them up and running on conforming loans in three days, and then they asked us to get up and running across their entire product set and also do wholesale for them, and we've got them up and running in 60 days. So, zero implementation costs, zero third-party vendor fees, nothing. So all on a per-funded loan with this one bank, just on the volume they're transitioning to the platform from what they did last year, we're going to make $4 million plus in revenue. And we think now with adding wholesale capabilities, we might be at like $10 million to $12 million in revenue over the next 18 months on an annualized basis with this one bank alone, and they're small to medium-sized banks. So the pipeline is looking really good on second part of the B2B pipeline that we have discovered, really does work for us is other fintechs who want to get into the mortgage business, wealth management fintechs, lending platforms, personal loan platforms, and we're seeing a lot of interest from those platforms to start to diversify into home equity, and eventually into mortgage and be prepared to turn their customers into mortgage these platforms have done a really good job aggregating millions and millions of users over the past couple of years, selling everything from Buy Now Pay Later, personal installment loans, and we make it really easy for them to get in the mortgage business without having to hire LOs and underwriters and processors and so on and so we hope to share with you positive feedback and details, and sign some big deals over the next nine months in this year on with many of these large fintech platforms. So, I hope that covers like the two different types of B2B that we're going to see going forward. Brendan McCarthy Absolutely very helpful thanks Vishal. That's all for me. Operator Reina Kumar with Oppenheimer. Hi, good morning. This is Jake Kooyman on for Reina. Thank you for taking our question and congrats on onboarding your first bank partner as part of the Tinman AI as a software I was just hoping you could expand on how this relationship works in terms of the economics and operational workflow and what does the go-to-market look like to capture additional bank partners? Thank you. Vishal Garg Sure. So, the way that it works is that, we take all of their existing software and it goes away, and they get one platform. We load up the pricing that they want and give them self-serve pricing control. We load up the underwriting criteria they want and they can have that attached to the pricing. So, it's the only eligibility plus pricing platform in the they can add an additional underwriting criteria and charge up or down for it, on an overlay basis all-in-one flow, and it automatically triggers what needs to be taxed out, both to the consumer and the processor and underwriter. It does it all automatically. So, it's really easy to learn once they kind of get the hang of it and we basically deploy it an account manager and a product manager to help them do the other side, we've created a retail origination module for them for their bank branches. We've created a wholesale origination module for them and a direct-to-consumer module for them for their website, and so, they deploy that and they take in the applications basically mimicking the same workflow that they have today, but with an AI assistant handling they basically can now be on 24/7, 365 days a year for their customers and their LOs can become 3 times more productive and start reaching the productivity that betters LOs have traditionally had in the then from there, their underwriters are able to just basically become exception managers, and basically all of those folks get trained by our team. We have a SWAT team that goes there, gets deployed and then from there, they're up and math on that is per loan for a funded loan, about $1,500 per funded loan in software fees and platform fees, and basically, they don't have to deal with eight different vendors. They don't have to deal with multiple systems don't have to deal with any of that stuff. And so, for them, that's very, very compelling, it's not just compelling on a cost basis, it's compelling because we're increasing the throughput of their people by 2 times to 3 times, which substantially takes their cost down in terms of cost to originate and gets it more like better cost to originate, plus brings them scale, because then they're not delimited by each marginal for the next marginal loan they want to do, they have to hire a new loan officer and a new processor and a new underwriter and having to manage all of they have a staffing shortage, they can then just turn on us, kind of like what AWS did, we're doing for mortgages. Basically, you can turn on or turn down instantly capacity, and it just accommodates it. Great, thank you. I appreciate the details. Operator (Operator Instructions)Eric Hagen with BTIG. Eric Hagen Hi, thanks. Good morning, guys. Back on to the balance sheet maybe, I mean, how does the restructuring give you better negotiating terms with lenders and other counterparties? You guys talked about the bank partnerships.I mean, how does the restructuring itself play a part maybe in your ability to like source and maintain those relationships? And again, like, the restructuring itself, does that make you more competitive with some of the other entities who may be looking at those similar partnerships? Kevin Ryan Yeah, sure. So, Eric, good morning, it's Kevin. I'll start and then Vishal may want to supplement. It's certainly helpful. I think as we kind of we disclosed, we're going to create about $200 million of equity creation as part of the deal.I