Home News Ally Financial takes a big hit on Better.com investment

Ally Financial takes a big hit on Better.com investment

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online bank Ally Financial recorded an impairment charge of $136 million related to the investment Digital Mortgage Lenders Struggling better dot combank executives said Wednesday in the company’s third-quarter earnings call.

The bank disclosed to shareholders and analysts that the $136 million impairment was a “non-marketable equity investment” related to its mortgage business.

“This is effectively de-risked as our investment remains with a book value of $19 million after the impairment,” said CEO Jeff Brown. Said talking.

Founded by Vishal Garg in 2014, Better.com capitalized on the historic wave of refinancing and the growing comfort of homeowners in a fully digital mortgage experience to help them stay ahead of the pandemic. has grown astonishingly. Better has grown from about 2,000 employees and his $4.9 billion turnover in 2019 to 10,000 employees and his $58 billion turnover in 2021.

But the company, which has raised $905 million in several funding rounds and received a $750 million loan from SoftBank in 2021, has faced major problems.When Forbes reported on Garg, it took a big publicity hit aggressive management style Past controversies as well as the infamous mass layoffs on zoom.

Better also face Lawsuit from Sarah PierceThe company’s former CFO, she claims she was kicked out after complaining that the company’s “black box” finances were misleading investors.of Securities and Exchange Commission Noted.

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But above all, Better’s biggest problem seems to be its fundamentals. The company continues to lose heavily, with him losing $221 million in the first quarter and struggling to build momentum in an equally slowing buy market.

IPO Plan through Special Purpose Acquisition Aurora Acquisition Corporation, Original plan Q4 2021 is unlikely given the market conditions.

According to Insider, Garg has been scouting the press in recent weeks to promote new directions, including “a Zillow-like website for mortgage applicants to find affordable homes.” Better is also building a Home Her Actions tool that the company believes allows pre-approved mortgage holders to bid on homes and buy them without brokerage fees.

Ally, one of the nation’s largest car lenders, invested in Better in 2019, though the amount of the investment was not disclosed at the time.

In the first half of 2022, Better originated $8.7 billion, making it America’s 34th largest mortgage lender. According to Inside Mortgage Finance, its composition volume is down 67% from last year. Only among the top 50 lenders freedom mortgage There was a significant drop in origination volume, at 75%.

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