Technology has made finding a home a lot easier, with a variety of services such as Zillow, Redfin and many others there to help buyers sift through thousands of listings. But once someone’s found that dream home, finishing the process remains a challenge.
That’s the problem a pair of former Redfin employees are trying to solve with their new startup, Approved. The San Diego company announced Tuesday a $1 million pre-seed round to help build out the service. The round was led by Social Capital and Precursor Ventures.
Approved seeks to digitize mortgage documentation. The company markets itself to small lenders, giving them a platform for borrowers to submit documents such as bank statements, pay stubs, and tax information online rather than having to gather them up and deliver them in person or via fax.
Co-founders Andy Taylor and Navtej Sadhal worked together at Redfin where they witnessed firsthand the dichotomy between the beginning of a home search and the end.
“You go from this tech-enabled, mobile-enabled world, to a world where all the sudden your loan officer is asking for your signature on a physical piece of paper,” Taylor said. “One of our customers described it as landing a rocket ship in the stone age because it was like taking a step back in time.”
To make the company’s mission a reality, Approved employs various pieces of technology that can collect bank statements, W2s, 1099s, 1040s and pay stubs; turn a smartphone into a document scanner; create whiteboards for borrowers and lenders to edit; and maintain a document library that supports all types of popular loan documents.
That’s a lot of sensitive information to collect and hold on to. One of the first things the company learned during testing was how highly the industry valued security. All of Approved’s infrastructure is on Amazon Web Services and requires two-factor authentication to access it. Approved deploys PCI-grade encryption at rest with Amazon KMS for its database and files.
“Everything you build has to have that in mind,” Taylor said of security for the product. “You really have to put your tinfoil hat on when you’re thinking about how you are going to be structuring these things and architecting them.”
Taylor and Sadhal aren’t the only ones trying to make the mortgage process more digital-friendly. Rocket Mortgage, Lending Home and Quicken Loans are some of the big-name competitors, and even their former employer, Redfin, is in that market. The Seattle brokerage in January announced plans to offer home loans in an effort to service its customers from start to finish in the home-buying process.
Taylor told GeekWire that Approved stands out from the competition because it isn’t a service that lends directly to the consumer nor is it proprietary in nature. Anyone can use it, including competitors.