think there were people who definitely looked at us and said, you have a relatively high debt load, certainly for a company that's kind of at the low point of the cycle, hopefully cycle improves here, and all the AI improvements will kind of drive us through the cycle irrespective of the way the cycle does. But I think we've definitely fixed the balance sheet and that we've taken equity up, debt down as the course of this so when people do their kind of high-level of diligence on us as a partner, I think they're really looking at us for the technology, what we can provide, all the things Vishal just went through, right? That is what they're really looking for, but they certainly want to make sure they have a strong counterparty as well that they're going to work with for years and years and years to come, and so we feel like on the margin,We've improved our pitch to them as a result of the balance sheet transaction, but we did the balance sheet transaction because it was just the right thing to do for shareholders, and it was the right kind of ROI on the use of the cash we used to actually get the deal done. Eric Hagen Great color there. Appreciate that. I mean, we hear constantly about the range of borrower profiles, the need for loan officers to effectively like tailor a loan to the borrower's profile. I mean, how do you guys work with the software to address these different profiles?How do you benchmark that flexibility to again address the different loan profiles, or is it really more effective to instead think of the better platform as really just being the cheapest and most efficient platform for the borrower whose profile is down the fairway, so to speak? And the niche for the software isn't really trying to be super-tailored, how should we kind of think about where you guys plug in? Thanks. Vishal Garg I think that's a really great question. So for the first seven years of our life, Better was great for straight down the fairway customers, and we just crushed it in terms of cost and efficiency, unconforming, jumbo, high FICO, medium TI, AD LTV type loans, and that fueled our growth, and I would say, really onboarding the retail loan officers, we've had to build out the functionality for every loan type in Tinman in the past 120 three plus borrowers, who even knew that was a thing, but apparently Bank of Mom and Dad is really big in retail, right, and you need to have three plus borrowers. So we had to build that into our system, and now we have infinite borrowers. It can qualify, you can have 12 borrowers on our own file that we had to build all the custody products, we had to build the construction loan product, we had to build all these additional products all into the system, and now the system crushes all of those loan this bank, we had to onboard bank non-QM, bank statement, doc light, system now crushes it, and more importantly, the AI underwriting automatically is matching the consumer to the full product set and exposing the full product set. The loan officer doesn't have to do any work to remember any of this doesn't have to go from the loan officer, from a conventional product and then go through the funnel, go through underwriting, then come get kicked out and then get matched to a different product and so on and so forth. This is like all happening so, I think one of the things that Tinman is going to now be known for is not just being super cost efficient, but actually capturing the full scope of products that are available on the platform, which, by the way, is helping D2C dramatically improve its unit economics, because all these people that we were previously turning away in D2C that we didn't have a product for, we now suddenly have a product this is the growth of Tinman AI, and the breadth of the product offering is improving conversion across all of our channels. Kevin Ryan Yeah, I mean, Eric, the addition Vishal just said it, but the addition of products is one of the biggest stories for us over the last three to six months. Through Tinman AI, the onboarding of NEO, it's been a game changer as it relates to rolling out products. Eric Hagen Right, great color from you guys this morning appreciate you. Operator Bose George with KBW. Bose George Hi, guys. Good morning. Actually, that was very interesting on your comments about the way Tinman could disintermediate some of the LOS systems. Are the companies that you're speaking to like the bank you noted generally on a system like Encompass and then they're looking at you guys as a lower cost, higher efficiency alternative or is it kind of a de novo, like can you just characterize the people you're talking to? Vishal Garg The people we're talking to are on Encompass are simple Nexus, and the bank that has that we've onboarded was on Encompass and NEO was on Encompass, and fundamentally, I think the efficiency gain for moving from those two systems plus all the vendors, the ecosystem around it to our platform is pretty dramatic, and these companies obviously have huge sales forces, long contract cycles, but I think what's been really fortuitous for us is, this is all happening now at the same time as everyone is reevaluating all of their technology to determine whether it can work with the AI agents and basically, the bulk of these technologies that exist in mortgage land, they can't because you have seven or eight systems. If you talk to OpenAI, they'll tell you the maximum number of function calls that the LLM can do at the same time is two to three function calls, right?So, now, how are you going to do if you've got a delimiter on two to three function calls right now, how are you