Button Finance, a New York-based fintech focused on home equity loans, announced Monday that it had closed $2 million in initial seed funding.

Through an artificial intelligence-powered underwriting platform, the mortgage firm plans to work with traditionally underserved borrowers and allow them to achieve greater financial independence by tapping into the value of their homes. It aims to deliver funding decisions in as little as five days.

“American homeowners now have more untapped equity than ever before, given the recent home-price rally,” said Jason Harris, CEO of Button Finance, in a press release. “Button Finance’s products empower borrowers to access their home equity, pay down high-interest debt, and make value-enhancing renovations to their homes.”

Homeowners with less-than-ideal credit who are seeking a consumer loan have often been restricted to high-interest credit cards or peer-to-peer lending programs, where rates could run as high as 36%, Harris observed.

“It was really astonishing to me how many people were getting bigger consumer loans at interest rates that were just completely absurd when you compare it to a mortgage rate,” he said in an interview with National Mortgage News.

Although the model comes with greater risk than more traditional products, it’s made for a customer base that banks are overlooking, Harris said.

“We think if Lending Club is going to give somebody an unsecured consumer line, we’re willing to give them a much deeper mortgage, given that they’re using their house as leverage,” he said.

Structured credit asset management company Hildene Capital Management led the funding round, joined by L&L Capital Partners and angel investors active within New York fintech. With the funding, Button Finance intends to further develop its proprietary technology and make strategic hires as it expands.

“The traditional players in the mortgage industry have been slow to adopt new technology and innovative underwriting,” said Dushyant Mehra, co-chief investment officer of Hildene Capital Management, which specializes in distressed and event-driven opportunities in credit. “The Button Finance team spotted a gap in the market, and they built a robust underwriting model to address it, leading to higher risk-adjusted yields.”

In conjunction with the capital raise, the company also announced the appointment of Josh Hager as head of mortgage operations. An industry veteran of over two decades, Hager previously held leadership positions at fintech mortgage originators, including Better.com, Homeward and Divvy Homes. Earlier in his career, he served in underwriting and mortgage operational roles in the lending units of Wells Fargo and Bank of America.

Founded in 2019, Button Finance has plans to expand into other products over the next two years, according to Harris.

“We’ll probably expand into other mortgages first and unsecured consumer, but it really depends on the market at the time. It just seems like there’s such a wide-open playing field today with home equity,” Harris said.

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