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Threat to banks; First American takes some Ribbon; Paca$o 💸

By September 16, 2021 No Comments

Pacaso raising bank and making some enemies along the way

“Tech ‘Unicorn’ Pacaso Is Turning Homes Into LLCs and Pissing Off the Neighbors,” reads the headline in Vice.

But it’s not far from the truth.

It’s been less than a year since Pacaso officially launched. But the fast-growing real estate startup has already hit a triple-digit revenue run rate, attracted big-name investors — and caused an uproar among longtime residents in areas such as Napa Valley where it buys vacation homes. 

Pacaso on Tuesday announced a $125 million funding round led by SoftBank via its $40 billion Vision Fund 2. SoftBank has backed the likes of Opendoor, DoorDash, Coupang, Didi, and other highly-valued tech companies. Its investment in Pacaso is a vote of confidence in the year-old startup founded by former Zillow Group CEO Spencer Rascoff and dotloop founder Austin Allison. 

This isn’t the first time a member of the Allison family shook up the wine world. Austin’s brother, Alex Allison, is an adviser for WineSociety a wine distribution disruptor which offers Premium Wine in 500ml Cans with free shipping right to your door in nearly 40 states.

But back to Pacaso, some Californians say the billion-dollar company is hawking illegal timeshares. “If this business model succeeds,” one Sonoma resident said, “our town starts to become more and more like an adult Disneyland.”

A group called Stop Pacaso Now has formed in California’s Wine Country, started by local residents who say the company is “the newest way for Silicon Valley bros and venture capital vultures to make a quick buck at your expense: By turning your neighbor’s house into what’s basically a glorified timeshare.”

Pacaso sparked controversy earlier this year after buying homes that locals say were part of the workforce housing inventory. The company responded by saying it would resell the house to a sole owner, and would only buy properties in the area valued at more than $2 million, Inman reported.

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First American makes sizable investment in homeownership platform Ribbon

Ribbon has some heavy hitters betting on its success.

Ribbon just secured $150 million, inclusive of $75 million in Series C equity financing and $75 million in  additional working capital. Additionally, Ribbon has also upsized its $500 million credit facility, on the heels of 15x growth this year. This investment will enable more than $10 billion in home transactions annually, and fuel Ribbon's swift expansion into new states.

During the latest round of fundraising Ribbon welcomed new strategic investors, including First American Financial, Waterfall Asset Management, TriplePoint Capital and former Zillow CEO Spencer Rascoff's 75 & Sunny Ventures.

Ribbon's homeownership platform allows real estate agents and lenders the ability to easily design winning cash offers, empowering their everyday homebuyers — while providing sellers with the certainty and speed of a guaranteed, on-time closing.

Over 100 brokerage and lender partners have created their own Ribbon-powered cash experiences, growing to a network of 20,000 agents and loan officers creating $600 million in home offers a month on Ribbon. 

Shaival Shah, Co-Founder and CEO of Ribbon said: “With our new capital raise, we intend to aggressively expand nationally, build more of the homeownership journey, and meet the significant consumer and partner demand.”

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This is the biggest threat to the future of banking, and mortgage lending too, probably

Climate change is posing a bigger risk to bank balance sheets than the subprime mortgage crisis that contributed to the Great Recession,according to the co-author of a new study on the vulnerability of commercial loans. 

The study, conducted by the sustainability nonprofit Ceres and released last week, found that up to 10 percent of the value of U.S. commercial loans at leading banks is at risk of being wiped out by the effects of floods, fires, extreme heat and hurricanes.

It’s possible that a similar, or even higher, threat exists to residential loans, according to Rise&Shred’s analysis of the study results.

“There is more risk on bank balance sheets because of climate than there was from subprime housing,” study co-author Steven Rothstein said in an interview with The Hill. “And it took us eight to 10 years to get out of that recession.”

And unlike subprime mortgages, there is no easy way for banks to divest themselves of assets at risk, Rothstein said, because climate risk is spread so widely through the economy.

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