going to do it across eight systems without the type of latency that we're talking about, or minutes of latency, and nobody wants you can't deploy an AI agent on any of these old broken systems. So, I think it's sort of like a seminal 1995 to 1999 moment, where suddenly the Internet is a thing. Now, AI is a thing, and none of these systems are AI-equipped. That's why you haven't I mean, we've rolled out Betsy six months ago, and you haven't seen anything out of the industry other than an appointment scheduling bot for loan officers. Like an interface on top of like you can book I think fundamentally, you were our lead is like a generational lead here, and I have been super surprised by the industry response, particularly from very large mortgage companies reaching out to us and saying, Wow, this worked. I assume you get it work for them, you'll get it to work for us. Come out and see us, and so we're going to scale into this. Bose George Okay, great. That's interesting. Thanks. And then, actually, have companies that you're speaking to note any concerns about essentially buying technology from a competitor, and to the extent this thing grows meaningfully, is there any sort of alternatives like maybe separate this out, or is that too early to think about things like that? Vishal Garg I think it's too early to think about that. I think the companies that we're talking to, were not in retail. They don't view as a competitor, and I've been transparent with them. B2C might become 25% of our business or even 10% of our business over time, and I think, yes, there is then, there's also the when you're facing a potential extinction event, you're less worried about like, buying a tool that helps you get past that extinction event from someone who could or would have maybe be a competitor. Bose George Yeah, okay, yes, makes sense thank you. Operator This concludes the question-and-answer session. I'll turn the call to Vishal Garg for closing remarks. Vishal Garg Thank you all for continuing to support us as we build America's leading AI mortgage platform and in doing so help consumers get a better rate, have a better process, which lets them have a better house and a better the past five years have been challenging for us, given the state of the market, we're now playing offense hard again. We're looking forward to executing on our continued efficient growth and to share more positive news with you in the quarters ahead. Thank you. Operator This concludes today's conference call. Thank you for joining. You may now disconnect. Sign in to access your portfolio
Business Wire
13-05-2025
- Business
- Business Wire
Better Home & Finance Holding Company Announces First Quarter 2025 Results
NEW YORK--(BUSINESS WIRE)--Better Home & Finance Holding Company (NASDAQ: BETR; BETRW) ('Better' or the 'Company'), a New York-based digitally native homeownership company, today reported financial results for its first quarter ended March 31, 2025. 'Deliberate and strategic efforts to scale AI across the enterprise and for our partners delivered strong year-over-year growth in Q1, especially given a challenging macroeconomic backdrop,' said Vishal Garg, CEO and Founder of Better. 'Our continued technological advancements are designed to propel growth while driving cost and operational efficiency improvements as we advance toward profitability. Several initiatives are enabling this including expanding Betsy into processing and underwriting workflows, Tinman AI platform distribution diversification that is supercharging profitable growth for loan officers and powering banks by licensing Tinman software, and finally, efficient expansion of our D2C channel. With the addition of two new distribution channels for our technology, our team is seizing the initiative and manifesting growth opportunities independent of broader economic and mortgage market conditions.' First Quarter 2025 Financial Highlights: GAAP Results: Revenue of approximately $33 million, compared to $22 million in Q1' 24 and $25 million in Q4'24 Net loss of approximately $51 million, compared to a loss of $51 million in Q1' 24 and a loss of $59 million in Q4'24 Key Operating Metrics and Non-GAAP Financial Measures: Adjusted EBITDA loss of approximately $40 million, compared to a loss of $31 million in Q1' 24 and a loss of $28 million in Q4'24 Funded loan volume of $868 million, compared to $661 million in Q1'24 and $936 million in Q4'24 Approximately 3,000 Total Loans, compared to approximately 2,000 in Q1'24 and approximately 3,300 in Q4'24 Purchase loan volume of $578 million comprised 67% of Funded Loan Volume; HELOC loan volume (which includes home equity lines of credit and closed-end second lien loans) of $157 million comprised 18% of Funded Loan Volume; and refinance loan volume of $133 million comprised 15% of Funded Loan Volume D2C loan volume of $614 million, an increase of 71% year-over-year and decrease of 19% quarter-over-quarter, and comprised 71% of Funded loan volume, with Tinman AI Platform and B2B comprising the remainder 29% of volume 'Even through a continued challenging market environment and heightened macro volatility, we continue to make progress towards our goals of driving increased volume and revenue balanced with ongoing expense management and improved profitability,' said Kevin Ryan, CFO of Better. 