Better gets BIGGER, buys Goldman Sach’s overseas mortgage broker
Digital mortgage lender Better is making its first expansion overseas with the acquisition of Trussle — a Goldman Sachs-backed digital mortgage and insurance broker.
The deal values UK-based Trussle at roughly $9 million, according to people familiar with the matter.
The announcement comes ahead of Better’s public listing via SPAC merger with Aurora Acquisition Corp., which is expected to value the company at $7.7 billion.
The SPAC deal includes a $1.5 billion private investment in public equity (PIPE) arrangement led by SoftBank, which invested a separate $500 million in the company just a month prior to the deal announcement.
PIPEs are mechanisms for companies to raise capital from a select group of investors that make the final market debut possible.
Additionally, the company not only generated $800 million in revenue last year, but also a profit — though its growth has not come without some controversy.
Better’s platform moves the mortgage process completely online, giving customers the ability to upload and eSign documents, and claims to cut the closing time from an industry average of 42 days down to 21 days.
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Homebuyers walk from market, North Texas builder walks from buyer
The housing market was on fire this spring, leaving many would-be buyers burned out. Low mortgage rates have been fueling demand, but there's also been a record-low inventory of available properties. That haspushed home prices to record highs, with some homes attracting multiple all-cash offers, and others selling for $1 million over the list price.
But home sales have fallen for the fourth month in a row, on a monthly basis, partially because there aren't enough homes to buy, but also because the competition and higher prices are turnoffs to those who can't afford to compete, according to a recent report from the National Association of Realtors.
Up against all-cash offers they can't match and a feeding frenzy on each house they visit, many buyers are dropping out of the market and opting to wait it out and reevaluate their options.
Meanwhile, down in North Texas, a local homebuilder has walked away from a deal to build a house with a homebuyer.
It’s always a shame when deals fall through, but this one hurts to read about.
The Dickens bought a plot of land and paid a builder to build them a home. Pretty standard deal, right?
However, in June, with the home nearly complete, the builder told the Dickens his costs to build the home had dramatically gone up.
Builder Kim Paschal said the unprecedented increase in material costs along with changes to the home’s original plan drove up the price.
”This house I sold for $525,000 is now going to cost me $750,000 to build. What am I going to do? The only thing you can do is go to the customer and say, ‘we got a problem,’” Paschal said.
Paschal said he offered to sell the home to the Dickens at cost with no markup but the price was still more than $200,000 more than the original price.
“I thought we signed a builder’s agreement to help me build the house of my dreams for that price on the contract,” the Dickens said. “I never expected costs to come in at the last minute and go $200,000 above what that price tag was – never.”
“I feel bad for them. I really do,” Paschal said. “But it’s not my fault. It’s not their fault. That’s the tragedy. It just happened.”
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Inflation will simmer down and the Fed may stay the mortgage-purchase course
Data released by the Bureau of Labor Statistics on Tuesday showed that prices rose 0.9 percent in the past month, a hike after prices also rose 0.6 percent in May. The price hike in June marked the largest 1-month spike since June 2008. (WaPo paywall.)
Still, policymakers at the Federal Reserve and White House continue to predict that as the economy has time to heal, the surge in inflation will cool and overall prices will settle back down. They maintain that the sharp increases are a temporary feature of a bumpy economic recovery.
Their expectation is that inflation will simmer down closer to the Fed’s 2 percent annual target next year and in 2023.
Meanwhile, Fed officials continue to be at odds over how it should continue to help the economic recovery. Previously, some fed officials have expressed concern over the fed’s actions and their impact on housing and mortgages.
The Federal Reserve’s purchases of Treasury securities and mortgage-backed securities are both affecting interest rates and financial conditions overall and one group does not have a significantly larger impact on the housing market, said New York Fed Bank President John Williams.
“I don’t see them as one tool being particularly focused on housing and the other not,” Williams told reporters after speaking virtually during an event organized by the Bank of Israel. “Both of them affect interest rates therefore both of them affect the cost of housing.”
Policymakers are discussing how and when to start slowing the Fed’s asset purchases from the current pace of $80 billion a month of Treasury securities and $40 billion a month of mortgage-backed securities.
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