'We remain focused on driving operating leverage through continued investments in efficiency, corporate cost management, and diversifying our distribution channels and managing towards profitability in the midterm.' First Quarter 2025 Highlights: Announced the retirement of Better's outstanding convertible debt and right-size the liability structure. This transaction is expected to create approximately $200 million of positive pre-tax equity value and create a path to long-term value creation for our equity holders. Year-over-year Funded Loan Volume growth was driven by increases in all three main product categories, home equity products (207% growth), including HELOCs and closed-end second lien loans), refinance (64% growth), and purchase (9% growth). We continue to see increased productivity resulting from AI program investments, including further expansion of Betsy™, which leverages AI and large language models to take a customer through pre-approval, rate quote, and rate lock autonomously. Betsy™ is programmed to verbally communicate with customers to answer mortgage application inquiries and to collect and verify outstanding application data, and most recently to autonomously enable consumers to lock their rate and get their loan towards closing. Since beginning production in January 2025, during Q1 2025, NEO Powered by Better onboarded approximately 115 NEO loan officers across 53 branches, serving a total of approximately 366 families equating to approximately $163 million of Funded Loan Volume. We see this scaling to over $450 million of Funded Loan Volume in the second quarter. We continue to undergo efforts to exit our noncore U.K. assets while focusing on growing Birmingham Bank. In Q1'25, Birmingham Bank achieved £72.4 million in origination volume, which was up approximately 159% compared to £28 million in origination volume for Q4'24. We expect to more than double U.K. bank originations again in 2025 as we deploy AI with the goal of building the leading AI-driven specialist mortgage bank in the United Kingdom. We expect the exiting of the three smaller non-core U.K. businesses to start being a benefit to our adjusted EBITDA losses in the second half of 2025. For more information, please see the detailed financial data and other information available in the Company's interim report on Form 10-Q, to be filed with the Securities and Exchange Commission (the 'SEC'), and the investor presentation on the investor relations section of the Company's website. Webcast Better will host a live webcast of its earnings conference call beginning at 8:30am ET on May 13, 2025. To access the webcast and the related presentation, or to register to listen to the call by phone, go to the investor relations section of the Company's website at or click the 'Attendee Registration Link' below. Please join the webcast at least 10 minutes prior to start time. A replay will be available on the investor relations website shortly after the call ends. * Webcast Details * Event Title: Better Home & Finance Holding Company First Quarter 2025 Results Event Date: May 13, 2025 08:30 AM (GMT-12:30) Eastern Time (US and Canada) Attendee Registration Link: About Better Since 2017, Better Home & Finance Holding Company (NASDAQ: BETR; BETRW) has leveraged its industry-leading AI Mortgage platform, Tinman™, to fund more than $100 billion in mortgage volume. Tinman™ allows customers to see their rate options in seconds, get pre-approved in minutes, lock in rates and close their loan in as little as three weeks. Better's mortgage offerings include GSE-conforming mortgage loans, FHA and VA loans, and jumbo mortgage loans. Better launched its 'One Day Mortgage' program in January 2023, which allows eligible customers to go from click to Commitment Letter within 24 hours. Better was named Best Online Mortgage Lender by Forbes and Best Mortgage Lender for Affordability by WSJ in 2023, ranked #1 on LinkedIn's Top Startups List for 2021 and 2020, #1 on Fortune's Best Small and Medium Workplaces in New York, #15 on CNBC's Disruptor 50 2020 list, and was listed on Forbes FinTech 50 for 2020. Better serves customers in all 50 US states and the United Kingdom. Forward-looking Statements This press release contains certain forward-looking statements within the meaning of federal securities laws. Forward-looking statements are all statements other than those of historical fact, and include predictions, projections and other statements about future events that are based on current expectations and assumptions. Forward-looking statements are inherently subject to risks and uncertainties which could cause actual future events to differ materially from those expressed or implied by the forward-looking statements in this communication. These risks and uncertainties include: our ability to operate under and maintain or improve our business model; the effect of interest rates on our business, results of operations, and financial condition; our ability to expand our customer base, grow market share in our existing markets and enter into new markets; our ability to respond to general economic conditions, particularly elevated interest rates and lower home sales and refinancing activity; our ability to restore our growth and our expectations regarding the development and long-term expansion of our business; our ability to comply with laws and regulations related to the operation of our business, including any changes to such laws and regulations; our ability to achieve and maintain profitability in the future; our ability and requirements to raise additional financing in the future; our estimates regarding expenses, future revenue, capital and additional financing requirements; our ability to maintain, expand and be successful in our strategic relationships with third parties; our ability to remediate existing material weaknesses and implement and maintain an effective system of internal controls over financial reporting; our ability to develop new products, features and functionality that meet market needs and achieve market acceptance; our ability to retain, identify and hire individuals for the roles we seek to fill and staff our operations appropriately; the involvement of our CEO in litigation related to prior business activities, our business activities and associated negative media coverage; our ability to recruit and retain additional directors, members of senior management and other team members, including our ability in general, and our CEO's ability in particular, to maintain an experienced executive team; our ability to successfully manage our international and banking operations our ability to maintain and improve morale and workplace culture and respond effectively to the effects of negative media coverage; and our ability to maintain, protect, assert and enhance our intellectual property rights. More information on these risks and other potential factors that could affect the Company's business, reputation, results of operations, financial condition, and stock price can be found in the Company's Annual Report on Form 10-K, which is available, free of charge, at the SEC's website at New risks and uncertainties arise from time to time, and it is impossible for Better to predict these events or how they may affect us. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made, and Better undertakes no obligation, except as required by law, to update or revise the forward-looking statements, whether as a result of new information, changes in expectations, future events or otherwise. Following are tables that present selected financial data of the Company. Also included are reconciliations of non-GAAP measures to their most comparable GAAP measures and definitions of certain key metrics used herein. Use of Non-GAAP Measures and Other Financial Metrics We include certain financial measures not presented in accordance with generally accepted accounting principles ('GAAP') including Adjusted EBITDA, Adjusted Net Income (Loss) and other key metrics. We calculate Adjusted Net Income (Loss) as net income (loss) adjusted for the impact of stock-based compensation expense, change in the fair value of warrants, and other non-core operational expenses. We calculate Adjusted EBITDA as net income (loss) adjusted for the impact of stock-based compensation expense, change in the fair value of warrants, and other non-recurring or non-core operational expenses, as well as interest and amortization on non-funding debt (which includes interest on the Convertible Note (as defined in our Form 10-K)), depreciation and amortization expense, and income tax expense. These non-GAAP financial measures should not be considered in isolation and are not intended to be a substitute for any GAAP financial measures. These non-GAAP measures provide supplemental information that we believe helps investors better understand our business, our business model and how we analyze our performance. We also believe these non-GAAP financial measures improve investors' and analysts' ability to compare our results with those of our competitors and other similarly situated companies, which commonly disclose similar performance measures. However, our calculation of Adjusted EBITDA and Adjusted Net Income (Loss) may not be comparable to similarly titled performance measures presented by other companies. Further, although we use these non-GAAP measures to assess the financial performance of our business, these measures exclude certain substantial costs related to our business, and investors are cautioned not to use such measures as a substitute for financial results prepared according to GAAP. Non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. As a result, non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, our financial results prepared and presented in accordance with GAAP. Key Metrics This press release refers to the following key metrics: Funded Loan Volume represents the aggregate dollar amount of all loans funded in a given period based on the principal amount of the loan at funding. Purchase Loan Volume represents the aggregate dollar amount of purchase loans funded in a given period based on the principal amount of the loan. Refinance Loan Volume represents the aggregate dollar amount of refinance loans funded in a given period based on the principal amount of the loan. HELOC loan volume represents the aggregate dollar amount of HELOC loans funded in a given period based on the principal amount of the loan at funding. D2C Loan Volume represents the aggregate dollar amount of loans funded in a given period based on the principal amount of the loan at funding that have been generated from direct interactions with customers using all marketing channels other than our B2B partner relationships and our Tinman AI Platform channel. B2B Loan Volume represents the aggregate dollar amount of loans funded in a given period based on the principal amount of the loan at funding that have been generated through one of our B2B partner relationships. B2B Loan Volume represents the aggregate dollar amount of loans funded in a given period based on the principal amount of the loan at funding that have been generated through one of our B2B partner relationships. Tinman AI Platform channel Loan Volume represents the aggregate dollar amount of loans funded in a given period based on the principal amount of the loan at funding that have been generated through NEO Powered by Better. Total Loans represents the total number of loans funded in a given period, including purchase loans, refinance loans and HELOC loans.
Yahoo
14-04-2025
- Business
- Yahoo
Better Home & Finance Holding Company Announces Retirement of Approximately $530 Million Convertible Notes; Creates Approximately $265 Million of Positive Pre-Tax Equity Value to Continue Expanding its AI Mortgage Platform
Retiring approximately $530 million of convertible notes through restructuring of existing convertible notes in exchange for $110 million of cash and $155 million of new debt Expected creation of approximately $265 million of pre-tax equity, excluding discounts on the debt Better has signed a new indenture for $155 million in new notes maturing December 31, 2028, with a 6% PIK annual interest rate Strategic rationale for transaction includes reducing debt overhang of the Company and improving balance sheet positioning and strategic optionality Management remains focused on driving towards profitability in the midterm. Continue leaning into Tinman™ technology and AI, with Betsy™ AI Loan Assistant executing over 115k customer interactions per month, AI underwriting growing from 40% of locked loans to over 75% in the near future, and increasing loan officer productivity in terms of loans per month to over 3x mortgage industry median NEW YORK, April 14, 2025--(BUSINESS WIRE)--Better Home & Finance Holding Company (NASDAQ: BETR; BETRW) ("Better" or " or "the Company"), the leading AI home finance company with over $100 billion of mortgages funded on its Tinman™ AI platform, today reported that it has restructured its outstanding convertible notes with its lender to retire approximately $530 million of outstanding debt in exchange for a one-time cash consideration of $110 million and the issuance of $155 million of new senior secured notes from SB Northstar LP, the Company's existing noteholder, which will be due December 31, 2028 and will accrue interest at a rate of 6% per annum that is payable, at Better's option, in kind (PIK) or in cash. "We are extremely pleased to retire the Company's outstanding convertible debt and right size its liability structure," said Vishal Garg, Founder & CEO of "This transaction will create approximately $265 million of positive pre-tax equity value for the Company and its shareholders, as well as create a path to long-term value creation for our equity holders. We continue to invest in building the leading AI platform in the mortgage industry, and fulfilling our mission of making homeownership cheaper, faster and easier, and just plain better for all Americans." "With the completion of this debt restructuring, our next two priorities are growth and profitability," said Kevin Ryan, CFO of "We will continue building out our NEO platform, lean into productivity-driven savings through AI deployment across our mortgage business, and drive costs down further in our corporate functions. We are excited about using AI to drive the business towards growth and profitability, similar to the advances we experienced from 2016 to 2021, when we grew originations over 100x." For more information on Better, please see the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC"), and the investor presentation on the investor relations section of the Company's website at About Better Home & Finance Holding Company Better Home & Finance Holding Company (NASDAQ: BETR; BETRW) is the first AI-powered mortgage lender and first fintech to fund more than $100 billion in mortgage volume. Since 2016, Better has leveraged its industry-leading AI platform, Tinman™, to achieve a singular mission of making homeownership cheaper, faster, and easier for Americans. Tinman™ allows customers to see their rate options in seconds, get pre-approved in minutes, lock in rates, and close their loan in as little as three weeks. In addition, Betsy™, the first voice-based AI loan assistant built exclusively for the mortgage industry, revolutionizes the homebuying journey by delivering timely application status updates to consumers, answering questions, and moving their loan application along 24/7/365. Better's mortgage offerings include GSE-conforming mortgage loans, FHA and VA loans, and jumbo mortgage loans. In January 2023, Better launched "One Day Mortgage," allowing eligible customers to go from click to Commitment Letter within 24 hours. Better won the 2025 Fintech Breakthrough Awards for Digital Mortgage Innovation, and was named Best Online Mortgage Lender by Forbes and Best Mortgage Lender for Affordability by WSJ in 2023, ranked #1 on LinkedIn's Top Startups List for 2021 and 2020, #1 on Fortune's Best Small and Medium Workplaces in New York, #15 on CNBC's Disruptor 50 2020 list, and was listed on Forbes FinTech 50 for 2020. Better serves customers in all 50 US states and the United Kingdom. For more information, follow @betterdotcom on Instagram and TikTok. Forward-looking Statements This press release contains certain forward-looking statements within the meaning of federal securities laws. Forward-looking statements are all statements other than those of historical fact, and include predictions, projections and other statements about future events that are based on current expectations and assumptions. Forward-looking statements are inherently subject to risks and uncertainties which could cause actual future events to differ materially from those expressed or implied by the forward-looking statements in this communication. These risks and uncertainties include: our ability to operate under and maintain or improve our business model; the effect of interest rates on our business, results of operations, and financial condition; our ability to expand our customer base, grow market share in our existing markets and enter into new markets; our ability to respond to general economic conditions, particularly elevated interest rates and lower home sales and refinancing activity; our ability to restore our growth and our expectations regarding the development and long-term expansion of our business; our ability to comply with laws and regulations related to the operation of our business, including any changes to such laws and regulations; our ability to achieve and maintain profitability in the future; our ability and requirements to raise additional financing in the future; our estimates regarding expenses, future revenue, capital and additional financing requirements; our ability to maintain, expand and be successful in our strategic relationships with third parties; our ability to remediate existing material weaknesses and implement and maintain an effective system of internal controls over financial reporting; our ability to develop new products, features and functionality that meet market needs and achieve market acceptance; our ability to retain, identify and hire individuals for the roles we seek to fill and staff our operations appropriately; the involvement of our CEO in litigation related to prior business activities, our business activities and associated negative media coverage; our ability to recruit and retain additional directors, members of senior management and other team members, including our ability in general, and our CEO's ability in particular, to maintain an experienced executive team; our ability to successfully manage our international and banking operations our ability to maintain and improve morale and workplace culture and respond effectively to the effects of negative media coverage; and our ability to maintain, protect, assert and enhance our intellectual property rights. More information on these risks and other potential factors that could affect the Company's business, reputation, results of operations, financial condition, and stock price can be found in the Company's Annual Report on Form 10-K, which is available, free of charge, at the SEC's website at . New risks and uncertainties arise from time to time, and it is impossible for Better to predict these events or how they may affect us. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made, and Better undertakes no obligation, except as required by law, to update or revise the forward-looking statements, whether as a result of new information, changes in expectations, future events or otherwise. View source version on Contacts For Investor Relations inquiries, please contact: ir@
Associated Press
14-04-2025
- Business
- Associated Press
Better Home & Finance Holding Company Announces Retirement of Approximately $530 Million Convertible Notes; Creates Approximately $265 Million of Positive Pre-Tax Equity Value to Continue Expanding its AI Mortgage Platform
NEW YORK--(BUSINESS WIRE)--Apr 14, 2025-- Better Home & Finance Holding Company (NASDAQ: BETR; BETRW) ('Better' or ' or 'the Company'), the leading AI home finance company with over $100 billion of mortgages funded on its Tinman™ AI platform, today reported that it has restructured its outstanding convertible notes with its lender to retire approximately $530 million of outstanding debt in exchange for a one-time cash consideration of $110 million and the issuance of $155 million of new senior secured notes from SB Northstar LP, the Company's existing noteholder, which will be due December 31, 2028 and will accrue interest at a rate of 6% per annum that is payable, at Better's option, in kind (PIK) or in cash. 'We are extremely pleased to retire the Company's outstanding convertible debt and right size its liability structure,' said Vishal Garg, Founder & CEO of 'This transaction will create approximately $265 million of positive pre-tax equity value for the Company and its shareholders, as well as create a path to long-term value creation for our equity holders. We continue to invest in building the leading AI platform in the mortgage industry, and fulfilling our mission of making homeownership cheaper, faster and easier, and just plain better for all Americans.' 'With the completion of this debt restructuring, our next two priorities are growth and profitability,' said Kevin Ryan, CFO of 'We will continue building out our NEO platform, lean into productivity-driven savings through AI deployment across our mortgage business, and drive costs down further in our corporate functions. We are excited about using AI to drive the business towards growth and profitability, similar to the advances we experienced from 2016 to 2021, when we grew originations over 100x.' For more information on Better, please see the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the 'SEC'), and the investor presentation on the investor relations section of the Company's website at About Better Home & Finance Holding Company Better Home & Finance Holding Company (NASDAQ: BETR; BETRW) is the first AI-powered mortgage lender and first fintech to fund more than $100 billion in mortgage volume. Since 2016, Better has leveraged its industry-leading AI platform, Tinman™, to achieve a singular mission of making homeownership cheaper, faster, and easier for Americans. Tinman™ allows customers to see their rate options in seconds, get pre-approved in minutes, lock in rates, and close their loan in as little as three weeks. In addition, Betsy™, the first voice-based AI loan assistant built exclusively for the mortgage industry, revolutionizes the homebuying journey by delivering timely application status updates to consumers, answering questions, and moving their loan application along 24/7/365. Better's mortgage offerings include GSE-conforming mortgage loans, FHA and VA loans, and jumbo mortgage loans. In January 2023, Better launched 'One Day Mortgage,' allowing eligible customers to go from click to Commitment Letter within 24 hours. Better won the 2025 Fintech Breakthrough Awards for Digital Mortgage Innovation, and was named Best Online Mortgage Lender by Forbes and Best Mortgage Lender for Affordability by WSJ in 2023, ranked #1 on LinkedIn's Top Startups List for 2021 and 2020, #1 on Fortune's Best Small and Medium Workplaces in New York, #15 on CNBC's Disruptor 50 2020 list, and was listed on Forbes FinTech 50 for 2020. Better serves customers in all 50 US states and the United Kingdom. For more information, follow @betterdotcom on Instagram and TikTok. Forward-looking Statements This press release contains certain forward-looking statements within the meaning of federal securities laws. Forward-looking statements are all statements other than those of historical fact, and include predictions, projections and other statements about future events that are based on current expectations and assumptions. Forward-looking statements are inherently subject to risks and uncertainties which could cause actual future events to differ materially from those expressed or implied by the forward-looking statements in this communication. These risks and uncertainties include: our ability to operate under and maintain or improve our business model; the effect of interest rates on our business, results of operations, and financial condition; our ability to expand our customer base, grow market share in our existing markets and enter into new markets; our ability to respond to general economic conditions, particularly elevated interest rates and lower home sales and refinancing activity; our ability to restore our growth and our expectations regarding the development and long-term expansion of our business; our ability to comply with laws and regulations related to the operation of our business, including any changes to such laws and regulations; our ability to achieve and maintain profitability in the future; our ability and requirements to raise additional financing in the future; our estimates regarding expenses, future revenue, capital and additional financing requirements; our ability to maintain, expand and be successful in our strategic relationships with third parties; our ability to remediate existing material weaknesses and implement and maintain an effective system of internal controls over financial reporting; our ability to develop new products, features and functionality that meet market needs and achieve market acceptance; our ability to retain, identify and hire individuals for the roles we seek to fill and staff our operations appropriately; the involvement of our CEO in litigation related to prior business activities, our business activities and associated negative media coverage; our ability to recruit and retain additional directors, members of senior management and other team members, including our ability in general, and our CEO's ability in particular, to maintain an experienced executive team; our ability to successfully manage our international and banking operations our ability to maintain and improve morale and workplace culture and respond effectively to the effects of negative media coverage; and our ability to maintain, protect, assert and enhance our intellectual property rights. More information on these risks and other potential factors that could affect the Company's business, reputation, results of operations, financial condition, and stock price can be found in the Company's Annual Report on Form 10-K, which is available, free of charge, at the SEC's website at . New risks and uncertainties arise from time to time, and it is impossible for Better to predict these events or how they may affect us. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made, and Better undertakes no obligation, except as required by law, to update or revise the forward-looking statements, whether as a result of new information, changes in expectations, future events or otherwise. View source version on For Investor Relations inquiries, please contact:[email protected] KEYWORD: UNITED STATES NORTH AMERICA NEW YORK INDUSTRY KEYWORD: PROFESSIONAL SERVICES TECHNOLOGY RESIDENTIAL BUILDING & REAL ESTATE FINANCE CONSTRUCTION & PROPERTY FINTECH ARTIFICIAL INTELLIGENCE SOURCE: Better Home & Finance Holding Company Copyright Business Wire 2025. PUB: 04/14/2025 07:30 AM/DISC: 04/14/2025 07:31 AM
